2020 (2) TMI 1220 - AT - Income Tax

Addition of reversal of excise duty u/s 43B - HELD THAT - The amount of the provision for the excise duty reversed in the year under consideration has already been suffered to tax in the immediate preceding assessment year. The assessee has been following this practice consistently and the same was allowed by the Ld. CIT (A) in the immediate preceding assessment year. This fact can be verified from the order of the Ld. CIT-A for the assessment year 2009-10 which is placed on page no. 131 of the paper book. In view of the above, we hold that the assessee is entitled for the deduction of the impugned excise duty reversed in the year under consideration. Accordingly we set aside the finding of the Ld. CIT-A and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed.

Summary

Issues:
1. Disallowance of excise duty reversal under section 43B of the Income Tax Act.
2. Disallowance of miscellaneous expenses as prior year expenses.

Issue 1: Disallowance of excise duty reversal under section 43B of the Income Tax Act:

The appellant contested the addition made by the AO regarding the reversal of excise duty amounting to ?11,47,325 under section 43B of the Act. The AO disallowed the excise duty claiming it was not paid and hence not allowable under section 43B. The appellant argued that the excise duty provision was reversed in the current year after being offered to tax in the previous year. The CIT-A upheld the AO's decision, stating the appellant failed to provide evidence of payment against the provision made in the previous year. The appellant, however, presented evidence showing the provision was reversed in the current year, having been taxed in the immediate preceding assessment year. The Tribunal noted the consistent practice of the appellant and allowed the deduction, directing the AO to delete the addition made. The ground of appeal was allowed, and the appeal was partly allowed.

Issue 2: Disallowance of miscellaneous expenses as prior year expenses:

At the outset, the appellant withdrew ground no. 3 raised in the appeal memo related to the disallowance of ?23,123 in respect of miscellaneous expenses as prior year expenses. The Tribunal dismissed this ground as not pressed.

In conclusion, the Tribunal ruled in favor of the appellant regarding the disallowance of excise duty reversal under section 43B of the Income Tax Act, allowing the deduction and directing the AO to delete the addition. The appeal was partly allowed, and the order was pronounced in the Court on 20/01/2020 at Ahmedabad.