Case Law Details
Aroma Enterprises (India) Ltd. Vs ACIT (ITAT Ahmedabad)
ITAT Ahmedabad held that as assessee was not legally obliged to pay customs duty amount, additional claim towards payment of such customs duty cannot be allowed under provisions of section 43B(a) of the Income Tax Act.
Facts- The assessee made a fresh claim of customs duty expenses amounting to Rs. 1,53,45,844/- before AO during the course of assessment proceedings. The contention of the assessee was that the assessee is eligible to claim the aforesaid expenses towards customs duty expenses, which had been paid by the assessee under protest and had not been charged to the Profit & Loss Account. However, AO did not allow the claim of the assessee on the ground that deduction on account of unclaimed customs duty paid by the assessee cannot be allowed since AO has no power under the Income Tax Act to allow expenses made by the assessee during the year, but not claimed by the assessee in the return of income.
CIT(A) rejected the allowability of the claim u/s. 43B(a) of the Act. Being aggrieved, the present appeal is filed.
Conclusion- Held that in assessee’s case, the assessee was not required to pay customs duty under reference. The Ld. CIT(A) observe that in view of the aforesaid order passed by the concerned Customs Authority, since the assessee was not required to pay customs duty amounts to Rs. 1,53,45,844/- in all likelihood, the assessee would have already put up a claim for refund of the aforesaid amount which was paid under protest. Further, since the assessee was not legally obliged to pay customs duty amounts to Rs. 1,53,45,844/-, therefore, this additional claim towards payment of customs duty cannot be allowed under the provision of Section 43B(a) of the Act.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax(Appeals)-1, (in short “Ld. CIT(A)”), Ahmedabad in Appeal No. CIT(A)/Circle-1(1)(1)/10406/2018-19 vide order dated 07.02.2020 passed for Assessment Year 2016-17.
2. The assessee has taken the following grounds of appeal:-
“1. The learned CIT(Appeal) has erred in laws and facts in not allowing the fresh claim of Custom duty of Rs 1,53,45,844/- paid under protest made during course of assessment proceedings duly examined by the A.O. without properly appreciating the facts of the assessee.
2. He has erred in law and fact in not considering and appreciating the fact that A.O. has did not allow the claim in the absence of revised return of income following the decision of The Supreme Court in the case of Goetze (India) Limited.
3. He has erred in law and facts in not allowing claim of assessee for Rs 1,53,45,844/- in as much as that such fresh claim can be allowed by the higher authorities as held by the Court distinguishing decision in the case of Goetze (India) Limited.
4. On the facts of the assessee, the claim of Rs 1,53,45,844/-ought to have been allowed.
5. The appellant craves leave to add, to alter and to modify any ground of appeal.”
3. At the outset, we observe that the appeal is time barred by 68 days. However, we observe that the date of service or communication of the order sought to be appealed against is 15.02.2020. We observe that the due date of filing of appeal was falling under the Corona period, and therefore, we are hereby condoning the delay in filing of the present appeal by the assessee. In the result, the delay in filing of the present appeal is hereby condoned.
4. The brief facts of the case are that the assessee, vide letter dated 07.12.2018 made a fresh claim of customs duty expenses amounting to Rs. 1,53,45,844/- before the Assessing Officer during the course of assessment proceedings. The contention of the assessee was that the assessee is eligible to claim the aforesaid expenses towards customs duty expenses, which have been paid by the assessee under protest and have not been charged to the Profit & Loss Account. However, the Assessing Officer did not allow the claim of the assessee on the ground that deduction on account of unclaimed customs duty paid by the assessee cannot be allowed since the Assessing Officer has no power under the Income Tax Act to allow expenses made by the assessee during the year, but not claimed by the assessee in the return of income. The Assessing Officer held that the Hon’ble Supreme Court in the case of Goetze India Ltd. vs. CIT has held that additional claim cannot be made before the Assessing Officer as there is no provision under the Income Tax Act to make amendment in the return without filing a revised return. Consequently, the Assessing Officer held that deduction on account of customs duty paid under protest amounting to Rs. 1,53,45,844/- cannot be allowed.
5. In appeal, Ld. CIT(A) allowed the assessee to raise this contention before him on the ground that the appellate authority including CIT(A) have full power / authority to entertain such claim in appeal and accordingly, permitted the assessee to raise such claim before him. However, on merits, the CIT(A) observed that as per the order passed by Deputy Commissioner of Customs dated 28.02.2018, the assessee was not under any obligation to pay this additional customs duty amounting to Rs. 1,53,45,844/- and therefore, he rejected the allowability of the aforesaid claim under Section 43B(a) of the Act. While passing the order, the Ld. CIT(A) made the observations as follows:-
“I have carefully gone through the case laws (supra) and feel that the appellate authorities have full power to entertain any such claim and the issue is being decided on verification as per jurisdictional ratio laid down by Hon’ble Supreme Court in the case of Jute Corporation of India Limited 187 ITR 688 (SC).
During the appellate proceedings, a paperbook in 48 pages has been placed on recorded and same is prepared. A copy of decision by Deputy Commissioner of Customs dated 28/02/2018 in the case of M/s. Aroma Enterprise (India) Limited has been filed and the AR read out the relevant portion of this order. The contentious issue has been decided favouring the appellant. The final verdict at page no. 31 is reproduced as under:
“In order that additional Duty of Excise (Goods of Special Importance) Act, 1957 was not leviable on the import of filter tip cigarettes classifiable under CTSH 24022090 imported by the importer vide Bills of Entry filed between 01/09/2015 to 28/10/2015 as detailed in Table- “B” and Table- “C” above in view of amendment to the First schedule of Additional Duties of Excise Act vide Notification No.11/06-CE., dtd. 01/03/2006 read with Notification No.1/2007-CST, dated 29/03/2007. Accordingly, I also order re-assessment of the subject Bills of Entry.”
In view of legal order issued by department of customs (supra) as on this date, the appellant was not required to pay the custom duty under reference. As a corollary to this order by the superior authority of custom department, the appellant might already have put up its claim for refund of the amount which was paid under protest. Also, it can be concluded that the appellant was not legally obliged to pay any such duty, therefore, though the fresh claim has been admitted but rejected as the payment is not falling strictly under the provision of section 43B(a). It is unknown liability which is neither contractual liability nor statutory liability, therefore, in my opinion it is not allowable in the year of payment as it is difficult to map the year of its crystallized.
(i) 145 ITR 741 (Cal.)
(ii) 218 ITR 195 (SC)
(iii) 199 ITR 815 (All.)
(iv) 225 ITR 33 (All.)
The appellant could not claim to have forgone any such claim from the custom department therefore, it has to receivable in books of account. It is an individual splinter disputed amount with other department for which the liability appear to have never occurred nor existing on the date of this order as per order by the DC of Customs (supra). Secondly, the fact remains that this kind of payment is not routed through P&L Account for year ending on 31/03/2016, therefore its eligibility for set off against the taxable income is against the interest of revenue. It is not running account wherein the payment year after year is claimed by making adjustments into duty payable account such as DEPB. Thirdly, the appellant if claim that the amount from the customs department can be offered for taxation as and when received. Such claims in that department continue from one year to another and there is no well-established mechanism whereby the I.T. department can make suitable adjustments in the technology driven ongoing efforts both at assessment and appellate level. It goes without saying that there would be a case of Postponement of tax liability if the untenable claim of the appellant allowed. Consequently the ground no.3 is hereby dismissed.”
6. The assessee is in appeal before us against the aforesaid order passed by the Ld. CIT(A). Before us, there has been no appearance on part of the assessee despite a large number of opportunities for hearing presented to the assessee to cause appearance. Accordingly, we shall proceed to pass the order on the basis of material before us. So far as Ground 2 & 3 of the assessee’s appeal are concerned, we observe that the same are infructuous since the Ld. CIT(A) has permitted the assessee to raise such claim regarding allowability of customs duty paid under protest amounting to Rs. 1,53,45,844/- during the course of appellate proceedings. Accordingly, Ground Nos. 2 & 3 of the assessee’s appeal are dismissed as being infructuous.
7. Now coming Ground No. 1 and 4 of the assessee’s appeal, we observe that Ld. CIT(A) in his order has observed that as per copy of decision by the Deputy Commissioner of Customs dated 28.02.2018 in assessee’s case, the assessee was not required to pay customs duty under reference. The Ld. CIT(A) observe that in view of the aforesaid order passed by the concerned Customs Authority, since the assessee was not required to pay customs duty amounts to Rs. 1,53,45,844/- in all likelihood, the assessee would have already put up a claim for refund of the aforesaid amount which was paid under protest. Further, since the assessee was not legally obliged to pay customs duty amounts to Rs. 1,53,45,844/-, therefore, this additional claim towards payment of customs duty cannot be allowed under the provision of Section 43B(a) of the Act. Accordingly, we find no infirmity in the order passed by Ld. CIT(A) so as to call for any interference, given the facts of the assessee’s case.
8. In the result, the appeal of the assessee is dismissed.
This Order pronounced in Open Court on 25/08/2023
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