2013 (7) TMI 1119 - AT - Income Tax

Summary

Issues involved: Appeal against order of Ld.CIT(A)-XVI, New Delhi for Assessment Year 2006-07.

Issue 1: Provisional liability for expenses outstanding
- The assessee claimed a provisional liability of &8377; 40,81,730 for material procured, sales commission, electric stores, and repairs & maintenance.
- Ld.AO disallowed the claim as the assessee admitted non-payment of the liability.
- Ld.Commissioner of Income Tax (Appeals) deleted the addition based on the mercantile system of accounting and past acceptance by Revenue.
- The Ld.D.R. argued lack of crystallization of the expenditure during the year.
- The Ld.Counsel for the assessee emphasized the acceptance of similar claims in the past.
- Tribunal upheld the Ld.Commissioner of Income Tax (Appeals) decision for consistency, as liabilities were discharged in the subsequent year.
- Ground dismissed in favor of the assessee.

Issue 2: Interest on late deposit of excise duty and trade tax
- First Appellate Authority allowed the interest payments based on a High Court decision.
- Tribunal found the payments compensatory in nature and hence allowable.
- No issues found with the decision.
- Revenue's appeal dismissed.

Judges: Shri A.D. Jain And Shri J. Sudhakar Reddy, JJ.

This judgment pertains to an appeal filed by the Revenue against the order of Ld.CIT(A)-XVI, New Delhi for the Assessment Year 2006-07. The first issue addressed in the judgment was the deletion of an addition of &8377; 40,81,730 claimed as provisional liability for various expenses by the assessee. The Ld.AO disallowed this claim due to non-payment admitted by the assessee. However, the Ld.Commissioner of Income Tax (Appeals) overturned this decision based on past acceptance and the mercantile system of accounting. The Tribunal upheld this decision citing consistency and the subsequent discharge of liabilities in the following year. Therefore, the ground was dismissed in favor of the assessee.

Moving on to the second issue, the Tribunal considered the allowability of interest on late deposits of excise duty and trade tax. The First Appellate Authority had allowed these payments, relying on a High Court decision. The Tribunal concurred, deeming the payments compensatory and hence permissible. No discrepancies were found in this decision, leading to the dismissal of the Revenue's appeal. The judgment was pronounced on 12th July, 2013, by Shri A.D. Jain And Shri J. Sudhakar Reddy, JJ.