Section 36(1)(ii) disallowance not restored after Tribunal followed its earlier year view and upheld relief to the assessee.

The Tribunal dealt with whether a disallowance under section 36(1)(ii) of the Income-tax Act, 1961 could be restored after the CIT(A) deleted it for assessment year 2009-10. It noted that the same issue had already been considered in the Revenue's appeal for the immediately preceding year, where the disallowance had been held not to be sustainable. Following that earlier decision, the Tribunal declined to restore the disallowance and upheld the relief granted to the assessee, leaving the issue against the Revenue.

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Issues: Whether the disallowance deleted by the Commissioner of Income-tax (Appeals) under section 36(1)(ii) of the Income-tax Act, 1961 was liable to be restored.

Analysis: The appeal concerned assessment year 2009-10 and arose from an assessment completed under section 143(3) of the Income-tax Act, 1961. The only issue was whether the assessee was entitled to relief from the disallowance made by the Assessing Officer under section 36(1)(ii). The Tribunal noted that the very same issue had already been examined in the Revenue's appeal for the immediately preceding assessment year and that the earlier decision had upheld the view that the disallowance was not lawful. On that basis, the Tribunal followed its earlier decision for the present year as well.

Conclusion: The disallowance was not restored, and the issue was decided against the Revenue.

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