Jay Bharat Maruti Ltd. vs Commissioner of Income Tax

Badar Durrez Ahmed, J.—We have heard the counsel for the parties. The assessee is in appeal before us against the order of the income

tax Appellate Tribunal dated 15-4-2004 in respect of the assessment year 1995-96. One of the issues sought to be raised is with regard to the

deduction claimed by the assessee u/s 80I of the income tax Act, 1961 (hereinafter referred to as ''the said Act'') on interest received on letters of

credit and bank guarantee money. A similar claim has been made by the assessee in respect of the interest earned on deposits, under sales tax

rules, in Kisan Vikas Patras, interest received on income tax refund as also the interest received on inter-corporate deposits. The Tribunal has

decided these issues against the assessee and, therefore, the assessee is in appeal before us. We may straightaway say that these issues no longer

survive after the decision of this Court in Rishi Dev Batra Vs. Dr. (Mrs.) Anup Suri wherein the said issue has been decided in favour of the

revenue and against the assessee. Consequently, these issues do not arise any further and the decision of the Tribunal is correct. The second aspect

of the matter is with regard to travelling expenses, which have been incurred by the assessee in connection with the purchase of some plant and

machinery. The Assessing Officer had claimed these expenses on the revenue account. However, the Assessing Officer treated the same as

''capital expenditure'' and disallowed the same. This was upheld by the Commissioner of income tax (Appeals) as well as by the income tax

Appellate Tribunal. The Tribunal held the said expenditure to be directly connected with the purchase of the plant and machinery and, therefore,

the same was to be treated as capital expenditure. We see no reason to interfere with this finding.

The third issue sought to be canvassed before us pertains to the deduction claimed u/s 43B of the said Act. The said amount was disallowed by

the Assessing Officer but allowed by the Commissioner of income tax (Appeals) and was confirmed by the Tribunal. The Tribunal, while

considering the appeal of the revenue on this aspect of the matter, rejected the revenue''s contention and upheld the views of the Commissioner of

income tax (Appeals) that the petitioner was entitled to deduction u/s 43B of the said Act. The Tribunal, after following the decision of the

Supreme Court in the case of Berger Paints India Ltd. Vs. Commissioner of Income Tax, Calcutta, concluded that the details of the additions of

the said amount of Rs. 51,06,391 on account of excise duty paid by the assessee was correct. The Tribunal, however, went further to observe that

as the said amount of Rs. 51,06,391 was also loaded on the closing stock of the year in question, the opening stock of the succeeding year would

have to be reduced so as to avoid a double deduction.

The learned counsel for the appellant submitted that a rectification application had been moved before the Tribunal being M.A. No.

404/Delhi/2004, inter alia, pointing out that the Tribunal had committed a mistake in directing the Assessing Officer to reduce the amount of excise

duty from the opening stock of the next year, while allowing the deduction of Rs. 51,06,391 on account of excise duty paid. However, the

Tribunal, by its order dated 31-8-2005, rejected the contention of the appellant/assessee and once again observed that if the amount had been

loaded on the closing stock, in order to avoid double deduction, the direction was necessary.

Now, before us, the learned counsel for the appellant/assessee submits that the finding of the Tribunal that the sum of Rs. 51,06,391 had been

loaded on the closing stock is factually incorrect and, therefore, there was no need for deducting the said sum from the opening stock of the

succeeding year. We feel that this aspect of the matter can be adequately addressed by directing the Assessing Officer to verify as to whether the

said amount of excise duty paid during the year had been loaded on the closing stock or not. In case it was loaded, then the observations of the

Tribunal would stand. However, if it was not so loaded, then there would be no need for reducing the said amount from the opening stock of the

succeeding year. In view of the foregoing discussion, we find that no other issue remains to be considered by us. The appeal stands disposed of in

terms of the observations made above as also the direction to the Assessing Officer.