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2024 (3) TMI 1117 - AT - Income TaxDisallowance of VAT expenses - Disallowance as fee or charge u/s40(a)(iib) - assessee is a state government owned company which is engaged in wholesale business of foreign liquor in Chhattisgarh - CIT(A) deleted the additions / disallowance - HELD THAT - Identical issue has been dealt with by the Co-ordinate Bench of the Tribunal, Raipur in assessee's own case for the A.Ys.2015-16, 2016-17 and 2017-18 2022 (12) TMI 1498 - ITAT RAIPUR relying upon the law laid down in the case of Kerala State Beverages Manufacturing Marketing Corporation Ltd. 2022 (1) TMI 184 - SUPREME COURT wherein as approved the view taken by the Hon ble High Court of Kerala that as surcharge on sales tax is a tax , and Section 40(a)(iib) does not contemplate tax , and surcharge on sales tax is not a fee or a charge , therefore, no disallowance under the said statutory provision was called for in the hands of the assessee. Accordingly, finding no infirmity in the view taken by the CIT(Appeals), we uphold the same and the addition is vacated. Decided in favour of assesse.
Issues:
The judgment involves the following Issues: 1. Disallowance of VAT expenses u/s 40(a)(iib) of the Income-tax Act, 1961. 2. Timeliness of filing the appeal by the revenue. 3. Assessment of the state government owned company engaged in wholesale business of foreign liquor in Chhattisgarh for A.Y. 2020-21. Issue 1: Disallowance of VAT expenses u/s 40(a)(iib) of the Income-tax Act, 1961: - The revenue challenged the deletion of disallowed VAT expenses amounting to Rs. 95,03,71,530/- by the ld. NFAC, based on the order passed by the A.O u/s 143(3) r.w.s. 144B of the Act. - The CIT(Appeals) accepted the assessee's contention, leading to the deletion of disallowances made by the A.O. - The Tribunal referred to a previous case involving the same issue and relied on the judgment of the Hon'ble Supreme Court, concluding that the disallowance was not justified as the VAT levied by the State Government was indeed a tax and not a fee or charge as per Section 40(a)(iib) of the Act. - Accordingly, the Tribunal upheld the view of the CIT(Appeals and vacated the addition of Rs. 95,03,71,530/-. Issue 2: Timeliness of filing the appeal by the revenue: - Despite a delay of 465 days pointed out in the Form 36, the Ld.DR clarified that no actual delay was involved in filing the appeal, as it was done within the stipulated time period from the date of passing of the impugned order by the CIT(Appeals). Issue 3: Assessment of the state government owned company engaged in wholesale business of foreign liquor in Chhattisgarh for A.Y. 2020-21: - The assessee, a state government owned company engaged in wholesale business of foreign liquor in Chhattisgarh, filed a return of income for A.Y. 2020-21 declaring total income of Rs. 14,93,78,190/- and claimed a refund of Rs. 1,59,94,920/-. - The assessment by the A.O u/s. 143(3) r.w.s. 144B of the Act resulted in the disallowance u/s 40(a)(iib) of the Act of Rs. 95,03,71,530/- and imposition of a penalty on indirect tax u/s 37 of the Act of Rs. 8339/-. - The CIT(Appeals) accepted the assessee's appeal, leading to the deletion of disallowances made by the A.O. - The revenue appealed against the order of the CIT(Appeals, which was dismissed by the Tribunal based on the previous case and the judgment of the Hon'ble Supreme Court. The Tribunal upheld the decision of the CIT(Appeals, dismissing the appeal of the revenue in terms of the observations made in the judgment.
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