Page 108 - ELT_15th June 2020_VOL 372_Part 6th

786 EXCISE LAW TIMES [ Vol. 372

count’ - Assessee could set off sales tax against his liability on sales of finished
goods i.e. vehicles - High Court correct in disallowing deduction of amount in
sale tax recoverable account - Haryana General Sales Tax Act, 1973 - Section
43B of Income Tax Act, 1961. [para 31]
Appeals dismissed
CASES CITED
Berger Paints India Ltd. v. Commissioner of Income Tax — 2004 (165) E.L.T. 488 (S.C.)
— Distinguished .................................................................................................................. [Paras 28, 29]
Collector v. Dai Ichi Karkaria Ltd. — 1999 (112) E.L.T. 353 (S.C.) — Distinguished .................. [Para 25]
Eicher Motors Ltd. v. Union of India — 1999 (106) E.L.T. 3 (S.C.) — Distinguished ........... [Paras 19, 20]
Lakhan Pal National Ltd. v. ITO — (1986) 162 ITR 240 — Referred ................................................. [Para 28]
REPRESENTED BY : S/Shri S. Ganesh, Sr. Advocate, Ms. Kavita Jha,
AOR, Ms. Devika Jain and Anant Mann, Advocates,
for the Appellant.
S/Shri K. Radhakrishnan, Arijit Prasad, Sr. Advo-
cates, Mrs. Anil Katiyar, AOR, Ms. Deeksha Rai and
S.A. Haseeb, Advocates, for the Respondent.
[Judgment per : Ashok Bhushan, J.]. - By these appeals the assessee has
challenged the judgment of the High Court of Delhi dated 7-12-2017 deciding the
Income Tax Appeal No. 31 of 2005. ITA No. 31 of 2005 related to Assessment year
1999-2000 and ITA No. 442 of 2005 related to Assessment year 2000-2001, in both
the appeal similar questions were answered against the assessee. For deciding
these two appeals it is sufficient to notice the facts in CA No. 11923 of 2018 for
Assessment Year 1999-2000. The High Court by the impugned judgment has af-
firmed the views of Income Tax Appellate Tribunal on the questions which have
been raised in this appeal. The Assessing Officer as well as the Commissioner of
Income Tax (Appeals) has not accepted the claim of the appellant. The appellant
(hereinafter referred to as the “assessee”) is engaged in the business of manufac-
turing automobiles, which are chargeable to Excise Duty under the Central Ex-
cise Act, 1994. The assessment year in question is assessment year 1999-2000. The
assessee, a Company, has been engaged in manufacturing and sale of various
Maruti Cars and also trades in spares and components of the vehicles. It acquires
[excisable] raw materials and inputs which are used in the manufacturing of the
vehicles. The assessee had also been taking benefit of MODVAT credit on the
raw material and inputs used in the manufacturing. At the end of the Assess-
ment year 1999-2000 an amount of Rs. 69,93,00,428/- was left as unutilised
MODVAT credit. In the return it was claimed that the Company was eligible for
deduction under Section 43B of the Income-tax Act as an allowable deduction.
Similarly, the Company claimed deduction under Section 43B of an amount of
Rs. 3,08,88,171/- in respect of Sales Tax Recoverable Account.
2. The Assessing Officer passed assessment order dated 28-3-2002. The
Assessing Officer disallowed the claim of deduction of Rs. 69,93,00,428/- as well
as Rs. 3,08,99,171/-. Aggrieved by the assessment order, the assessee filed an ap-
peal before the Commissioner of Income Tax. The Commissioner of Income Tax
also sustained the disallowance of the above two items. An appeal to ITAT met
the same fate. The ITAT took the view that the advance payment of Excise Duty
which represented unutilised MODVAT credit without incurring the liability of
such payment is not an allowable deduction under Section 43B. The assessee
filed an appeal under Section 260A of the Income Tax Act in the High Court. The
EXCISE LAW TIMES  15th June 2020  108