IMPORTANT POINTS
Acceptance of a practice for long or non-challenge to a judgment of High Court cannot preclude a substantial question of law being raised and entertained. Such questions need to be answered on merits.
Deposit in PLA is eligible for deduction u/s 43B, Income Tax Act.

JUDGMENT

Ranjan Gogoi, J.

Leave granted in all the Special Leave Petitions.

2. Four of the present appeals involve the same assessee, i.e., M/s Modipon Ltd. and are in respect of the Assessment Years 1993-1994, 1996-1997, 1997-1998 and 1998-1999 respectively. The fifth appeal is in case of another assessee, i.e., Paharpur Cooling Towers Ltd. and pertains to the Assessment Year 1996-1997.

3. The question involved in all the appeals is the same and may be formulated as hereunder:

"Whether the assessee is entitled to claim deduction under Section 43B of the Income Tax Act, 1961 in respect of the excise duty paid in advance in the Personal Ledger Account ("PLA" for short)?"

4. Before delving into the question formulated one significant fact common to the appeals involving the assessee-Modipon Ltd. may be noted. From the Assessment Year 1984-1985 (from which assessment year Section 43B of the Income Tax Act, 1961 came into force), the assessee has been claiming deduction under the aforesaid provision of the Income Tax Act in respect of the balance amount in the PLA at the end of each accounting year and the assessee had been adding back the same amount as part of the taxable income in the immediately succeeding accounting year in order to avoid double deduction. The aforesaid practice consistently adopted by the assessee had been all along accepted by the Revenue from the Assessment Year 1984-1985 up to the Assessment Year 1998-1999 except for the four assessment years under consideration.

5. Shri K. Radha Krishnan, learned senior counsel for the Revenue has urged that though levy of excise is on manufacture of excisable goods, actual payment of duty is at the stage of removal. The advance duty paid in the PLA is adjusted/debited from time to time, against clearances/removal made by the assessee. Unless such clearances/removal are made and excise duty is debited from the advance deposit there is no actual payment of duty so as to entitle an assessee to the benefit of deduction under Section 43B of the Income Tax Act which contemplates deduction only against actual payment as distinguished from accrual of liability. It is urged on behalf of the Revenue that the amount in deposit is akin to a loan and under the provisions of Central Excise Rules, part or whole of the said amount can be refunded to the assessee. It is further submitted that under Rule 21 of the Central Excise Rules, 1944, at any time before removal, the Commissioner or the other authorities prescribed therein may remit duty in respect of manufactured goods lost or damaged or otherwise unfit for consumption or marketing. The amount of advance deposit, therefore, does not represent actual payment of duty so as to entitle an assessee to the benefit of deduction under Section 43B. Accordingly the orders of the High Courts challenged in the appeals are liable to interference.

6. In reply, Shri Ajay Vohra, learned senior counsel appearing for the assessee has submitted that the practice followed by the assessee in claiming deduction for the balance amount in the PLA at the end of each accounting year and adding back the same as part of the taxable income in the immediately succeeding accounting year really makes the dispute between the parties academic as the revenue implication, in any event, is nil. Shri Vohra has submitted that the aforesaid practice has been accepted by the Revenue for the Assessment Years 1984-1985 to 1998-1999 except for the four assessment years in question. There is no compelling reason to reopen the issue and, therefore, to maintain consistency the issue may be resolved in favour of the assessee. Reliance in this regard has been placed on decisions of this Court in Radhasoami Satsang v. C.I.T., (1992) 193 ITR 321 (SC) and C.I.T. v. Excel Industries Ltd., (2013) 358 ITR 295 (SC) Shri Vohra has further submitted that the very same issue had been decided in favour of the assessee by two High Courts i.e. Delhi High Court in C.I.T. v. Maruti Suzuki India Ltd.,