2014 (9) TMI 826

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....n are 1979-80 and 1980-81. The assessee claimed before the Income Tax Officer for depreciation at the rate of 15% on its machinery for both years. He relied upon a decision of the Appellate Tribunal in case of Nandan Textile Ltd. rendered in Income Tax Appeal No.3166(Bom)/1977-78 decided on 8th December, 1978. The Income Tax Officer did not accept the assessee's claim for depreciation at the higher rate. He was of the view that the assessee was not doing processing work but mainly doing the work of blending and bleaching of cloth. Further, the decision in case of Nandan Textiles Pvt. Ltd. was the subject matter of pending reference before this court at the instance of department. The Assessing Officer, therefore, allowed depreciation at....

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....hat furnishing of a bank guarantee to secure the demand pending adjudication by the Hon'ble Supreme Court or a Court of law would not enable the assessee to claim depreciation or the benefit. It is only the actual payment of duty that would enable him to claim the benefit. 6. Mr.Suresh Kumar submits that thereafter in the case of Oswal Agro Mills Ltd. and Anr. Vs. Assistant Collector of Central Excise Division, Ludhiana and Others (1994) 2 SCC 546 the Hon'ble Supreme Court considered a identical issue and held in favour of the revenue that furnishing of a bank guarantee is not equivalent to payment of excise duty. 7. In the present case as well we find that the Central Excise Authorities levied excise duty in relation to the f....

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....not be payable but assuming that it is payable, it is actually paid by way of discharge of FDRs in favour of the Government of India. 9. After having heard Mr.Suresh Kumar and perusing with his assistance, the judgment of the Supreme Court in case of Oswal Agro Mills Ltd. and Another (supra) we are of the opinion that furnishing of a bank guarantee for whole or part of the disputed excise duty pursuant to the order of the Court is not equivalent to payment of excise duty, that is, only securing the revenue and in terms of the conditions imposed by the order of the Court. The bank guarantee cannot be straightway encashed by the revenue and until pendency of the proceedings. This was therefore not equivalent to the payment. The tribunal ha....