Monday, February 10, 2014

Contractual liability to pay custom duty on importer’s behalf won’t be hit by sec. 43B, it’s not statutory liability

The High Court held as under:
1)  Section 43B applies only in cases of statutory liability. By virtue of the said section a statutory liability is not deductable in the year in which it accrues, if the same remains unpaid. A deduction with respect to a statutory liability is allowed only on payment of the same;
2)  The liability to pay the amount of additional customs duty on behalf of the importers as and when they were called upon to discharge the same was clearly a contractual liability and not a statutory liability;
3)  Therefore, in the instant case, the question as to whether the said liability would be considered as deductible under Section43B would not arise;

4)  Even assuming that section 43B would apply to such contractual liability, the furnishing of a bank guarantee to importers would not be considered as actual payment under section 43B so as qualify for deduction under that section - Oswal Agro Mills Ltd. v. CIT [2014] 42 100 (Delhi)

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