Case Law Details
Johnson and Johnson Ltd. Vs DCIT (Bombay High Court)
In a landmark decision, the Bombay High Court has clarified a significant point regarding the income tax deduction available on excise duty claims. The court’s judgment in the cases of Johnson and Johnson Ltd. Vs Deputy Commissioner of Income Tax (DCIT) sheds light on whether claiming an excise duty deduction amounts to a double deduction under the Income Tax Act, 1961. This article delves into the details of the court’s ruling, its implications, and the principles underlying the decision.
The Bombay High Court’s decision emerged from two appeals with identical facts and legal questions, albeit with different amounts. Both appeals were directed against a common order passed by the Income Tax Appellate Tribunal (ITAT) on 19th August 2002. The central issue revolved around the deduction of Rs. 60,99,426/- representing the excise duty claimed under Section 43B of the Income Tax Act, 1961.
The ITAT had initially found that allowing this deduction would result in a double deduction, which is not permissible under the law. However, the Bombay High Court re-examined the case, particularly in light of the Supreme Court’s decision in Burger Paints (India) Ltd. v. CIT, which reversed an earlier judgment that had influenced the ITAT’s decision.
The High Court’s analysis focused on the treatment of excise duty in the accounts of unsold stocks at the end of the previous year. It was noted that the excise duty, though not treated as an expense in the accounts, was separately claimed and allowed in the income tax assessments. The court found that the Tribunal erred in its conclusion that the deduction would amount to double deduction.
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