Law:

Section:

Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deduction to be allowed only on actual payment - Assessment year 1984-85 - Assessee's claim under section 43B for deducting actual customs duty and excise duty paid on stock of raw material and finished goods was negatived on ground that amount paid had not been shown separately in profit and loss account - Assessee had accounted item on consumption basis, showing duty paid on raw materials held as closing stock, along with value of raw materials, under 'inventories' in Current Assets, of balance sheet - Whether, section 43B stipulates that before claiming deduction, assessee should have shown amount paid towards duty under a separate head and inclusion of it in valuation of current assets would disentitle him from claiming deduction under section 43B - Held, no - Whether fact that duty paid was not charged to profit and loss account by itself would disentitle assessee from claiming deduction - Held, no - Whether, therefore, assessee would be entitled to claim deduction under section 43B of custom and excise duty actually paid and shown as current assets in balance sheet and not charged to profit and loss account - Held, yes - Whether fact that part of custom duty which was paid in respect of raw materials which remained with assessee at end of year would not deprive assessee of benefit of claiming deduction in year in which duty had been actually paid - Held, yes FACTS The assessee imported some material required for the manufacturing of its products and paid import duty on it. The cost of the imported material inclusive of duty was taken to the profit and loss account only on consumption basis. The balance of import duty paid on the raw material held as closing stock was taken into the balance sheet as part of current assets under the heading 'Inventories'. Similarly, excise duty paid on finished goods held as closing stock was shown as part of the inventory under the current assets in the balance sheet. The assessee claimed deduction under section 43B of the actual customs and excise duty paid on the stock of raw material and finished goods. The Assessing Officer disallowed it on the…

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