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Income Tax Appellate Tribunal, “D” BENCH: KOLKATA
Per Shri A.T.Varkey, JM
This appeal preferred by the Revenue is against the order of the Ld. CIT(A)-21, Kolkata dated 22.02.2017 for assessment year 2008-09 .
The sole issue involved in this appeal of revenue is against the action of Ld. CIT(A) in deleting the addition of Rs.10,00,00,000/- towards payment of excise duty pertaining to earlier years and paid in the assessment year under consideration.
Briefly stated facts are that the assessee filed his return of income u/s. 139(1) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) on 27.09.2008 declaring total income of Rs.3,12,83,690/-. Assessment u/s. 143(3) of the Act was completed on 31.12.2010 determining total income of Rs.3,32,87,100/-, inter alia, making addition/disallowance of Rs.20,03,416/-. Aggrieved with the said order, the assessee preferred an appeal before the Ld. CIT(A), who vide its order dated 15.11.2011 allowed partial relief and to give the effect of the same, order u/s. 143(3)/251 was passed on 14.12.2011 determining total income of Rs.3,26,93,288/-. Subsequently, proceeding u/s. Loknath Prasad Gupta, AY 2008-09 147 of the Act was initiated by issuing notice u/s. 148 of the Act on 07.05.2014 on the alleged ground that payment in FY 2007-08 of Rs.10,13,20,792/- towards excise duty pertaining to earlier years should not have been allowed in the assessment completed u/s. 143(3) of the Act on 31.12.2010 and thus the allowance of the same had resulted in under assessment by Rs.10,13,20,792/-. In the assessment order passed u/s. 147/143(3) dated 15.01.2016 the AO has observed as under: “14. The submission of the assessee were examined in the light of records and submissions of the assessee filed in the course of the assessment proceedings as above. In view of the order dated 10.06.2015 by the Hon’ble ITAT in (discussed above) the assessee claims the entire amount of interest of Rs.19,58,89,924/-, in AY 2008-09 (i.e. in the year in which the Order of the Excise Settlement Commission was passed). However, since the liability towards interest was finally determined by the Hon'ble Delhi High Court vide Order dated 13.04.2012 (in AY 2013-14) the same may be allowed in the year of the pronouncement of the order given by Hon'ble Delhi High Court as adjudicated by the Hon'ble ITAT, Kolkata subject to verification of the facts. Further, the department had filed an appeal before Hon'ble Calcutta High Court for the A. Y 2009-10 against the order of ITAT, Kolkata in I T.A No. 1096/KoI/2014 dt.10.06.2015 in respect of disallowance of Excise duty and interest thereon, which is yet to be disposed off. To maintain judicial consistency, it is held that payment of excise duty amounting to Rs.10,00,00,000/- are not eligible for deduction u/s 43B of the 1 T. Act'1961. In view of facts and circumstances described above, the claim of deduction for payment of Rs.10,l3,20,792/- towards Excise Duty and fine/penalty pertaining to A. Ys 2001-02 to 2007- 08 and paid in A. Y 2008-09 is liable to be disallowed, but fine/penalty amounting to Rs.13,20,792/- is already disallowed in order u/s 143(3) dated 31.12.2010. Hence, the assessee's claim of deduction for payment of Rs.10,00,00,000/- towards excise duty pertaining to A. Y 2001-02 to 2007-08 and paid in the A. Y 2008-09 is disallowed and added back to the total income of the assessee. Penalty proceedings u/s 271(l)(c) is being initiated separately on this issue.”
Aggrieved, assessee preferred an appeal before the Ld. CIT(A), who allowed the assessee’s ground of appeal by following the decision of the ITAT on this issue in assessee’s own case in AY 2009-10. Aggrieved, revenue is before us.
4. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the claim of assessee was allowed by the Ld. CIT(A) taking note of the decision of ITAT in assessee’s own case for AY 2009-10 passed on 10.06.2015 wherein the Tribunal has held as under: “11. It is not denied by the ld. D.R. before us that the excise duty paid by the assessee is covered by the provisions of section 43B(a). Excise duty is a duty imposed by the Central 2
Loknath Prasad Gupta, AY 2008-09 government under the Central Excise Duty Act. The provisions of section 43B(a), in our opinion, are explicit clear and it allows the deduction in computing the income under the head “income from business” in the year in which the excise duty is actually paid by the assessee irrespective of the previous year in which the liability to pay such sum arise by the assessee, according to the method of accounting regularly employed by the assessee. In view of specific provisions of section 43B(a), it is a case where no other view can be taken. The only view possible in view of the specific provisions of section 43B(a) is that the excise duty has to be allowed in the year in which it is actually paid. It is not denied by the revenue that the assessee has paid the excise duty during the impugned assessment year. Since dictum of law on this count does not require any other interpretation, therefore, we are of the view that the order passed by the Assessing Officer cannot be regarded to be erroneous coupled with the errors. For invocation of the provisions of section 263 both the conditions that the order passed by the Assessing Officer is erroneous as well as prejudicial to the interest of the revenue must be satisfied. Since, in our opinion, there was no error in the order of the Assessing Officer allowing the deduction to the assessee in the original assessment passed under section 143(3) in respect of the excise duty amounting to Rs.29,17,01,515/- in respect of which the proceeding under section 263 has been carried out by the CIT, we, therefore, on this basis itself, set aside the order of the CIT passed under section 263.”
We note that as per sec. 43B(a), it allows deduction in computing the income under the head “Income from Business” in the year in which the excise duty is actually paid by the assessee, irrespective of the previous year in which the liability to pay such sum arise by the assessee, according to the method of accounting regularly employed by the assessee. therefore, as per sec. 43B(a) of the Act, the excise duty has to be allowed in the year in which it is actually paid. It is not the case of the Revenue that the assessee has not paid the excise duty during the assessment year under consideration. In such a scenario, we do not find any infirmity in the order passed by the Ld. CIT(A) on the issue and, therefore, we uphold the impugned order of Ld. CIT(A). We, therefore, dismiss this ground of appeal of revenue.
5. In the result, appeal of Revenue is dismissed. Order is pronounced in the open court on 22/06/2018 Sd/- Sd/- (M. Balaganesh) (Aby. T. Varkey) Accountant Member Judicial Member
Dated :22nd June, 2018 JD(Sr.P.S.)
Loknath Prasad Gupta, AY 2008-09 Copy of the order forwarded to:
1. 1. Appellant – ACIT, Central Circle-3(3), Kolkata. 2 Respondent – Shri Loknath Prasad Gupta, Ramkrishna Dev Path, Titagarh, 24 Parganas (N), Kol-700 119..
3. The CIT(A) - 21, Kolkata. (sent through e-mail)