Modi Revlon Pvt. Ltd. V. Commissioner of Income Tax

ITA/151/2016

AI Insights

This case involves an appeal under Section 260-A of the Income Tax Act, 1961, where the assessee, Modi Revlon Pvt. Ltd., challenged the order dated 23.1.2015 by the Income Tax Appellate Tribunal, Guwahati Bench. The Tribunal had upheld the assessment of tax made by the Assessing Officer and confirmed by the CIT (Appeals) regarding the provision for Central Excise Duty and education cess for the assessment year 2010-11. The High Court's decision was influenced by a recent judgment in a similar case (ITA No.4/2014), which addressed the legality of a curtailment notification affecting excise duty liabilities.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 797528 (HC-GUWAHATI)
• Appeal Type: Others
• Pronouncement Date: 24-11-2016
• Assessment Year: misc
• Other Referred Cases: Modi Revlon Pvt. Ltd. vs. Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S SARMA
• Assessee Lawyers: ASHOK SARAF
• Keywords: Central Excise Duty; Education Cess; Income tax appellate tribunal; Tax liability; Provision for Expenditure
• Section: 41(1); 260-A

Judgement Text

"ITA 151/2016 BEFORE HON’BLE MR. JUSTICE HRISHIKESH ROY HON’BLE MR. JUSTICE NELSON SAILO Heard Dr. Ashok Saraf, the learned Senior Counsel for the appellant (assessee). Also heard Mr. S. Sarma, the learned Standing Counsel for the Income Tax Departm ent representing the Commissioner of Income Tax (CIT). 2. It is the joint submission of both lawyers that this case is squarely co vered by the recent judgment of 24.11.2016, in the ITA No.4/2014 (Modi Revlon Pv t. Ltd. vs. Commissioner of Income Tax). 3. This appeal is under Section 260-A of the Income Tax Act, 1961 (hereinaf ter referred to as the I.T. Act ), where the assessee challenges the order date d 23.1.2015 (Annexure-IV), in the ITA No.45/Gau/2014, whereby the learned Income Tax Appellate Tribunal, Guwahati Bench held against the assessee, on their clai m to deduction, in respect of the provision of Central Excise Duty and also educ ation chess, for the assessment year 2010-11. Thus the assessment of tax in resp ect of these provisions, made by the Assessing Officer and the confirmation ther eof by the CIT (Appeals), was upheld by the Appellate Tribunal. 4. In the judgment delivered by us in the ITA No.4/2014, the following obse rvations were made by this Court: & & & & & & & & & & & & & & & 23. The extent of liability of central excise duty payable by the assessee f or the assessment year 2009-10, will flow from the final verdict on the legality of the curtailment notification No.17/2008-Central Excise dated 27.03.2008 and although the notification was quashed in the WP(C) No.1707/2008, the consequenti al departmental challenge to the verdict of the High Court, is awaiting finality in the Supreme Court. Thus the precise amount of excise duty payable in the con cerned year has remained inconclusive and therefore the reflection of the disput ed amount in the books of accounts cannot be said to be an unreasonable act. In our understanding, a prudent assessee following the mercantile system, can certa inly make provision for expenditure towards tax liability, even though the asses see may dispute the departmental claim but when the litigation is not yet finali zed, it cannot be said with authority that the provision made will never be cate gorized as expenditure for the concerned assessment year. 24. That apart, if the Supreme Court finally declares that the curtailment n otification of 27.03.2008 is legally unsustainable, the revenue will not suffer any prejudice since the department can bring the provisional amount to tax, unde r Section 41(1) of the IT Act. Therefore we are of the considered opinion that t he substantial question of law framed in this proceeding has to be answered in f avour of the assessee and against the revenue. Having answered thus, we set asid e the respective impugned order(s) dated 13.11.2013, 10.04.2013 and the assessme nt order dated 23.12.2011, in so far as the disallowance of the central excise p rovision made in their books of accounts by the assessee. The appeal stands allo wed in these terms. & & & & & & & & & & & & & & & . 5. Having regard to the above and noticing the agreement in the Bar, this c ase is disposed of as one covered by the decision of 24.11.2016, in the ITA No.4 /2014 (Modi Revlon Pvt. Ltd. vs. Commissioner of Income Tax). Thus the impugned order of the Income Tax Appellate Tribunal, rendered in the ITA No.45/Gau/2014, in so far as disallowance of the provision made for excise duty and education ch ess for the concerned Assessment Year, are set aside and quashed. 6. With the above order the case is disposed of. "