INDIAN SMELTING AND REFINING CO. LTD. VS COMMISSIONER OF INCOME-TAX
2001 P T D 2346
[248 I T R 4]
[Supreme Court of India]
Present: S. P. Bharucha and Ms. Ruma Pal, JJ
INDIAN SMELTING AND REFINING CO. LTD,
Versus
COMMISSIONER OF INCOME‑TAX
Civil Appeal No.2756 of 1998. decided on 28/11/2000.
(Appeal by special leave from the judgment and order, dated January ‑5, 1998, of the Bombay High Court in I.T. Reference No.26 of 1987).
Income‑tax‑‑‑
‑‑‑‑Business expenditure‑‑‑Excise duty‑‑‑Notice to 'show cause served on assessee but no demand raised ‑‑‑Assessee not admitting liability and showing cause‑‑‑Excise duty proceedings dropped‑‑‑Liability for excise duty is a contingent liability‑‑‑Not allowable as deduction‑‑‑Indian Income Tax Act, 1961, S.37(1).
The assessee, a manufacturer of ingots, billets and castings, had made a provision of Rs.90,22,783 towards excise duty in the calendar .year 1979, relevant to the assessment year 1980‑.81, on the basis of notices to show cause as to why demand should not be made for payment of that amount. But no demand for excise duty had been raised, the assessee did not admit the liability and showed cause, and the cause shown was accepted and the proceedings initiated against the assessee were dropped in December, 1992. The Tribunal allowed deduction of the provision made by the assessee; but the High Court, on a reference, held (see (1998) 230 ITR 194) that the liability claimed by the assessee on account of excise duty was only a contingent liability and could not constitute expenditure for purpose of income‑tax, and, therefore, the Tribunal was not justified in holding that the assessee was entitled to deduction on the provision made. The assessee preferred an appeal, to the Supreme Court. The Supreme Court dismissed the appeal holding that the view taken by the High Court was correct.
CIT v. Indian Smelting and Re‑fining Co. Ltd. (1998) 230 ITR 194 (Bom.) affirmed.
Parag Tripathi, Senior Advocate (Ms. Shruti Choudhary and Umesh Kumar Khaitan, Advocates with him) for Appellant.
S. Ganesh, Mrs. Asha G. Nair and Ms. Sushma Suri, Advocates for Respondent.
ORDER
We have heard learned counsel and seen the relevant documents. We are of the opinion that the view taken by the High Court, in the facts and circumstances of the case, is correct and no interference is called for.
The civil appeal is dismissed.
M.B.A./934/FCAppeal dismissed.