Bombay High Court
Johnson And Johnso Ltd. Group P.Ltd vs Dcit Spl Rg.23,Mumbai on 2 February, 2024
Author: Neela Gokhale
Bench: K. R. Shriram, Neela Gokhale
2024:BHC-OS:1900-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL (IT) NO. 148 OF 2003
WITH
INCOME TAX APPEAL (IT) NO. 103 OF 2003
M/s. Johnson and Johnson Ltd. ...Appellant
Versus
The Deputy Commissioner of Income Tax
Special Range-23, Mumbai ...Respondent
Mr. Subhash S. Shetty i/b Mr. Atul K. Jasani for Appellant.
Mr. Suresh Kumar for Respondent-Revenue.
CORAM: K. R. SHRIRAM &
DR. NEELA GOKHALE, JJ.
DATED: 2nd February 2024
PC:-
The facts in both these appeals are identical and the questions
of law proposed are also identical, save and except the amounts
differ. Both appeals are also against a common order passed by the
Income Tax Appellate Tribunal ("ITAT") on 19th August 2002. Since
we have considered the facts in Income Tax Appeal (IT) No. 148 of
2003, we reproduced the questions of law framed therein. In Income
Tax Appeal (IT) No. 103 of 2003, the amount will be Rs. 24,83,212/-.
INCOME TAX APPEAL (IT) NO. 148 OF 2003 :
1. On 23rd September 2004, the appeal was admitted and three
substantial questions of law were framed.
Gitalaxmi
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2. Mr. Shetty stated at the outset that question (a) is not being
pressed and question (c) is basically a repetition of question (b).
Therefore, the Court needs to consider only question (b), which reads
as under :
"(b) Whether on the facts and in the circumstances of
the case the Tribunal erred in coming to the
conclusion that the appellant was not entitled to
the deduction of Rs. 60,99,426/- representing the
excise duty claimed under Section 43B of the
Income Tax Act, 1961 as this would amount to
double deduction ?"
3. The ITAT in its impugned order dated 19 th August 2002, on the
issue at hand, came to a factual finding that the Assessing Officer
("AO"), by allowing deduction of Rs. 980.74 lakhs has allowed Rs.
60,99,426/- as part of Rs. 2,08,08,346/- and therefore, if that
amount of Rs. 60,99,426/- was again allowed in the assessment, it
would amount to double deduction, which is not permissible. The
Tribunal also relied upon a judgment of the Calcutta High Court in
the case of CIT v. Burger Paints (India) Ltd.1, to come to the
conclusion that assessee was not entitled to the deduction of Rs.
60,99,426/- representing the 'Excise Duty Claim' under Section 43B
of the Income Tax Act, 1961 ("the Act"). That judgment of the
Calcutta High Court has been reversed by the Apex Court in Burger
Paints (India) Ltd. v. CIT2 in favour of assessee.
1. 254 ITR 498.
2. 266 ITR 99.
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4. What needs to be considered is whether the finding of Tribunal
that the AO has allowed Rs. 60,99,426/- as part of Rs. 2,08,08,346/-
towards the excise duty paid.
5. Having heard the Counsels and considered the documents
before us, assessee was correct in submitting that the excise duty in
case of unsold stocks held by them at the end of previous year is not
treated as expenses in the accounts, but has been separately claimed
and allowed in the income tax assessments. In the statement forming
part of the appeal paper-book giving month-wise payments of excise
duty for Assessment Year 1986-1987, the summary reads as under :
Particulars Rs.
Opening Balance 1,47,08,920/-
Add : Payments debited to Profit & Loss Account 9,80,74,762/-
Less : Refunds credited to Income Account 1,43,357/-
Less : Excise Duty transferred to Pre-paid Account
and added to Closing Stock of Finished Products 2,08,08,346/-
Closing Balance of Excise Duty Account 9,18,31,679/-
This would show that the excise duty amounting to Rs.
2,08,08,346/- was transferred to pre-paid account and added to the
closing stock of finished products. If the opening balance of Rs.
1,47,08,920/- is reduced, that would leave a sum of Rs. 60,99,426/-
in the pre-paid account.
6. While computing the total income for Assessment Year 1986-
1987, appellant had claimed the deduction in respect of excise duty
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amounting to Rs. 60,99,426/- being the differential excise duty
attributable to opening and closing stock of the finished goods held
by them during the previous year ended 29 th December 1985. Excise
duty paid and included in the closing stock has to be claimed
separately as a deduction otherwise appellant would not be claiming
the entire excise duty paid in the year of its payment. Section 43B of
the Act, which came to be introduced from Assessment Year 1984-
1985 onwards, provides that the excise duty would be deductible
only on the payment basis in the year in which it is actually paid.
Therefore, while computing the total income for Assessment Year
1986-1987, assessee had claimed a deduction of excise duty
amounting to Rs. 2,08,08,346/- actually paid in the year 1985 and
included in closing stock less excise duty paid and included in closing
stock of 1984 already claimed, amounting to Rs. 1,47,08,920/-.
Therefore, in our view, the Tribunal was not correct in coming to a
conclusion that this amount of Rs. 60,99,426/- would amount to
double deduction.
7. In the circumstances, we allow the appeal and answer question
(b), as framed, in the affirmative.
8. Appeal disposed.
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INCOME TAX APPEAL (IT) NO. 103 OF 2003 :
1. Learned Counsel states that the findings recorded in Income
Tax Appeal (IT) No. 148 of 2003 will squarely apply to this appeal as
well. Therefore, appeal is allowed and question (b), as framed, is
answered in the affirmative.
2. Appeal disposed.
(DR. NEELA GOKHALE, J.) (K. R. SHRIRAM, J.)
GITALAXMI KRISHNA
KRISHNA KOTAWADEKAR
KOTAWADEKAR Date:
2024.02.03
12:53:02 +0545
Gitalaxmi
