TaxTMI 
TaxTMI 
1977 (9) TMI 30
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....s registered office at London. It is engaged in the business of winning and selling manganese ore. In the relevant assessment year the company was assessed as a non-resident. The company was assessed to provisional duty on the consignments of manganese ore as indicated in the letter dated september 29, 1952, from the Collector of Central Excise, Madras, addressed to the assessee. A relevant extract of the Tribunal (sic). The letter clearly stated that it was proposed to reassess the consignments on the basis of the known cost of the goods of the like kind and quality which could be delivered at the time and place of exportation in the ordinary course of business. In the year 1958 the compan y finally got various demands as under : Date o....
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....espect of the same assessee had been allowed by the Tribunal in the earlier year. It also rejected the contention of the revenue that the claim ought not to be allowed as no such claim was made before the Income-tax Officer. It is from this order of the Tribunal that the above question has been referred to us for our determination. Mr. Joshi, on behalf of the revenue, submitted that the Tribunal was not justified in permitting a deduction because the amount was not paid by the assessee. In fact, the assessee, according to him, disputed the liability to pay this amount. Apart from not making a payment, he did not make an entry even in the books of account for his liability. This being the position, according to his submission, the Tribuna....
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....in appeals, and (ii) that it had made no provision in its books with regard to the payment of that amount. The appeals to higher authorities or courts taken by the assessee contesting its liability to pay the sales tax ultimately failed. It was held by the Supreme Court that the moment a dealer made either purchases or sales which were subject to sales tax, the obligation to pay the tax arose. Although that liability could not be enforced till quantification was effected by assessment proceedings, the liability for payment of tax was independent of the assessment. The assessee, which followed the mercantile system of accounting, was entitled to deduct from the profits and gains of its business liability to sales tax which arose on sales mad....
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....ntitled to claim a deduction on the footing of the liability arising in the relevant accounting year. That such is the position even in respect of the taxes payable is also clear not only from this decision but also from a decision of the Madras High Court which has been approved by the Supreme Court in the above case. In Pope the King Match Factory v. Commissioner of Income-tax [1963] 50 ITR 495 (Mad), a similar demand for excise duty came to be considered before the Madras High Court. Such a demand was served on the assessee and though he was objecting to it and seeking to get the order of the Collector of Excise reversed, he debited this amount in his accounts on the last day of his accounting year, and claimed this amount as a deductibl....