Commissioner Of Income Tax,Puducherry v. M/S.dxn Herbal Manufacturing Industries Pvt. Ltd., Mannadipet,Pondicherry

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 07.9.2015 CORAM : THE HONOURABLE MR.JUSTICE V.RAMASUBRAMANIANANDTHE HONOURABLE MR.JUSTICE T.MATHIVANAN T.C.A.No.730 of 2015 Commissioner of Income Tax,Puducherry. ...Appellant Vs M/s.DXN Herbal Manufacturing Industries Pvt. Ltd., Mannadipet,Pondicherry. ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against theorder dated 5.12.2014 in I.T.A.No.526/Mds/2013 on the file of theIncome Tax Appellate Tribunal, Madras 'B' Bench, against the order ofthe Commissioner of Income Tax (Appeals) XII, Chennai - 34, dated27.12.2012 and made in ITA No. 317/2011-2012, against the order ofthe Joint Commissioner of Income Tax, Pondicherry, dated 16.12.2011and made in PAN/G.I. No. /D-16. For Appellant : Mr.J.Narayanasamy JUDGMENT WAS DELIVERED BY V.RAMASUBRAMANIAN,J This appeal is by the Revenue raising the following question oflaw : “Whether on the facts and in the circumstances of thecase, the Tribunal was right in holding that the duty paidby the assessee in advance under protest by treating thepayment as loan and advance in the balance sheet withoutdebiting the payment in the profit and loss account isallowable as a deduction under Sections 37 and 43B ?“ https://hcservices.ecourts.gov.in/hcservices/ 2. Heard Mr.J.Narayanasamy, learned Standing Counsel for theRevenue. 3. The assessee is engaged in the sale of ayurvedic products. Forthe assessment year 2009-10, the assessee filed original return ofincome on 28.9.2009 admitting a particular total income afterclaiming deduction under Section 80IB. Subsequently, the assesseefiled a revised return of income admitting a total income, which waslesser than what was reflected in the original return and claiming adeduction under Section 80IB to the extent little lesser than thededuction as original claim. 4. The revised return was processed under Section 143(1) and thecase was selected for scrutiny. A notice under Section 143(2) wasissued. In the course of scrutiny, it was found that the assesseeclaimed a deduction of Rs.3,30,39,169/- as excise duty paid. Theclaim was made under 43B on payment basis. But unfortunately, thesaid payment had been made pursuant to a conditional order passed bythe High Court in a litigation between the assessee and theDepartment of Central Excise. In other words, the liability of theassessee to pay excise duty had not crystallized or at least attainedfinality. Therefore, the assessee did not show this amount in theprofit and loss account, but showed it under the heading of loans andadvances in the fond hope of getting a refund after succeeding in thelitigation. 5. The Assessing Officer rejected the claim for deduction underSection 43B on the ground that the amount was not reflected in theprofit and loss account. The Commissioner (Appeals), by an orderdated 27.12.2012, allowed the claim of the assessee on the groundthat once the amount had actually been paid, though under protest, itis a business expenditure incurred and paid during the year.Therefore, the Commissioner (Appeals) held that the payment made wasan allowable expenditure incurred under Section 37 as well as underSection 43B. 6. The Revenue filed a further appeal to the Tribunal raising aspecific ground in ground No.2 to the effect that if the assessee hadnot claimed the expenditure in its books of accounts, but had shownthe same only as advance receivable in the balance sheet, thededuction could not have been allowed. The grievance of the Revenueis that without considering the said ground of attack, the Tribunaldismissed the appeal of the Revenue. 7. As rightly pointed out by the Tribunal in paragraph 5 of itsorder, the assessee has actually paid the said amount as excise duty 6. The Revenue filed a further appeal to the Tribunal raising aspecific ground in ground No.2 to the effect that if the assessee hadnot claimed the expenditure in its books of accounts, but had shownthe same only as advance receivable in the balance sheet, thededuction could not have been allowed. The grievance of the Revenueis that without considering the said ground of attack, the Tribunaldismissed the appeal of the Revenue. 7. As rightly pointed out by the Tribunal in paragraph 5 of itsorder, the assessee has actually paid the said amount as excise duty in the relevant previous year for enabling them to move the goods outof their factory. This payment was made pursuant to an order passedby this Court. The fact that the assessee has taken up the matter onappeal to the Supreme Court on their litigation with the Departmentof Central Excise, would not make the payment a non payment. Theheading, under which, the assessee has incurred expenditure is only aduty payment. Therefore, the Tribunal was right in holding that theassessee satisfied both the statutory provisions of Sections 37 and43B. 8. Mr.J.Narayanasamy, learned Standing Counsel pointed out thateven the third ground raised by the Department to the effect that theassessee failed to produce any order of excise duty or demand noticeof any other statutory authorities for proving the liability was notconsidered by the Tribunal. 9. But, we do not think that the Department can ask for anythingmore than the factum of payment. The actual payment of the amount wasnot disputed even in the order of the Assessing Officer. What theAssessing Officer has recorded is that no order or demand of exciseduty served upon the assessee was produced. But, the AssessingOfficer has recorded the fact that even in the order of the HighCourt, it was mentioned that the goods moved out of the factory afterpayment. The point that was raised by the Assessing Officer was thatthere was no demand on the part of the Department. Thecrystallization of demand may not really be a ground to suspect theactual payment. In any case, it is a question of fact. Hence, we areof the considered view that the question of law raised by theDepartment does not arise for consideration. 10. Accordingly, the tax case appeal is dismissed. Sd/-Assistant Registrar(CO) //True Copy//Sub Assistant RegistrarRS To 1. The Income Tax Appellate Tribunal, Madras 'B' Bench. 2. The Commissioner of Income Tax (Appeals)-XII, Chennai - 34. 3. The Joint Commissioner of Income Tax, Pondicherry. SV (CO)PSI (28.09.2015) T.C.A.No.730 of 2015