2004 (2) TMI 4 - SC - Income Tax

Supreme Court favors appellant on excise/customs duty deduction under Income-tax Act

Berger Paints India Ltd. Versus Commissioner of Income-Tax

The Supreme Court ruled in favor of the appellant-assessee in a case concerning the deduction of excise and customs duties under section 43B of the ... Assessee is a company engaged in the manufacture and sale of paints, varnishes and other allied products- Tribunal is justified in law in directing the Income-tax Officer to allow the amount being Central excise and customs duty under section 43B of the Act on the ground that the said amount has been included in the value of closing stock Issues:1. Claim for deduction of excise and customs duties under section 43B of the Income-tax Act, 1961.2. Interpretation of judgments by various High Courts and the Income-tax Appellate Tribunal.3. Challenge to the principle laid down in Lakhanpal National Ltd.'s case.4. Decision-making process of the Commissioner, Income-tax Appellate Tribunal, and High Court.Issue 1: Claim for deduction of excise and customs duties under section 43B of the Income-tax Act, 1961:The case involved the appellant-assessee claiming deductions for excise and customs duties under section 43B of the Income-tax Act for various assessment years. The appellant argued that the duties actually paid during the relevant previous year should be deductible. The Commissioner of Income-tax challenged this claim, leading to a series of appeals and references to the High Court.Issue 2: Interpretation of judgments by various High Courts and the Income-tax Appellate Tribunal:The judgment highlighted the interpretation of section 43B by various High Courts and the Income-tax Appellate Tribunal. The Gujarat High Court's decision in Lakhanpal National Ltd.'s case was followed by the Bombay High Court and the Madras High Court. The Special Bench of the Income-tax Appellate Tribunal also considered conflicting views and made observations supporting the assessee's claim for deductions under section 43B.Issue 3: Challenge to the principle laid down in Lakhanpal National Ltd.'s case:The Revenue attempted to challenge the principle laid down in the Gujarat High Court's judgment in Lakhanpal National Ltd.'s case. However, the Supreme Court found that the judgments of other High Courts and the Income-tax Appellate Tribunal had followed this principle, and none of these decisions had been challenged. The Supreme Court held that there was no just cause to depart from the principle established in Lakhanpal National Ltd.'s case.Issue 4: Decision-making process of the Commissioner, Income-tax Appellate Tribunal, and High Court:The Supreme Court set aside the judgments of the Calcutta High Court for the assessment years in question. It ruled in favor of the assessee, citing the uniform view taken by other High Courts. The Supreme Court emphasized that a certificate to appeal should have been granted if the Calcutta High Court desired to depart from the uniform view. The appeal was allowed with no order as to costs.