Law:

Section:

Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment - Assessment year 1992-93 - Whether significance of section 43B is that if a deduction is claimed in respect of any tax or duty paid it should be on actual basis and on making payment - Held, yes - Whether section 43B does not by itself or per se disallow any value from cost, but only stipulates condition that if value of purchases includes a duty component, that should be made good to hilt - Held, yes - Whether thus, an assessee is duty bound to make good actual duty it has paid on account of purchase of raw materials for producing finished products by producing proof of payment, etc., and in absence of such proof assessee could not reduce said amount from value of its closing stock - Held, yes [In favour of revenue] FACTS The assessee claimed that the amount of Modvat credit was to be reduced from the value of its stock-in-trade at the end of the accounting year, on the premise that the amount represented the excise duty paid by the assessee in respect of the purchase of inputs which were made use of by the assessee for the purpose of assembling or producing computers, the machinery part of which is popularly known as hardware. This deduction was not allowed by the Assessing Officer and, therefore, the amount remained with the value of the closing stock, boosting the profit figure to this extent. On appeal, the Commissioner (Appeals) allowed the claim of the assessee. On further appeal, the Tribunal held that the Assessing Officer was not justified in adding the amount on account of MODVAT credit and, therefore, upheld the view of the Appellate Commissioner. In the instant appeal, the revenue contended that the question relating to the so-called addition or otherwise on account of MODVAT credit has been examined by this Court in the case of the very assessee, although for a subsequent assessment year, in ITA No. 811 of 2006 and connected appeals, in terms of dated 17-1-2012 and the matter having been remanded to the Assessing Officer on this aspect, particularly for giving an opportunity to the assessee to make good its justification for…

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