HIGH COURT OF
Commissioner of Income-tax
v.
Hughes Escorts Communications Ltd.
MADAN B. LOKUR AND DR. S. MURALISDHAR, JJ.
IT APPEAL NO. 761 of 2007
August 17, 2007
Section 43B of the Income-tax Act 1961 - Business Disallowance certain
deductions to be allowed only on actual payment - Assessment year 1999-2000 -
Whether amount required to be paid under a Special Value Branch to Customs
authorities by assessee company was an allowable deduction under section 43B -
Held, yes
The assessee company claimed deduction under section 43B on the ground that it was required to make certain Special Value Branch (SVB) deposit with the Customs authorities. The Commissioner (Appeals) directed the Assessing Officer to allow the deduction claimed by the Assessing Officer to by the revenue the Tribunal upheld the view taken by the Commissioner (Appeals).
On further appeal:
It was found a perusal of the order passed by the Tribunal that the
Assessee really had no option but to make the payment as per the demand notice
issued by the Customs authorities. At the time of making the payment it was not
known whether the demand would fall short of the actual liability or in excess
of the actual liability. Taking this into consideration, the Tribunal felt that
it would not be appropriate to limit the claim of the Assessee only to the
extent of the actual liability. It was found that there was no error in
directing the Assessing Officer to make a verification with regard to the
excess payment, it any and to tax the amount if had not already been taxed. The
Tribunal also limited the liability of the actual amount to the assessment year
under consideration. [
No fault was found in the view taken by the Tribunal primarily because
the liability was required to be discharged by the assessee on demand and the
assessee had no option but to make the payment. This clearly fell within
section 43B(a). [
The appeal was dismissed accordingly.