Central Excise Duty paid in Cash Eligible for Tax Deduction: ITAT [Read Order]

The Hyderabad bench of the Income Tax Appellate Tribunal recently decided that the amount of duty paid as central excise whether in cash or cheque would be eligible for tax deduction under the Income Tax Act, 1961.

The bench comprising P. Madhavi Devi (JM) and B. Ramakotaiah (AM) were decided so while considering the cross-appeals filed by both assessee and revenue against the common order of CIT (A).

In the instant case, the Assessing Officer, after conducting an investigation on the business premises of the assessee, made an addition of Rs. 10,00,000/- based on the show cause notice that assessee has paid an amount of Rs. 10 Lakhs by way of cash.

Aggrieved assessee preferred an appeal before first appellate authority and submitted their contentions wherein CIT (A) held that since the assessee has paid the amount in cash hence not an allowable expenditure.

The first appellate authority rejected the plea of the assessee that amount paid by cheque and the date mentioned in it was out of the impugned assessment years.

While perusing the show cause notice the tribunal bench found that there is only one payment determined by the Excise Authorities and also added that whether the payment is in cash or by way of cheque, the Central Excise amount paid would be eligible for the deduction, out of the receipts of the business concern.

“Whether the payment is in cash or by way of cheque, the Central Excise amount paid would be eligible for the deduction, out of the receipts of the business concern. This amount of Rs. 10 Lakhs in para 40.3 clearly state to have been paid on 23-09-2011, which is outside the four impugned assessment years, more so pertaining to AY. 2012-13. Why AO brought this amount to tax in all the assessment years is not understandable,” the bench said.