Commissioner Of Income Tax v. Digvijay Cement Co. Ltd.....opponent(S

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1004 of 2006With TAX APPEAL NO. 1005 of 2006 FOR APPROVAL AND SIGNATURE: 5 Whether it is to be circulated to the civil judge ?No ======================================COMMISSIONER OF INCOME TAX....Appellant(s) Versus DIGVIJAY CEMENT CO. LTD.....Opponent(s) ======================================Appearance: MR PRANAV G DESAI, ADVOCATE for the Appellant(s) No. 1NOTICE SERVED for the Opponent(s) No. 1 ======================================CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKER Date : 09/12/2014ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of these appeals, the appellant-Revenue has challenged the judgment and order dated 15.12.2005 passed by the Income Tax Appellate Tribunal, Rajkot Bench, in ITA Nos.414 & 415/Rjt/2005 for Assessment Years 1989-90 and 1990-91. 2.While admitting these appeals on 29.8.2006, this Court has framed the following substantial question of law: “Whether the Appellate Tribunal is right in law and on facts in deleting disallowance made under Section 43B in respect of interest on proforma credit under Central Excise Rules ?” 3.The facts of the present case are that the assessee had availed proforma credit of excise duty on purchase of raw materials. The excise department did not allow the claim and raised the demand of Rs.443.88 Lacs. The company lost its case before this Court. This Honourable High Court directed the company to pay the duty with interest thereon at 13%. The company claimed this interest liability as deduction. The said liability was disallowed on the ground that the company has contested this liability in the Honourable Supreme Court, where the matter was pending and it is also disallowed under Section 43-B. In the Assessment Year 1991-92 the Commissioner of Income Tax (Appeals) has stated that Assessing Officer has disallowed the amount on the ground that although the liability to pay interest is ordinarily deductible, since it is linked with the payment of taxes, it has to be disallowed under Section 43-B. The CIT (A) in the said year, has allowed the claim on the ground that the liability has arisen on account of decision of this Court and since the interest liability emanates from the decision of this Court and not due to any statutory provision of law, the same decision was followed by him in the Assessment Year 1992-93 and accordingly held the liability to be allowable. The Income Tax Appellate Tribunal following its own decision held that the facts being identical there is no reason to interfere with the order of CIT (A) for deleting the disallowance on account of proforma credits under Central Excise Rules, by invoking the provisions of Section 43-B and dismissed the appeal of revenue. Being aggrieved by said order, present appeal is preferred by the revenue. 4.Heard the learned advocate appearing for the revenue and considered the submissions. While passing the impugned order, the Tribunal has relied upon its earlier decision in assessee's own case pertaining to Assessment Years 1994-95 to 1997-98 in ITA No.4808 to 411/RJT/2004 dated 14.6.2005 and ITA No.157/RJT/2003 dated 8.6.2005, wherein it was observed as under: 4.Heard the learned advocate appearing for the revenue and considered the submissions. While passing the impugned order, the Tribunal has relied upon its earlier decision in assessee's own case pertaining to Assessment Years 1994-95 to 1997-98 in ITA No.4808 to 411/RJT/2004 dated 14.6.2005 and ITA No.157/RJT/2003 dated 8.6.2005, wherein it was observed as under: “9.Next grievance of the Revenue relates to disallowance on account of interest by proforma credit under Central Excise Rules, by invoking provisions of Section 43 B. Rival contentions have been heard. In the course of assessment, the AO disallowed assessee's claim of interest of Rs.57,70,426 on account of interest on proforma credit, by observing that the amount was not paid before filing the return, therefore, it warrants disallowance U/s. 43 B. From the record we find that the assessee company has availed proforma credit on excise duty on purchase of raw material. The excise department disallowed this claim and raised a demand. The assessee agitated this demand. The assessee agitated this demand before the Gujarat High Court but lost the case and the High Court directed the assessee to pay this amount with 13% interest. The assessee has claimed this interest as an expenditure which is arising out of the order of the High Court and not on account of any statutory provisions of law. Therefore, as per our considered view, the provision of Section 43 B is not applicable and the amount of interest claimed is allowable as a deduction U/s. 37 (1). The CIT (A) has allowed the assessee's claim for deduction by relying on the decision of ITAT, Ahmedabad Bench in the case of Shri Dinesh Mills Limited, and also Saurashtra Cement Limited.” 5.Not only that identical issue also came up for consideration before this Court in Tax Appeal No. 1917 of 2005 in the case of Commissioner of Income Tax v. Saurashtra Cement Ltd., wherein this Court has observed as under: “3. In the circumstances, it is not necessary to set out facts and respective contentions in detail. Today, by a judgment of even date, the reference on this issue has been answered by this Court against the revenue and in favour of the assessee. Hence, for the self-same reasons, the question in the present tax appeal stands answered accordingly in favour of the assessee and the appeal stands disposed of with no order as to costs.” 6.In that view of the matter, no elaborate reasons are required and we answer the question in favour of the assessee and against the Revenue. Both these Tax Appeals are dismissed accordingly. Sd/-(K.S.JHAVERI, J.) *malek Sd/-(K.J.THAKER, J)