State Bank Of Saurashtra vs Deputy Commissioner Of Income Tax on 31 December, 2004
In the case of Ruby Mills Ltd. v. ITO (1992) 41 ITD 171 (Bom) the Bombay Bench of the Tribunal have observed with regard to allowability of statutory liability by stating that. "The liability of excise duty arises against the assessee in the year in which chargeable goods were produced/manufactured. No quantification in an assessment thereof by any authority, nor any demand notice, nor any entry in the account book would by necessary to claim such a liability as a deduction. It being a statutory liability, it would be an allowable deduction to the assessee in the year of manufacture/production even though the assessee disputed the same before the excise authorities or in a Court of law". It further observed in para 18 "Courts have held that a statutory liability can alternatively be claimed as a deduction in the year in which the assessment was made/duty was assessed and demand made irrespective of the fact that the transaction relates to earlier years.