2022 (2) TMI 121 - HC - Income Tax

High Court allows appeal after 985-day delay, upholds Tribunal decision on Income Tax Act

Principal Commissioner Of Income Tax - 1, Kolkata Versus M/s. Beekay Steel Industries Limited

Principal Commissioner Of Income Tax - 1, Kolkata Versus M/s. Beekay Steel Industries Limited - [2022] 444 ITR 71 (Cal) Issues:1. Delay in filing the appeal2. Interpretation of Section 43B of the Income Tax Act, 19613. Invocation of power under Section 263 of the Income Tax Act, 1961Delay in filing the appeal:The High Court of Calcutta addressed a delay of 985 days in filing the appeal. Despite the lack of a satisfactory explanation for the delay, the court exercised discretion and condoned the delay, allowing the appeal to proceed.Interpretation of Section 43B of the Income Tax Act, 1961:The primary issue raised in the appeal was whether the Income Tax Appellate Tribunal (ITAT) erred in not considering Section 43B of the Income Tax Act, 1961. This section stipulates that certain payments should only be claimed as expenses in the year they are paid, not when the liability is incurred. The Tribunal examined the case where excise duty of finished goods was debited but shown under 'Short Term Provision' in the balance sheet. The Commissioner proposed that the remaining amount of excise duty needed to be paid back, as per the Tax Audit Report. However, the Tribunal found that the excise duty payable was constructively paid by the assessee in the next financial year but before the due date of filing the income tax return. The Tribunal also noted that the assessing officer had conducted an enquiry and did not make any addition or disallowance under Section 43B, ultimately granting relief to the assessee.Invocation of power under Section 263 of the Income Tax Act, 1961:The Tribunal examined whether the Principal Commissioner of Income Tax was justified in invoking power under Section 263 of the Act. The Commissioner had set aside the assessment order and directed a fresh assessment due to discrepancies in excise duty payments. The Tribunal reviewed the central excise returns and found that the excise duty payable was adjusted with available input credit, effectively constituting actual payment. It was concluded that the Tribunal rightly granted relief to the assessee, and the order did not warrant any interference.In conclusion, the High Court dismissed the appeal filed by the revenue, answering the substantial questions of law against the revenue. The judgment provides a detailed analysis of the issues related to the interpretation of tax laws and the exercise of discretionary powers in tax matters.