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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SHRI N.K. SAINI & SHRI K.N. CHARRY
PER SHRI K.N. CHARY, JUDICIAL MEMBER
Challenging the order dated 09.07.2014 in appeal no.
149/2013-14 passed by the Ld. Commissioner of Income Tax (Appeals)-XVI, Delhi (hereinafter for short called as the “Ld.CIT (A)”). The Revenue preferred this appeal on the following grounds:
1. “On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the disallowance made by the AO on account of depreciation claimed on customs duty payment of Rs. 24,55,891/- by not considering the fact that the assessee has not accepted the payment of customs duty as a liability and is disputing the same.
On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the disallowance made by the AO on account of depreciation claimed on customs duty payment of Rs. 24,55,891/- by not considering the observation in the assessment order that the assessee did not accepted the liability of payment of custom duty and had filed appeal against the order of custom authority. 3. On the facts and circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the disallowance made by the AO on account of depreciation claimed on customs duty payment of Rs. 24,55,891/- by not considering the observation in the assessment order that the crystallization of liability was dependent on the decision of appellate authorities and hence the same was treated as unascertained/contingent liability. 4. On the facts and circumstances of the case, the appellant craves to be allowed to add any fresh grounds of appeal
and/or delete or amend any of the grounds of appeal.”
2. Briefly stated facts are that the assessee was earlier known as M/s Orient Ceramics & Industries Ltd., and engaged in the manufacturing of glazed white, colored and decorative ceramic wall/floor tiles at Sikandrabad, Distt. Bulandshahr, U.P. under the name and style of ‘ORIENT TILES’. The assessee had imported machinery under duty exemption certificate issued by the Ministry of Finance due to which assessee did not pay any custom duty on import of the said machinery. However, in the AY 2004-05 the Custom Department disputed the said certificate and issued show cause notice to the assessee and called upon the assessee to pay the differential amount of custom duty and demand of Rs. 4,25,34,028/-which the assessee paid without prejudice to their contention that the certificate issued by the Ministry of Finance was valid, legal and proper and no custom duty need to be paid. The assessee had capitalized the said amount under the head “plant and machinery”. During the AY 2010- 11 the assessee mentioned in the notes to account in the annual report as follows:
“Custom/Excise Duty/Service Tax/Sales Tax demands and Show Cause Notice issued against Company has preferred appeals amounting to Rs. 1,62,20,709/- (During the year contingent liability of Rs. 53,613/- pending in consumer court has been settled)”.
Assessee filed their return of income for the AY 2010-11 on 04.10.2010 declaring a total income of Rs. 20,75,83,273/- but the Assessing Officer added a sum of Rs. 24,55,891/- while disallowing the depreciation on custom duty payment. However, in appeal Ld. CIT (A) deleted the same, as such, the Revenue is in this appeal before us.
Ld. DR contended that the Ld. CIT (A) should have considered the fact that the assessee had not accepted the payment of custom duty as a liability and in fact while disputing the same filed an appeal against the orders of the customs authorities, as such, the crystallization of liability was dependent on the decision of the appellate authorities and hence the same was rightly treated by the Assessing Officer as unascertained /contingent liability. He, therefore, prayed to restore the order of the AO. Per contra, it is the argument of the Ld. AR that the Ld. CIT (A) followed the orders of his predecessors confirmed by the higher forums like the Tribunal and the Hon’ble Jurisdictional High Court, as such, the said order cannot be interfered with.
By way of the Paper Book, Ld. AR produced the orders of the Tribunal for the years 2005-06 to 2008-09 and also the order of the Hon’ble Jurisdictional High Court in & 66/Del/2011, all the orders in assessee’s own case upholding the correctness of the capitalization of the payment of excise duty amounting to Rs. 4,25,34,028/-, and the depreciation on the said amount has to be allowed. In view of this binding precedent by the Hon’ble Jurisdictional High Court, by no stretch of imagination could it be said that the impugned order suffers any illegality or irregularity warranting any interference by this Tribunal. We, therefore, uphold the same and dismissed the grounds of appeal of the assessee.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 26.09.2017