2025 (6) TMI 1471

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....C had erroneously invoked the provisions of section 43B of the Act against a sum of Rs. 2,60,67,039/- (holding that the said sum represented delayed sum in remittance of GST), in the absence of such sum reflecting in the financial statements of the Appellant for the impugned Assessment Year under the facts and circumstances of the case. 4. The learned CIT(A)-NFAC erred in law in not appreciating that CPC had erroneously invoked the provisions of section 43B of the Act against a sum of Rs. 18,89,018/- (i.e., sum representing employee's contribution to PF for the month of Sep 2017, wherein the remittance was delayed by one day) under the facts and circumstances of the case. 5. Without prejudice the learned CIT(A)-NFAC further erred in law in not appreciating that, CPC ought not to have invoked the provisions of section 43B of the Act against the sum of Rs. 18,89,018/- as the said sum was remitted to the treasury of the concerned department within the statutory time frame provided under the provisions of section 139(1) of the Act under the facts and circumstances of the case. 6. The learned CIT(A)-NFAC erred in law in not appreciating that the CPC was not justified in consid....

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....,018/- ii. Amount debited to P&L account of the previous year but disallowable u/s 43B of the Act on account of estimated GST Payable allegedly reported by the statutory auditor is Rs. 2,60,67,039/- 3.1 Further, the assessee after receiving the intimation noticed that at the time of filing of the return, while calculating the tax liability had erroneously selected the basic tax rate @ 30% instead of correct base rate of 25%, which has been carried on in the said intimation. Thereafter noticing the said mistakes i.e. wrong mentioning of tax rate @ 30% instead of 25% the assessee company immediately furnished the rectified return on 18.11.2019 and accordingly claimed the refund of Rs. 86,12,904/- along with interest u/s 244A of the Act thereon. The CPC without providing the reasonable opportunity had rejected the rectified return filed by the assessee. Thereafter, the return of income originally filed by the assessee on 24.10.2018 was selected for limited scrutiny on the issue of "foreign outward remittance" and accordingly statutory notices u/s 143(2) & 142(1) of the Act were issued calling for the details/information. During the course of assessment proceedings, the assessee com....

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...., copy of assessment order along with CBIC circular. 7. Before us, the ld. A.R. of the assessee vehemently submitted that the ld. CIT(A)/NFAC erred in not appreciating the fact that CPC had erroneously invoked the provisions of section 43B of the Act against a sum of Rs. 2,60,67,039/- in the absence of such sum reflecting in the financial statement. Further, ld. A.R. of the assessee submitted that ld. Authorities below erred in confirming the disallowance made u/s 36(1)(va) of the Act specially when there is a delay of just 1 day because of Sunday being the holiday. 8. Ld. D.R. on the other hand supported the order of the authorities below. 9. We have heard the rival submissions and perused the materials available on record. On going through the intimation passed u/s 143(1) of the Act, we find that the CPC has disallowed total Rs. 2,79,56,057/- based on the qualification in tax audit report on account of following heads: i. Amount debited to P&L account to the extent disallowable u/s 36 of the Act for late payment of provident fund is Rs. 18,89,018/- ii. Amount debited to P&L account of the previous year but disallowable u/s 43B of the Act on account of estimated GST by stat....

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....been claimed as a deduction but the said tax or duty or any other statutory liability has not been actually paid. When no deduction of GST by way of operating expenses has been claimed by the assessee company, then question of disallowance of the same does not arise in the present case. It is worthwhile here to note that the section 43B of the Act deals with the allowing of certain deductions on certain expenses only when such expenses are paid by the assessee and not when they have been incurred as per the accounting method of the assessee. Thus, section 43B of the Act states that certain deductions are to be allowed only on actual payment of the expenses for which the deduction is claimed. In the present case, on going through the balance sheet we find that there is no GST amount payable as on 31.3.2018 and therefore, the disallowance made u/s 43B of the Act based on incorrect tax audit report of a Chartered Accountant which is later on rectified by the auditor is unjustified. Accordingly, we delete this disallowance made under section 43B of the Act amounting to Rs. 2,60,67,039/- and allow this ground of appeal of the assessee. 9.3 Now coming to the second issue with regard to ....