Unpaid GST shown as liability, not P&L expense, and paid before return: s.43B disallowance deleted on appeal

Dispute concerned disallowance under s.43B for unpaid GST. The Tribunal held s.43B could not be invoked where the assessee had not debited the GST amount to the P&L as an expenditure and had not claimed any deduction; it was disclosed as a current liability/provision under duties and taxes. The SC ruling in Chowringhi Sales Bureau was distinguished because the liability here was specifically disclosed and not treated as income or an estimated charge. As the GST was paid prior to filing the return, the Delhi HC ratio in Noble Hewitt applied, and the disallowance was deleted; the appeal was allowed.

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Issues Involved:
The appeal challenges the order of the National Faceless Appeal Centre for the assessment year 2020-21 regarding the disallowance made under \u/s 43B of the Income Tax Act, 1961.

Assessment of Income and Disallowance \u/s 43B:
The Assessing Officer assessed the income at a higher amount than declared by the assessee, making an addition under \u/s 43B for unpaid GST. The CIT(A) partially allowed the appeal, leading to the current dispute.

Contentions of the Assessee:
The assessee argued that under \u/s 43B, payments can be claimed as expenses in the year of payment, not when the liability was incurred. The assessee paid a significant amount of GST before the due date of filing the return of income, disputing the disallowance.

Arguments of the Revenue:
The Revenue contended that the GST remained unpaid until the audit report finalization, justifying the disallowance made by the Assessing Officer and upheld by the CIT(A).

Judgment and Reasoning:
The Tribunal found in favor of the assessee, noting that the GST amount was not treated as an expenditure in the profit and loss account, but as current liabilities. As the GST was paid before filing the return of income, the provisions of \u/s 43B were deemed not applicable. The Tribunal distinguished the present case from precedents cited by both parties, ultimately allowing the appeal.

Conclusion:
The Tribunal allowed the appeal of the assessee, ruling that the disallowance made \u/s 43B was not justified as the GST amount was paid before the due date of filing the return of income.

Note:
The summary is based on the judgment of the Appellate Tribunal ITAT Ahmedabad in the case involving a dispute over the disallowance made under \u/s 43B of the Income Tax Act, 1961 for the assessment year 2020-21.

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