TaxTMI 
TaxTMI 
2016 (3) TMI 1009
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....ar 2009-10 on 29.9.2009 declaring a total income of Rs. 1,28,01,700/-. The case was selected for scrutiny under CASS and accordingly, notices u/s 143(2) & 142(1) of the Income- Tax, 1961 (hereinafter called as 'the Act') were issued. In response to notice, authorized representative of the assessee appeared from time to time and furnished books of accounts and other information called for. During the course of assessment proceedings, the A.O. noticed that assessee has admitted other income of Rs. 1,61,49,497/- towards escalation charges received from Chattisgarh State Electricity Board (CSEB), therefore, issued a notice and asked to furnish the nature of income offered under the head escalation charges. The assessee, in reply to the notice, submitted that during the previous year relevant to assessment year 2009-10, it has received a sum of Rs. 1,61,49,497/- from CSEB towards escalation charges of electricity. The assessee further, submitted that the Chattisgarh State Electricity Regulatory Commission has passed an order on 15.1.2008 enhancing the sale price of power and accordingly awarded an amount of Rs. 3,34,41,482/- for the financial years 2006-07 & 2007-08. The CSEB has filed ....
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....e A.O. The assessee further submitted that it has offered the income for the assessment year 2009-10, whereas the department has taxed the same income for assessment year 2008-09, thereby there was a double taxation for the same amount in two financial years, which cannot be done. The CIT(A) after considering the explanations offered by the assessee set aside the issue to the file of the A.O. with a direction that in case, the appeal filed by the assessee for the assessment year 2008-09 on this account was dismissed, the A.O. is directed to allow the relief for the assessment year 2009-10. In case, relief is allowed in assessment year 2008-09, then no relief shall be allowed for the assessment year 2009-10. Aggrieved by the CIT(A) order, the revenue is in appeal before us. 4. We have heard both the sides, perused the materials available on record and gone through the orders of the authorities below. During the financial year relevant to assessment year 2009-10, assessee has received power escalation charges from CSEB. The assessee has offered the same as income of the year on receipt basis. The department has taken a view that the said amount is taxable on accrual basis, therefo....
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...., by stating that the assessee has not admitted the liability, therefore, the amount is not allowable u/s 43B of the Act. The CIT(A) upholding the order of the A.O., held that when the liability is not crystallized during the year under consideration, the question of claiming deduction u/s 43B of the Act was not correct. 6. We have heard both the sides, perused the materials available on record. The A.O. disallowed CST and service tax paid under protest for the reason that the assessee itself has not admitted the liability in the books of accounts. The assessee has paid CST and Service tax under protest challenging the order of the authorities before the appellate authorities. The A.O. was of the opinion that the assessee has not accepted the liability and not recognized in the books of account, therefore, the same is not qualified to be claimed as expenditure. Once, the expenditure is not qualified to be deductible, then, no deduction is allowed under section 43B of the Act. It was the contention of the assessee that it has paid the amount, therefore, eligible for deduction u/s 43B of the Act. Whether the liability was paid without any condition or with protest, it does not cha....
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....year or not. Once assessee paid the amount, the year in which such payment is made is relevant for claiming the deduction and the year in which such liability was incurred by the assessee was irrelevant. In the present case on hand, though the assessee paid the tax under protest, the actual payment is made during the financial year relevant to assessment year 2009-10. The A.O. has misinterpreted the provisions of section 43B, by stating that the deduction is available, only when such liability was debited to profit & loss account. Therefore, we are of the opinion that the assessee is eligible for deduction for the CST and service tax paid on actual payment basis u/s 43B of the Act, whether it was paid under protest or otherwise. 9. Now it is pertinent to mention here to case law relied upon by the assessee. The assessee relied upon ITAT, Mumbai bench decision in the case of Euro RSCG Advertising (P) Ltd. Vs. ACIT (2013) 154 TTJ 389. The ITAT under similar circumstances, held the issue in favour of the assessee. The relevant portion is reproduced hereunder: Deduction u/s 43B-A1lowability-Relevancy of year of payment- Assessee company engaged in rendering range of communi....