2024 (4) TMI 1069

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....ade in view of clause 26(i)(B)(b) of Tax Audit Report['TAR' hereinafter]. 2.2 Aggrieved assessee carried the matter in appeal before first appellate authority u/s 246A(1)(a) of the Act. While dealing with assessee's appeal on jurisdiction as well on merits the Ld. NFAC provided as much as four opportunities commencing from February 2021 to August, 2022. Except replying notice dt. 04/04/2022 the assessee failed to comply with other notices, in the event, after consideration assessee's reply dt. 18/05/20022 the Ld. NFAC adjudicated both the issues against assessee vide para 4.3.1 and 4.4.2 of the impugned order respectively which reads as under; 4.3.1 As per the provisions of section 143(1)(a)(iv), the following adjustment can be made: "143. [(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely: - (a) the total income or loss shall be computed after making the following adjustments, namely: - (i)....., (ii)....., (iii)....., (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in th....

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.... on merits. Per contra, the Ld. DR strongly relying on the orders of tax authorities below prayed for dismissal of appeal. 4. We have heard rival contentions, subject to rule 18 of ITAT-Rules 1963 perused the material placed on record and considered the facts of the case in the light of settled legal position which are forewarned to rival parties. 5. There is no dispute that the petitioner follows mercantile system of accounting and claims deductions on the basis of incurred liability or accrued as the case may be and not on actual receipt or payment i.e. not on cash basis. It is an admitted fact that the amount of interest payable on delayed MVAT liability is provided in books by debiting to profit & loss account ['P&L' hereinafter] thus claimed as deductible u/s 37(1) of the Act. Further it is also remained undisputed that such interest provided/debited to P&L is remain unpaid within the time limit prescribed u/s 139(1) of the Act for filing the return of income. Insofar as the deductibility of such unpaid interest u/s 37(1) of the Act is concerned there is much less dispute in view of 'Mahalakshmi Sugar Mills Co Vs CIT' [1980, 123 ITR 429 (SC)]'Prakash Cotton Mills Ltd. Vs CIT....

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....ment basis is settled by the catena of judicial precedents, therefore the disallowance thereof carried out u/s 143(1)(a) of the Act in view of 'Rohan Korgaonkar' (supra) cannot be faulted with. In view thereof we find no infirmity with the orders of tax authorities in carrying out the disallowance through prima-facie adjustment u/c (iv) of u/s 143(1)(a) of the Act. The ground therefore stands dismissed. 8. Now coming to sole & substantive ground of merit, without reproducing the provision in verbatim it shall purposive to state that, section 43B of the Act provides a list of expenses which are otherwise deductible while computing income under the head 'Income from business and profession' shall be deductible/allowed in the year of actual payment and not in the year in which liability to pay such expenses is incurred/provided. Clause (a) of section 43B of the Act lists outs one of such expense payable by the assessee by way of 'tax, duty, cess or fee by whatever name called', under any law for the time being in force. Apparently the word interest is not prescribed u/c (a) of section 43B of the Act. The Revenue treats interest payable on any item falling u/c (a) of 43B of the Act as....

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....ture of interest payable by the assessee under the provisions of MVAT Act, 2002 wherein we noted that, as per s/s (1) of section 30 of the MVAT Act, the interest is payable if any dealer fails to apply for registration or has failed to apply within the time period specified in rule 8 of the MVAT Rules. Such dealer is liable to pay interest in respect of all unregistered period(s). The said interest is calculated from the 1st April of the respective year till the date of payment. According to section 30(2) of the MVAT Act, a registered dealer who fails to pay the due taxes as per returns within the specified time, is liable to pay by way of simple interest, a sum calculated at the prescribed rate on the amount of such tax for each month or part thereof after the last date by which he should have paid such tax. According to section 30(3) of MVAT Act, if any tax remains unpaid up to one month after the end of the period of assessment, then the dealer is liable to pay simple interest at the rates as specified from time to time, on such tax for each month or part thereof from the date immediately following the last date of the period for which the dealer has been assessed till the date ....