| Case ID |
227a7755-8241-46ba-a074-41ff9ebe3ee7 |
| Body |
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| Case Number |
Civil Appeal No. 16688 of 1996 |
| Decision Date |
Aug 17, 1999 |
| Hearing Date |
|
| Decision |
The Supreme Court dismissed the appeal filed by the Commissioner of Income-tax, affirming the Tribunal's ruling that the excise duty demanded by the Collector was deductible by the assessee. The Court held that the liability to pay excise duty arose when the demand notice was issued, and that the mere challenge of this demand by the assessee did not negate the obligation to pay. The Court underscored that the entries in the accounts do not determine the existence of a liability for tax purposes. The conclusion reached is that the Tribunal was justified in allowing the deduction of the excise duty from the income of the assessee, and the High Court's dismissal of the Revenue's application for reference was appropriate. |
| Summary |
This case revolves around the interpretation of liabilities under the Income Tax Act, 1961, particularly concerning the deductibility of excise duties. The Supreme Court of India addressed the complexities surrounding when a liability is recognized for tax purposes, relying on previous cases such as Kedarnath Jute Manufacturing Co. Ltd. v. CIT. The ruling clarified that the issuance of a demand notice from the Excise Department establishes an enforceable liability, and that disputes regarding the nature of this liability do not prevent its recognition for tax deductions. The decision reinforces the principles of accounting and taxation, emphasizing that legal obligations must be acknowledged in financial records even if contested. This case serves as a significant precedent in the realm of tax law, particularly for businesses dealing with excise duties and the complexities of accounting practices under the mercantile system. Keywords include excise duty, Income Tax Act, deductible expenses, legal liability, and mercantile accounting. |
| Court |
Supreme Court of India
|
| Entities Involved |
Income Tax Department,
Bharat Carbon and Ribbon Manufacturing Co. (P.) Ltd.
|
| Judges |
D. P. Wadhwa,
M. B. Shah
|
| Lawyers |
Not available
|
| Petitioners |
COMMISSIONER OF Income Tax
|
| Respondents |
BHARAT CARBON and RIBBON MANUFACTURING CO. (P.) LTD
|
| Citations |
2000 SLD 1757,
2000 PTD 1481,
(1999) 239 ITR 505
|
| Other Citations |
CIT v. Bharat Carbon and Ribbon Mfg. Co. (P.) Ltd. (1991) 192 ITR 221,
Kedarnath Jute Manufacturing Co. Ltd. v. CIT (1971) 82 ITR 363,
Indian Molasses Co. (P.) Ltd. v. CIT (1959) 37 ITR 66,
Pope The King Match Factory v. CIT (1963) 50 ITR 495
|
| Laws Involved |
Income Tax Act, 1961
|
| Sections |
256
|