2025 (10) TMI 230

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.... the order of the Income Tax Appellate Tribunal (ITAT) dated 23.02.2023 in C.O.No.1/Bang/2023 (in ITA No.1068/BANG/2022). 2. The Assessee-Respondent is said to be a Company in the business of Software Development, Consultancies etc. For Assessment Year 2014-15, the Return of Income was filed on 27.11.2014 declaring income of Rs. 33,22,30,58,230/- under the provisions of the Income-tax Act and Rs. 5,63,74,68,310/- under Section 115JB of the Act. The case was selected for scrutiny and notice under Section 143(2) of the Act was issued on 01.09.2015. The assessment was concluded under Section 143(3) by making certain additions/disallowances to the total income. On conclusion of the assessment, the claim of depreciation of Rs. 28,67,245/- on ....

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....ation of the Assessing Officer on the issue of provisions for discount. It was noted that during the year, the assessee had debited a sum of Rs. 29.00 crores towards provision for discount, which had not been added back by the assessee. After being given the opportunity to explain the same, on behalf of the favourable order for the Assessment Years 2004-2005 to 2007-2008 on that issue, the Assessment Officer observed that the department had not accepted that decision and had appealed to the High Court on the issue. Therefore, it was held that to maintain consistency with the earlier Assessment Years, the expenditure was considered to be contingent in nature and was disallowed and added back to total income. Penalty proceedings were also dir....

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....nd therefore, the provision created was a contingent liability which was not allowable under the Act. On behalf of the assessee the submission was that the assessee gave discount to the customers based upon the volume of the sale and after reaching a specified target. The assessee had to make a provision for discount to be paid to the customer after the target was achieved. Since the revenue was earned during the relevant assessment year, but, the discount was paid often after the target was achieved, in some cases after the end of the financial year, provision was made for discount by the assessee. It was noted by the ITAT that the provision for discount had been discharged fully in the subsequent years which showed that the assessee was m....