- (1.) The subject-matter of challenge in this appeal is a judgment and order dt. 28th Feb., 2003 by which the appeal preferred by the Revenue was allowed by the Tribunal holding that: Admittedly, the impugned amount of excise duty of Rs. 85.71 lakhs was actually not provided in the books of accounts not claimed by the assessee as a deduction while computing the business profits for the earlier assessment years, as per the provisions of the law existing for the said earlier assessment years, cannot be a ground for allowing as a deduction out of the profit of the relevant asst. yr. 1984-85 by taking shelter of s. 43B. As per opinion, s. 43B puts a further rider for allowing any deduction and cannot be taken as a gateway for allowing deductions in respect of the expenditure for which the liability arose in the earlier years but the same was not provided in the books of accounts or claimed in the computation of income in those earlier years in which s. 43B was not in existence. Earlier provisions of s. 4 of the I.T. Act, 1961, income-tax shall be charged for any assessment year, in respect of the total income of the previous year. For arriving at the total income of the previous year, only the expenditure pertaining to that previous year to be deducted. It is not open to assessee to deduct the expenses of earlier years or subsequent years for arriving at total income of that previous year. Aggrieved by the said order of the Tribunal, the assessee has come up in appeal.
(2.) Mr. Khaitan, learned senior advocate, appearing for the assessee appellant submitted that it would appear even from the order of the AO that he referred to the adjudicatory orders in respect of the show-cause cum demand notices dt. 10th Oct., 1977, 29th Sept., 1980 and 5th Nov., 1980 passed on 12th Feb., 1982. He submitted that the aforesaid three several demands were disputed by the assessee and the matter was set at rest by the order of adjudication passed on 12th Feb., 1982. The assessee had an option to prefer an appeal within three months. The assessee, however, was advised not to contest the matter any further. The money as such was paid before the time to prefer an appeal had expired. It is, in those circumstances, that the claim for deduction was made during the asst. yr. 1984-85. Mr. Khaitan submitted that when the payment was made, s. 43B had already been introduced to the statute whereunder deduction can only be made after the payment had, in fact, been made. He contended that even without the aid of s. 43B the position would not have been much different. He drew our attention to a Division Bench judgment of this Court in the case of CIT vs. Orient Supply Syndicate, 1982 134 ITR 12 wherein the Division Bench opined as follows: In that view of the matter, we are of the opinion that the Tribunal was correct in allowing this deduction. We would, however, say that it is not in all cases correct to say that a statutory liability discharged in a particular year become eligible for deduction in the year in question in the mercantile system of accounting. It depends on the facts and circumstances of the case and on the statutory provisions. Here in part the statutory liability admittedly accrued in the year in question and in part became real and enforceable in view of the facts in the year in question though referable to earlier years. But the reality of the situation was that, in substance, the liability accrued in the year in question. In that view of the matter, the decision of the Tribunal is sustained.
(3.) He, therefore, submitted that the Tribunal fell into an error of law in disallowing the deduction claimed by the assessee.;