Law: Income Tax Act, 1961

Section: 37

Income-tax--Business expenditure---Mercantile system of accounting---Customs duty of earlier assessment years claimed in assessment year 1983-84---Original demand for customs duty on 30-10-1980---Nullified on appeal by Central Board on 28-3-1981---Fresh demand, dated 27-3-1982---Liability accrued in year of demand---Deductible in assessment year 1983-84---Indian Income Tax Act, 1961, S. 37. The assessee, a company engaged in the manufacture and sale of electronic components; followed the mercantile system of accounting and claimed deduction of a sum of Rs.70.56 lakhs for the assessment year 1983-84 being the customs duty payable in respect of the assessment years 1975-76 to 1983-84. The Income-tax Officer rejected the claim on the ground that the liability to pay duty had not arisen but the Tribunal upheld the claim on the ground that since the demand was subsisting the liability also subsisted and accrued during the relevant assessment year and hence the deduction was allowable. On a reference: Held, that the original order of demand, dated October 30, 1980, passed by the customs authorities was nullified in appeal by order, dated March 28, 1981; of the Central Board of Excise and Customs. Therefore, the order dated October 30, 1980 had become non est. Thereafter, the original order of demand was made by the Collector of Customs on March 27, 1982, within the relevant assessment year 1983-84. Therefore, the deduction of customs duty claimed was allowable in the assessment year 1983-84. Kedarnath Jute Mfg. Co. Ltd. v. CIT (1971) 82 ITR 363; (1971) 28 STC 672 (SC); Pope the King Match Factory v. CIT (1963) 50 ITR 495 (Mad.) and Salem Cooperative Central Bank Ltd. v. CIT (1993) 201 ITR 697 (SC) ref. JUDGMENT ARIJIT PASAYAT, C.J.---Pursuant to the direction given in an application under section 256(2) of the Income Tax Act, 1961 (in short, "the Act"), the following question has been referred for opinion of this court by the Income-tax Appellate Tribunal, Cochin ench (in short, "the Tribunal"), alongwith a statement of case: "Whether, on the facts and in the circumstances of the case, the assessee is entitled to claim deduction of the customs duty in the assessment…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492