2023 (2) TMI 795 - AT - Income Tax

Disallowance made u/s 43B - Electricity Duty payable - HELD THAT - As was held by the Tribunal for the assessment year 2014-15 2020 (11) TMI 113 - ITAT DELHI we hold that the AO is not justified in disallowing the Electricity Duty payable invoking the provisions of section 43B of the Act. Therefore, we set aside the order of the ld. CIT (Appeals) and allow the appeal of the assessee.

Summary

Issues:
Appeal against disallowance under section 43B of the Income Tax Act, 1961 for Electricity Duty payable.

Analysis:
The appeal was filed against the order of the ld. Commissioner of Income Tax (Appeals) sustaining the disallowance under section 43B of the Act for Electricity Duty payable. The assessee argued that the Tribunal had previously decided in their favor for the assessment years 2014-15 and 2015-16. The Tribunal held that no disallowance was warranted under section 43B for Electricity Duty payable by the assessee, as it was collected on behalf of the government as an agent and not as a direct tax liability. The Tribunal referred to the Electricity Duty Act, 1963, and a decision of the Kerala High Court to support this conclusion. The Tribunal emphasized that the duty collected was in a fiduciary capacity and not a direct tax liability, thus not falling under section 43B of the Act.

The Tribunal noted that the rule of consistency should be followed by Income-tax authorities, and in the absence of any distinguishing features in the facts, the Assessing Officer was not justified in disallowing the claim. The Revenue failed to demonstrate any material to show that the previous Tribunal order had been stayed or overruled by a higher judicial forum. Therefore, the Tribunal set aside the order of the CIT(A) and allowed the appeal of the assessee based on the principle of consistency and lack of new evidence to disallow the expenditure under section 43B.

Based on the reasoning and decision in the assessment year 2014-15, the Tribunal held that the Assessing Officer was not justified in disallowing the Electricity Duty payable under section 43B. Consequently, the Tribunal set aside the order of the CIT(A) and allowed the appeal of the assessee. The appeal was ultimately allowed in favor of the assessee based on the consistent application of the law and the fiduciary nature of the duty collected, not constituting a direct tax liability under section 43B of the Act.