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1. ISSUES PRESENTED AND CONSIDERED
1.1 Whether disallowance under section 43B in respect of bonus payable, made on account of mismatch between the return of income and the tax audit report, was justified when the assessee claimed the bonus on payment basis in the subsequent year, alleging that no deduction had been claimed in the relevant earlier year.
1.2 Whether disallowance of deduction claimed on account of reversal of provision for payment to employees was justified when the assessee asserted that such provision had already been added back and offered to tax in the immediately preceding assessment year.
2. ISSUE-WISE DETAILED ANALYSIS
Issue 1 - Disallowance under section 43B towards bonus payable due to mismatch with tax audit report
Interpretation and reasoning
2.1 The Tribunal noted that the business loss was reduced in processing under section 143(1) by disallowing the bonus payable under section 43B based on a mismatch between the return of income and the tax audit report.
2.2 It was recorded that the bonus related to the financial year ended 31.03.2022 (relevant to assessment year 2022-23), was paid before the due date for filing the return, and was reported in the tax audit report for that year, wherein the bonus payable was charged to the profit and loss account and offered for tax.
2.3 The assessee contended that no deduction had been claimed in the return of income for assessment year 2022-23 in respect of this bonus, and therefore it was claimed as an expenditure in the year under appeal on payment basis. The Tribunal found this line of argument as, in principle, convincing, subject to factual verification of whether the deduction had actually not been claimed in the earlier year.
Conclusions
2.4 The Tribunal directed the Assessing Officer to verify whether any expenditure on account of the impugned bonus had been claimed in assessment year 2022-23; if it is found that no such expenditure was claimed in that year, the deduction is to be allowed in the year under appeal on payment basis under section 43B. The ground was thus treated as partly allowed for statistical purposes.
Issue 2 - Deduction on reversal of provision for payment to employees allegedly already disallowed in preceding year
Interpretation and reasoning
2.5 The second adjustment related to provisions for payment to employees. The assessee's case was that an amount of Rs. 1,10,13,000/- had been added back and offered to tax as an unascertained liability in the return of income for assessment year 2022-23.
2.6 In the year under appeal, the said provision was written back in the books and credited to the profit and loss account; since it had already been subjected to tax in the preceding year, the assessee claimed a corresponding deduction in the computation of income for the year under appeal.
2.7 The Tribunal treated this as a pure question of fact, turning on whether the same amount had indeed been offered to tax in the immediately preceding assessment year.
Conclusions
2.8 The Tribunal directed the Assessing Officer to verify the assessee's claim that the amount of Rs. 1,10,13,000/- had been offered to tax in assessment year 2022-23; if so found, no further addition was to be made in the year under appeal on this account. This ground also was treated as partly allowed for statistical purposes.
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