2024 (7) TMI 564 - AT - Income Tax

GST deduction under section 43B requires payment verification before statutory due date for allowability

The ITAT PUNE ruled on GST payment timing under section 43B regarding deduction allowability. The assessee filed ITR under section 139(4) on 29/07/2020, ... Belated payment of GST after due date of filing of return u/s 139(1) -Disallowance u/s 43B - belated payment of GST - assessee’s failure to discharge statutory dues by actual payment within the due date of filing as prescribed u/s 139(1) - belated ITR filed u/s 139(4) - whether ITR filed u/s 139(4) can be treated as filed u/s 139(1) for the purpose of section 43B of the Act? HELD THAT:- It is well settled law that, items of expenditure/liability subscribed u/c (a) to (g) in section 43B of the Act which are otherwise allowed as deductions while computing business income u/c IV-D of the Act, shall indeed be allowed in a previous year in which such sums are actually paid irrespective of financial year in which liability towards was incurred. The proviso to section 43B eases the hardship by extending such period upto the due date of filing ITR as prescribed u/s 139(1) of the Act. In nutshell any expenditure which is otherwise allowed as deduction in computing taxable income u/c IV- D is subjected to actual payment within the due date prescribed u/s 139(1) of the Act irrespective of method of accounting employed by assessee. In the instant case, admittedly the due date of filing ITR u/s 139(1) for AY 2019-20 was 30/09/2019 which was extended further by a month to 30/10/2019. The appellant however filed its ITR after the expiry of aforestated extended due date on 29/07/2020 wherein a claim against GST liability was made which by provisions of section 43B of the Act was subject matter of actual payment any-time before expiry of aforestated extended due date. Failing to which the Ld. CPC disallowed the claim for deduction u/s 43B of the Act on the basis of accountants report through TAR. We see this action of disallowance by prima facie adjustment in summary assessment u/s 143(1)(a) of the Act finds support from ‘Sri Jawahar Lal Gupta Vs [1991 (9) TMI 29 - ALLAHABAD HIGH COURT] and also finds support from CBDT Circular No. 601, dt 04/06/1991, which Ld. AR could hardly dispute during any of the proceedings including present one. When matter travelled in an appeal to first appellate authority, the Ld. NFAC perfunctorily confirmed the disallowance on the basis of delayed filing of GST return without vouching the exact amount of GST discharged by extended due date i.e. 30/10/2019 and balance amount of GST paid beyond such extended due date for confirming disallowance u/s 43B. For the reason we see strong force in remanding the matter back to the file of Ld. NFAC with a direction to deal this limited issue in accordance with aforestated law & pass a speaking order in terms of section 250(6) of the Act. Assessee appeal is allowed for statistical purposes. Issues:1. Disallowance of GST under section 43B of the Income-tax Act for failure to discharge statutory dues by the due date of filing the return.2. Interpretation of whether a belatedly filed income tax return under section 139(4) can be treated as filed under section 139(1) for the purpose of section 43B.3. Application of legal principles regarding the actual payment of statutory dues within the due date prescribed under section 139(1) of the Act.Detailed Analysis:Issue 1: The appellant challenged the disallowance of GST under section 43B for not discharging statutory dues by the due date of filing the return. The National Faceless Appeal Centre upheld the disallowance, stating that the appellant failed to make the payment before the due date. The tribunal noted that the disallowance was made based on the tax audit report and the return filed by the appellant.Issue 2: The tribunal analyzed whether a return filed under section 139(4) can be treated as filed under section 139(1) for the purpose of section 43B. The appellant argued that the belated filing of the return should be considered as filed under section 139(1) to protect the GST payment from disallowance. However, the tribunal referred to the non-obstante clause in section 43B, which requires actual payment by the due date prescribed under section 139(1) to claim deductions for statutory liabilities.Issue 3: The tribunal referred to the legal principle that deductions for statutory liabilities under section 43B are allowed if paid within the due date prescribed under section 139(1) or the extended due date. The tribunal emphasized the importance of actual payment within the specified time limits to claim deductions. In this case, the tribunal found that the appellant filed the return after the extended due date, leading to the disallowance of the GST claim under section 43B.In conclusion, the tribunal allowed the appeal for statistical purposes and directed the matter back to the National Faceless Appeal Centre for a detailed consideration of the GST payment issue in accordance with the law. The tribunal highlighted the significance of timely payment of statutory dues to claim deductions under section 43B of the Income-tax Act.