TaxTMI 
TaxTMI 
TaxTMI 
2002 (11) TMI 82
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....oceeding for the assessment year 1988-89, the Assessing Officer found that the assessee debited a sum of Rs. 3,56,541 in March, 1987, being the customs duty paid in relation to the import of brass scrap weighing 17.433 kg. It was disclosed by the assessee that the aforesaid brass scrap had been shipped from Rotterdam vide bill of lading dated January 7, 1987. The customs house agent of the assessee was Frakcht-Forwardes and through them customs duty of Rs. 2,87,393 was paid in the beginning of March, 1987, and further additional duty of Rs. 69,148 was paid on March 27, 1987. The aggregate of the two amounts comes to Rs. 3,56,541. The assessee thus claimed deduction of the above amount in the assessment year 1988-89 which was not allowed by the Assessing Officer on the ground, inter alia, that in view of the provisions contained in section 43B of the Act, the claim of deduction towards payment of customs duty is permissible only, in which the actual payment is made. Since the payment was made in the month of March, 1987, the deduction can be claimed in the assessment year 1987-88 and not in the assessment year 1988-89, and thus disallowed the deduction. The assessee being aggrieved ....
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....this appeal has been preferred by the Revenue. Shri A.N. Mahajan, learned standing counsel for the Income-tax Department (appellant), urged that the sum of customs duty paid by the assessee in March, 1987, is deductible only in the year in which it is actually paid, i.e., the assessment year 1987-88, and not in the assessment year 1988-89, and, therefore, both the learned Income-tax Commissioner (Appeals) and the learned Tribunal have not correctly appreciated the provisions contained in section 43B of the Act which permits deduction of sums paid in the year in which such sum is actually paid by the assessee. In support of his contention, he placed reliance on a judgment of the apex court rendered in the case of Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677 and on another judgment of the Calcutta High Court in the case of CIT v. Berger Paints (India) Ltd. (No. 1) [2002] 254 ITR 498. Relying on the aforesaid two judgments it is urged that in view of section 43B of the Act, the sum paid towards tax, duty cess or fee under any law shall be allowed in computing the income referred to in section 28 of that previous year in which such sum is actually paid by the assessee and, theref....
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....on any loan or borrowing from any public financial institution, in accordance with the terms and conditions of the agreement governing such loan or borrowing, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him. Provided that nothing contained in this section shall apply in relation to any sum referred to in clause (a) or clause (c) or clause (d) which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return: Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or before the due date as defined in the Expla....
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....s, who on the one hand claim the liability as deduction on the ground that they maintain accounts on mercantile or accrual basis and, on the other hand, they do not discharge the liability and dispute the same. The Supreme Court while considering the provisions contained in section 43B in the case of Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677, observed that section 43B was, therefore, clearly aimed at curbing the activities of those taxpayers, who did not discharge their statutory liability of payment of excise duty, employer's contribution to provident fund, etc., for long periods of time but claimed deductions in that regard from their income on the ground that the liability to pay those amounts, had been incurred by them in the relevant previous year. It was to stop this mischief that section 43B was inserted. Explanation 1 to section 43B is for removal of doubts. It provides that where a deduction in respect of any sum mentioned in clause (a) or (b) of section 43B is allowed in computing the income of any previous year, being a previous year relevant to the assessment year in which the liability to pay such sum was incurred by the assessee, the assessee shall not be ent....