MARUTI SUZUKI INDIA LTD. Vs. COMMISSIONER OF INCOME TAX
LAWS(SC)-2020-2-14
SUPREME COURT OF INDIA
Decided on February 07,2020

Maruti Suzuki India Ltd. Appellant
VERSUS
COMMISSIONER OF INCOME TAX Respondents




JUDGEMENT

ASHOK BHUSHAN,J. - (1.)By these appeals the assessee has challenged the judgment of the High Court of Delhi dated 07.12.2017 deciding the Income Tax Appeal No.31 of 2005. ITA No.31 of 2005 related to Assessment year 19992000 and ITA No.442 of 2005 related to Assessment year 20002001, 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 19992000. The High Court by the impugned judgment has affirmed 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 manufacturing automobiles, which are chargeable to Excise Duty under the Central Excise Act, 1994. The assessment year in question is assessment year 19992000. 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 exiceable 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 Assessment year 19992000 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 28.03.2002. 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 appeal 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 High Court answered question Nos.(ii) and ((iii) relating to the above noted disallowance in favour of the Revenue. Aggrieved by the judgment of the High Court, these appeals have been filed.
(3.)The two questions which were answered by the High Court in favour of the Revenue which were subject matter of this appeal are question Nos.(ii) and (iii) as framed by the High Court are to the following effect:
"(ii) Whether the ITAT had committed an error of law in upholding the disallowance of the amount of Rs.69,93,00,428/ which represented MODVAT credit of Excise Duty that remained unutilised by 31st March, 1999 i.e. the end of the relevant accounting year ?

(iii) Whether the ITAT has committed an error of law in upholding the disallowance of Rs.3,08,99,171/ in respect of Sales Tax Recoverable Account, under Section 43B of the Income tax Act ?"

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