2020 (11) TMI 946 - HC - Income Tax

Entitlement for prior period expenses and expenditure on excise transport fees - not claimed in original return and assessing authority has not made any addition in this regard or otherwise - whether the Tribunal is right in law in not remitting back the matter back to assessing authority to consider the issue as same was not adjudicated earlier? - HELD THAT - It is well settled in law that Tribunal is the final fact finding authority and this Court in exercise of powers under Section 260A of the Act can interfere with the findings of fact only when the same are shown to be perverse - See SUDARSHAN SILKS SAREES VS. CIT 2008 (4) TMI 5 - SUPREME COURT Rule 46A(3) of the Income Tax Rules, 1962 applies to the appellate authority namely Commissioner of Income Tax (Appeals) and not the Income Tax Appellate Tribunal. It is not in dispute that the assessee had produced the material which it had produced before the Tribunal, even before the Commissioner of Income Tax (Appeals). Commissioner of Income Tax (Appeals) failed to take note of the material produced by the assessee and did not call for the remand report. The Supreme Court, in NATIONAL THERMAL POWER 1996 (12) TMI 7 - SUPREME COURT while dealing with the power of the Tribunal, held that Tribunal may pass such orders as it thinks fit after giving both the parties an opportunity of being heard and there is no reason to restrict the power of the Tribunal only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals). Tribunal recorded the finding that the expenses were incurred during the relevant Assessment Year and therefore, the claim was allowable, by placing reliance on the decision of Supreme Court in 'KEDARNATH JUTE MFG. COMPANY LIMITED Vs. CIT' 1971 (8) TMI 10 - SUPREME COURT The aforesaid finding is a finding of fact which is based on meticulous appreciation of evidence on record. The Tribunal, by placing reliance on the decision of the Supreme Court in BHARAT EARTH MOVERS, 2000 (8) TMI 4 - SUPREME COURT has held that a business liability should arise in the accounting year and it should be capable of estimated with reasonable certainty and if these requirements are satisfied, the liability cannot be said to be contingent one - The only ground which has been taken is that the matter ought have been remitted by the Tribunal to the Assessing Officer. Since the Commissioner of Income Tax (Appeals) has dealt with the claims of the assessee on merits, therefore, the Tribunal has rightly dealt with the claims of the assessee on merits and there is no need of remand in the fact situation of the case. - Decided in favour of assessee.

Summary

Issues:
1. Prior period expenses claimed by assessee.
2. Deduction of claim towards expenditure/liability for excise transport fees.

Issue 1: Prior period expenses claimed by assessee

The appeal pertained to the Assessment Year 2002-03, where the revenue challenged the Tribunal's decision allowing the assessee's claim for prior period expenses amounting to ?2,56,28,132. The revenue contended that the claim was not made in the original return and should have been disallowed. They argued that fresh claims cannot be made without filing a revised return and that all expenses should be reconciled within the accounting period. The revenue further asserted that the Tribunal erred in not remanding the matter back to the assessing authority for consideration. However, the assessee defended the claim, stating that the Tribunal's findings were based on meticulous evidence and not perverse. They emphasized that the entries in the books of accounts are not conclusive, and the crucial aspect is when the expenditure was incurred. The Tribunal, being the final fact-finding authority, had correctly considered the evidence before it. The Court upheld the Tribunal's decision, citing relevant case law and emphasizing that findings of fact can only be interfered with if shown to be perverse.

Issue 2: Deduction of claim towards expenditure/liability for excise transport fees

The second issue involved the deduction of a claim for expenditure/liability of ?1,35,73,930 in respect of excise transport fees, which was not originally claimed in the return. The revenue argued that this claim was not a statutory liability under Section 43B of the Act and should not be allowed as a business liability since no actual payment was debited in the books of accounts. They contended that the Tribunal should have called for a remand report from the Assessing Officer. However, the assessee maintained that the Tribunal's decision was based on valid evidence and not challenged as perverse. The Court agreed with the assessee, stating that since the Commissioner of Income Tax (Appeals) had already dealt with the claims on merits, there was no need for remand. The Tribunal's decision was upheld, and both substantial questions of law were answered against the revenue and in favor of the assessee.

In conclusion, the High Court dismissed the appeal, upholding the Tribunal's decision regarding the assessee's claims for prior period expenses and deduction of expenditure/liability for excise transport fees for the Assessment Year 2002-03. The Court emphasized the importance of evidence-based findings and the limited scope of interference in matters of fact.