II. Direct Tax Case laws:
1. OSWAL AGRO MILLS LTD versus CIT, ITA no.41 of 2000, Date of Order: 07.02.2014, Delhi High Court.
Whether S. 43B is applicable to contractual liability.
Held No.
Section 43B applies only in cases of statutory liability. By virtue
of the said section, a statutory liability is not deductable in the year
in which it accrues if the same remains unpaid. A deduction with
respect to a statutory liability is allowed only on payment of the same.
This provision would have no application insofar as the assessee is
concerned, as the liability to pay the amount of additional customs duty
on behalf of the importers as and when they are called upon to
discharge the same is, clearly, a contractual liability and not a
statutory liability as discussed earlier. Therefore, in our view, the
question whether the said liability should be considered as deductible
under Section 43B of the Income Tax Act does not arise.
Whether arranging bank guarantee would amount to payment of statutory liability in order to suffice provisions of S. 43B
Held No.
The Decision of Hon’ble Supreme Court in the case of CIT vs. Mcdowell Co Ltd. (2009)10 SCC 755 relied
(Please click here to view the Judgment)
2. COMMISSIONER OF INCOME TAX vs. BHOGILAL RAMJIBHAI ATARA, TAX APPEAL NO. 588 of 2013, Date: 04/02/2014, High Court of Gujarat.
Unclaimed
liability does not attracts S. 41(1) even if creditors not traceable,
since the same were not written off by assessee.
The view of Tribunal upheld by the Hon’ble High Court, and the same provided as under:
“There is no finding that the impugned liabilities were trading
liabilities in respect of which the assessee had obtained any benefit or
advantage either by way of their remission or cessation in the year
under appeal. The assessee has not written off the impugned liabilities
shown in the accounts. The A.O. has not brought sufficient material on
records to establish as to how the ingredients of section 41(1) are
satisfied so as to bring the impugned addition within its ambit. ?The
judgment of Hon’ble Jurisdictional High Court in C.I.T. V. Nitin Garg,
cited supra is squarely applicable. In this view of the matter ground
No.1 taken by the assessee is allowed.
On the facts of the case, we do not consider it appropriate to
restore the matter to the file of the CIT (A)/AO so as to give them
second inning in order to establish the applicability or
non-applicability of section 4 1(1). It is a settled principle of law
that a statutory provision can be invoked only when the conditions
stipulated by it are established. In the present case, conditions of
section 41(1) are not satisfied. It is the policy of law to ensure that
the litigations are brought to an end expeditiously. In this view of the
mater, matters under appeal cannot be restored at the request of the
parties so as to give second inning to the parties to establish their
cases.”
(Please click here to view the Judgment)
|