TaxTMI 
TaxTMI 
2026 (6) TMI 292
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....posit of PF. The appellant filed rectification application dated 14.02.2024, challenging in the income made by the CPC. However, the CPC vide rectification intimation dated 21.06.2024 denied the correction in the intimation and issued the rectified intimation determining the same income i.e. Rs. 82,04,164/-. 3. Aggrieved by the said order of the CPC Bangaluru, the assessee filed appeal before the ld. CIT(A). The ld. CIT(A) vide impugned order has dismissed the ground against the disallowance of Rs. 45,62,808/- u/s. 43B of the Act with respect to the GST liability. However, the disallowance of Rs. 49,288/- on account of late deposit of PF u/s. 43B of the Act was allowed for statistical purposes. 4. Aggrieved by the impugned order with respect to the confirmation of disallowance on account of GST liability, the assessee/appellant is in appeal before the Tribunal and has raised the following grounds of appeal: "1. Learned Faceless Appeal Centre (NFAC) has grossly erred in law as well on facts in confirming adjustment of Rs. 45,62,808/- on account of GST payable, made by the Centralized Processing Centre (CPC) by invoking section 43B. 2. Learned NFAC has grossly....
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....id section 43B of the Act by using an alternative accounting method which is not permissible in law. It is therefore submitted that the CPC has rightly disallowed the amount of the GST liability and the same has been correctly and legally confirmed by the impugned order. 8. We have considered the rival submission and examined the record. In order to appreciate the argument raised before us on behalf of the parties, we would like to extract the relevant portion of the impugned order wherein the disallowance u/s. 43B of the Act which is the issue involved before us has been dealt with by the ld. CIT(A). Para 5 to 5.3 is accordingly extracted below as under: "5. Ground No. 3 relates to disallowance u/s. 43B of the Act pertaining GST Liability Rs. 45,62,808/-. 5.1. In this regard, the appellant has submitted that the CPC has made the disallowance w.r.t. GST Liability of Rs. 45,62,808/- without appreciating the fact that the appellant never claimed it as expense in the first place. The appellant also contended that since no expense is claimed in the P&L A/c, it cannot be disallowed. In support of its claim, the appellant has submitted its P&L A/c, relevant parts of ....
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....unting to Rs. 45,69,143/- on the ground that the same is not paid before due date of filing the return. Ld. Counsel submitted that the said amount representing GST and Service Tax were neither rooted through profit and loss account nor did the liability from service tax belong to the assessment year under consideration. Ld. Counsel further placing reliance on the decision of the Hon'ble Chattisgarh High Court in the case of Grand Motors vs. ITO in Tax(c) No.207/2024 dated 25.11.2024 submitted that on identical facts where the CPC disallowed VAT, Entry Tax, CST while processing the return u/s. 143(1), for not remitting into Government account before due date of filing of return of income made disallowance invoking the provisions of section 43B, the Hon'ble High Court referring to the decision of the Hon'ble Delhi High Court in the case of CIT vs. Noble & Hewitt (I) (P.) Ltd. held that since assessee did not claim the amount in his profit and loss account as his expenditure/deduction u/s. 43B, the disallowance made by CPC while processing return u/s. 143(1) was deleted. 3. Ld. DR strongly supported the orders of the authorities below. 4. Heard rival submissions, per....
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....ority i.e. the Commissioner of Income Tax (Appeals) under Section 246A(1)(a) of the IT Act and the CIT(A), by its order dated 15-3-2024, partly allowed the appeal of the appellant assessee to the extent of Rs. 1,79,97,376/- pertaining to opening balance for the assessment year 2018-19 deleting the same, but the balance disallowance of Rs. 62,32,262/- shown as payable in the balance sheet was confirmed against which the appellant assessee preferred further appeal before the ITAT which was also, in turn, dismissed finding no substance against which this appeal has been preferred. 6. Mr. S. Rajeswara Rao, learned counsel appearing for the appellant / assessee, would submit that the appellant did not claim any deduction of indirect taxes including VAT / other taxes in computing the income for the previous year and the appellant is following the exclusive method of accounting for indirect taxes as in the past. He would further submit that Section 43B of the IT Act mandates that a deduction otherwise allowable under the Act shall be allowed only in computing the income referred in Section 28 of that previous year in which such sum is actually paid by the assessee and since the a....
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....evious year under Section 139(1) of the Income Tax Act. The First Appellate Authority also noticed that it is an undisputed fact that-the Appellant did not charge VAT to the Profit and Loss account. It was therefore noted by the First Appellate Authority that in such circumstances, the liability may still be unpaid, but it cannot be disallowed being not claimed as deduction in the Books of Accounts." 11. Similarly, the Delhi High Court in the matter of Commissioner of Income-tax v. Noble & Hewitt (I) (P.) Ltd. held in paragraph 6 as under: - "6. In our opinion since the assessee did not debit the amount to the Profit & Loss Account as an expenditure nor did the assessee claim any deduction in respect of the amount and considering that the assessee is following the mercantile system of accounting, the question of disallowing the deduction not claimed would not arise." 12. Reverting to the facts of the case, it is admitted position on record that the appellant / assessee did not claim the amount of Rs. 62,32,262/- in his profit and loss account as an expenditure / deduction, nor the appellant claim deduction in respect of that account under Section 43B of t....
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....n of addition under section 43B will arise. While passing the order the High Court has made the following observations: "The Act imposes tax on income. In order to form income of a person, the person must receive or deemed to receive any sum. The amount of luxury tax which was not received cannot form part of the income of any person. [Para 7] The Act further gives relief, deduction and exemption from payment of income-tax to the person on various income. Section 43B provides a right to the assessee to claim deduction of any sum payable by the assessee by way of tax, duty, cess or fee etc. This section imposed a condition that such deduction be allowed only in case of actual payment of the liabilities mentioned therein by the assessee. Section 43B is concerned with deduction claimed by the assessee. Thus, the scope of inquiry by the Assessing Officer under section 43B is as to whether the assessee can be allowed deduction which can only be allowed to the assessee when it has liability to pay under the law and has actually paid that amount. The question of addition will arise only when the assessee has claimed deduction and the Assessing Officer finds that conditio....