2007 (6) TMI 234 - AT - Income Tax

Summary

Issues Involved:
The issues involved in this judgment are the addition of sales-tax payment as expenditure, applicability of section 43B of the IT Act, 1961, and the claim of deduction under said section.

Addition of Sales-Tax Payment as Expenditure:
The AO disallowed the claim of expenditure on sales-tax payment, stating it pertained to the preceding year. The CIT(A) upheld this decision, leading to an appeal. The Tribunal directed the AO to allow the liability on the basis of payment, emphasizing the applicability of section 43B of the Act.

Applicability of Section 43B of the IT Act:
The assessee claimed deduction under section 43B for sales-tax payment made in the relevant year. The CIT(A) declined the claim, stating the assessee was seeking double benefit. The Tribunal emphasized that section 43B overrides other provisions, allowing deduction only upon actual payment of tax or duty, not just on accrual of liability.

Claim of Deduction under Section 43B:
The Tribunal, considering the legal position under section 43B, disagreed with the lower authorities' decision to decline the deduction claim. It directed the AO to allow the deduction of sales-tax liability paid during the relevant year, ensuring the assessee had not already claimed it in a previous year. The appeal of the assessee was allowed based on the provisions of section 43B.