- (1.)This appeal has been admitted by an order dated 9 August 2004 by this Court on the following substantial question of law in respect of assessment year 1997-98;-
"When the Assessing Officer himself has not been allowing a claim for deduction on account of actual payment of Customs and Excise Duty relatable to stock of raw materials and finished goods lying in bond in the year in which it is actually paid and was disallowing the claim for deduction the difference between the amount of such levies pertaining to closing stock which was to be deducted and that pertaining to opening stock which was to be added back is a positive one, whether the Tribunal was justified in upholding the action of the Assessing Officer in adding back the negative difference of Rs. 10,56,000/- between the said levies pertaining to closing stock amounting to Rs. 3,51,78,000/- and opening stock amounting to Rs. 3,62,34,000/- ?"

(2.)The short fact of this case is as follows;-
The assessee has been carrying business manufacturing and sale of paints, varnishes submitted the return on 28.11.1995 showing an income or Rs. 18,25,62,280/-. Thereafter the assessee had filed a revised return on 30.3.1998 showing a total income of Rs. 17,99,30,660 and the said revised return was also processed under Section 143(1)(a) on 11.1.1999 along with an adjustment of Rs. 1,44,568/- under Rule 6B, which was made in the first return filed by the assessee. The controversy arose in this case when the assessing officer on account of payment of customs and excise duty in his order of assessment arrived at the total income of Rs. 19,26,13,050/- after making disallowances of deduction claimed by the assessee. The matter was carried in appeal before the C.I.T.(A), who in turn reversed the order of the Assessing Officer and deleted additions made by the Assessing Officer. The addition relates to the deduction claimed on account of payment of customs and excise duty in respect of the closing and opening stocks. The appeal was taken to the Commissioner of Income Tax [Appeal] who, however, reversed the decision of disallowance of deduction and allowed the deduction claimed by the assessee. The learned Tribunal by its judgment and/or order dated 19.12.2002 reversed the judgment and/or order of the Commissioner of Income Tax (Appeals) and restored the order of Assessing Officer as far as disallowance of deduction on account of payment of customs and excise duty is concerned.

(3.)Against this portion of the judgment and/or order, the assessee approached us.