2024 (7) TMI 1491 - HC - Income Tax

Appeal Partially Allowed: Swachh Bharat Cess Deduction Disallowance Set Aside for Fresh Consideration by AO.

The HC partially allowed the appeal, setting aside the ITAT's disallowance of the deduction claimed for Swachh Bharat Cess under 'write off of sundry ... Deduction claimed in respect of amounts deposited as “Swachh Bharat Cess” - as per the admitted case of the appellant, the aforesaid payments were placed in the category of 'write off of sundry balances' - ITAT held as assessee has failed to demonstrate that the amount was actually paid during the year in terms of section 43B(a), therefore we uphold the disallowance Appellant contends that although the Swachh Bharat Cess was shown under the category of 'write off of sundry balances', it essentially related to amounts paid as cess by the assessee / appellant in the year in question and ITAT has for the first time proceeded to advert to Section 43B(a) and allowed the disallowance altogether. HELD THAT:- Bearing in mind the aforesaid stand raised, we are of the considered opinion that insofar as this aspect is concerned, it would merit reconsideration by AO. We, accordingly allow the instant appeal in part and set aside the findings of the ITAT insofar as this aspect is concerned. The matter shall stand remitted to the AO for considering the claim of the appellant afresh. Issues:1. Deduction claimed for Swachh Bharat Cess under 'write off of sundry balances'.Analysis:The High Court judgment was based on an appeal against the order of the Income Tax Appellate Tribunal (ITAT) for the Assessment Year 2016-2017. The main issue revolved around the deduction claimed by the assessee for amounts deposited as Swachh Bharat Cess, categorized as 'write off of sundry balances.' The ITAT had disallowed the deduction, stating that the assessee failed to prove the actual payment during the year as required under section 43B(a) of the Income Tax Act, 1961.The appellant argued that the Swachh Bharat Cess amount shown as a write-off actually pertained to cess paid in the relevant year. The court noted this argument and found merit in reconsidering the matter by the Assessing Officer (AO). Consequently, the High Court allowed the appeal in part, setting aside the ITAT's findings on this issue and remitting the matter back to the AO for fresh consideration of the appellant's claim.The judgment emphasized that all rights and contentions of the parties were kept open, indicating that the matter was not conclusively settled and could be further addressed as needed. The decision highlighted the importance of correctly interpreting and applying tax laws to determine the eligibility of deductions, ensuring proper verification of payments to support claims made by taxpayers.