Section 43B of Income Tax Act, 1961— In the instant case, the assessment was completed by the Deputy Commissioner of Income Tax, after making disallowance of Rs. 1,67,62,544/- under the provisions of Section 43B of the Act on the ground that liability of excise duty has not been crystallized. The reasons given by the Assessing Officer for the above disallowance are twofold. (i) Payment of excise duty was shown as advance in the books of accounts (ii) No order of excise duty proving the existence of liability was filed.

The excise duty is attracted the movement the activity of manufacturing is complete. Therefore crystallization of liability is established in the year of manufacturing.
Admittedly, during the year under consideration, the goods were not manufactured.

Held that—since the excise duty is allowable as deduction on payment basis under the provisions of Section 43B of the Act, though the liability is pertaining to earlier years, the excise duty paid is allowable as deduction under the provisions of Section 43B of the Act.[M/S. DXN HERBAL MANUFACTURING INDIA PVT. LTD, (FORMERLY KNOWN AS ‘’DXN HERBAL MANUFACTURING (INDIA) PVT LTD, VERSUS THE DEPUTY COMMISSIONER OF INCOME TAX, PONDICHERRY CIRCLE, PONDICHERRY][2019] 16 ITCD Online (42) [ITAT CHENNAI]