Appeal delay condoned for bonafide reasons, tribunal allows appeal; disallows Section 43B disallowance, emphasizes contractual obligations.

The delay in filing the appeal was condoned by the tribunal due to bonafide reasons, allowing the appeal for adjudication. Regarding the disallowance under Section 43B of the Income Tax Act, the tribunal found that the reimbursement for property tax was contractual and not a statutory liability, thus deleting the disallowance and partly allowing the appeal. The judgment emphasizes the significance of contractual obligations in determining the allowability of expenses under tax laws.

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Issues:
Delay in filing the appeal, disallowance under section 43B of the Income Tax Act.

Delay in Filing the Appeal:
The appeal was filed with a delay of 124 days, and the assessee sought condonation for the delay. The tribunal, after considering the reasons provided, found the delay to be due to bonafide reasons and thus condoned the delay, admitting the appeal for adjudication.

Disallowance under Section 43B:
The main issue for consideration was the disallowance of Rs. 19,37,936 under section 43B of the Income Tax Act. The Assessing Officer disallowed this amount as it represented property tax claimed by the assessee but not actually paid during the year. The DRP upheld this addition. However, the assessee argued that the amount reimbursed to the landlord for property tax was part of the rent paid and hence allowable as expenditure. The tribunal examined the lease agreement terms and found that the reimbursement was contractual and not a statutory liability. As property tax is the owner's responsibility, the reimbursement by the assessee to the licensor could not be treated as tax, fee, cess, etc., under section 43B(a). Consequently, the disallowance was deleted, and the appeal was partly allowed.

This judgment highlights the importance of contractual obligations in determining the allowability of expenses under tax laws. It clarifies that certain reimbursements, even if related to statutory payments, may not fall under the disallowance provisions if they are contractual in nature.

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