Page 115 - ELT_15th June 2020_VOL 372_Part 6th

2020 ] MARUTI SUZUKI INDIA LTD. v. COMMISSIONER OF INCOME TAX, DELHI 793

previous to the assessment year 1984-85. The Commissioner of Income-tax
initiated proceedings under section 263 of the Act on the ground that the
Assessing Officer had wrongly allowed the claim for deduction of an
amount of Rs. 98,25,833/- towards customs and Excise Duty paid during
the previous year but credited to the profit and loss account in closing stock
of goods under the provisions of Section 43B. The assessee relied upon the
judgment of the Gujarat High Court in Lakhanpal National Ltd. v. ITO [1986]
162 ITR 240 [hereinafter referred to as “Lakhanpal National Ltd.’s case”] in
support of its claim. The Commissioner of Income-tax took the view that
the Gujarat High Court’s decision was distinguishable on facts and, there-
fore, made an order under section 263 of the Act disallowing the claim of
the assessee. On appeal to the Tribunal, the Tribunal held that the Gujarat
High Court’s judgment in Lakhanpal National Ltd.’s case [1986] 162 ITR 240
was distinguishable and confirmed the order of the Commissioner of In-
come-tax. On an application made under section 256(1) of the Act at the in-
stance of the appellant-assessee, the Tribunal, inter alia, referred the follow-
ing question of law for the opinion of the High Court (see [2002 ] 253 IT 738,
739) :
“Whether, on the facts and in the circumstances of the case, the
Tribunal was right in law in rejecting the assessee’s claim for deduc-
tion of the excise and customs duties of Rs. 98,25,833 paid in the year
of account and debited in the profit and loss account, on the ground
that the crediting of the profit and loss account by the value of the
closing stock, which included the aforesaid duties, did not have the ef-
fect of wiping out the debit to the profit and loss account?”
The High Court by its judgment dated September 24, 2001, in I.T.R.
No. 213 of 1993 (see [2002] 253 ITR 738), answered the question referred in
favour of the Revenue and against the assessee.”
29. This Court in Berger Paints Ltd. (Supra) upheld the view of assessing
officer and decided the question in favour of the assessee. This Court held that
the Commissioner of Income Tax has incorrectly distinguished the judgment of
Lakhan Pal National Ltd. Case.
30. As noted above in the above case, the claim of the assessee was that
entire sum of Rs. 5,85,87,181/- was the duties actually paid during the relevant
previous year. The above was not a case for unutilised MODVAT credit, hence,
the said case cannot be held to lay down any ratio with respect to allowable de-
duction under Section 43B in respect of unutilised MODVAT credit.
31. Now coming to the second question i.e. with regard to disallowance
of Rs. 3,08,79,171/- in respect of Sale tax recoverable amount, the High Court in
paragraph 52 of the judgment has noticed relevant facts in above reference in
following words : -
“52. The facts are the Assessee pays sales tax on the purchase of raw
materials and computers used in the manufacture of cars. Though, the
sales-tax paid is part of the cost of raw material, the Assessee debits the
purchases net of sales tax; the sales tax paid is debited to a separate account
titled “Sales-tax Recoverable A/c”. Under the Haryana General Sales Tax
Act 1973, the Assessee could set off such sales-tax against its liability on the
sales of the finished goods i.e. cars. Whenever the goods are sold, the tax on
such sales is credited to the aforesaid account.”
32. The High Court had rightly answered the above question in favour
of the Revenue relying on its discussion with respect to Question No. 1. The sales
EXCISE LAW TIMES  15th June 2020  115