Case Law Details
Directions issued by the Customs Department, the payment of customs duty has been made though the same has been shown as advance or a note has been appended in the accounts for contingent liability. Therefore, in our view the Assessee has made the payment of customs duty only when the liability has accrued on it. Since the customs duty has been paid to acquire the plant and machinery and therefore, it has to be capitalized, moreover, there is no dispute to the fact that such expenditure cannot be capitalised as observed by the assessing officer in his order in paragraph 2.3. The obligation to pay the excise duty arose during the impugned year and therefore, the liability to pay the amount had accrued to the Assessee during the year itself and the said liability cannot be said to be contingent and cannot be said to be an advance payment. The order of the learned Commissioner (Appeals) is a reasoned order, who has rightly accepted the contention and explanation of the Assessee and has rightly allowed the claim of the Assessee for capitalization of the payment of excise duty amounting to Rs. 4,25,34,027 and has rightly directed the assessing officer to allow the depreciation on the said amount. We find no infirmity in the order of the learned Commissioner (Appeals). Thus ground No. 1 of the revenue is dismissed.’
The ld. senior DR has not been able to distinguish the facts of the case. The issue is also no longer res-integra. Therefore, following the decision of the Hon’ble High Court, it is held that the assessee is entitled to deduct depreciation allowance on the WDV of the amount representing capital expenditure on account of payment of customs duty.
INCOME TAX APPELLATE TRIBUNAL, DELHI
ITA No. 900(Del)/2012
Assessment Year: 2008- 09
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