2017 (2) TMI 39 - AT - Income Tax

Addition made u/s.145A - assessee has not given any details of challan of various Excise duty paid on raw-materials - Held that - The detailed finding recorded by CIT(A) after observing that assessee has been consistently following the same method of adjustment u/s.145A over the years has not been controverted by Id. DR by bringing any positive material on record. The detailed working so arrived at by CIT(A) and the findings given there on are as per material on record, thus, do not require any interference on our part. Accordingly, we upheld the order of the CIT(A) for deleting the addition made by the AO u/s. 145A. - Decided in favour of assessee Disallowance on account of custom duty expenses - Held that - This ground of appeal is covered in favour of assessee by the decision of special bench in DCIT vs. Glaxo Smith Healthcare Ltd. 2007 (7) TMI 334 - ITAT CHANDIGARH wherein held Section 43B in clear terms provides that the deduction claimed by the assessee in respect of any sum paid by way of tax, duty, cess or fee, shall be allowed only in computing the income referred to in section 28 of that previous year in which it was actually paid, irrespective of the previous year in which the liability was incurred for the payment of such sum as per the method of accounting regularly employed by the assessee. For the purpose of claiming benefit of deduction of the sum paid against the liability of tax, duty; cess, fee, etc., the year of payment is relevant and is only to be taken into account. The year in which the assessee incurred the liability to pay such tax, duty, etc., has no relevance and cannot be linked with the matter of giving benefit of deduction u/s 43B of the Act. In this view of the matter, the appeal deserves to be allowed in favour of assessee.

Summary

Issues:
1. Deletion of addition made under section 145A of the Income-tax Act.
2. Disallowance of customs duty expense.
3. Admission of additional evidence by the CIT(A) without remanding to the AO.

Deletion of addition made under section 145A:
The appeal was filed by the Revenue against the order of the Commissioner of Income-tax-22, Mumbai for Assessment Year 2010-11. The Revenue challenged the deletion of the addition made under section 145A of the Act. The Tribunal analyzed the facts of the case and referred to a similar case decided by a Co-ordinate bench. The Tribunal noted that the assessee had consistently followed a method of adjustment under section 145A over the years. The Tribunal upheld the CIT(A)'s decision to delete the addition, citing that the method applied by the Assessing Officer was not applicable to the specific circumstances of the case. The Tribunal found that the detailed findings of the CIT(A) were supported by the material on record, leading to the dismissal of the Revenue's appeal on this ground.

Disallowance of customs duty expense:
The issue pertained to the disallowance of a customs duty expense of Rs. 10 Crore. The Revenue contended that the order of the CIT(A) should be set aside and the Assessing Officer's decision restored. However, the assessee argued that a special bench decision favored their position. The Tribunal examined the special bench decision and concurred with its findings. The Tribunal emphasized that the deduction for customs duty paid should be allowed only in the year it was actually paid, as per section 43B of the Act. Based on this legal provision and the precedent set by the special bench, the Tribunal concluded that this ground of appeal was also in favor of the assessee, leading to the dismissal of the Revenue's appeal on this issue.

Admission of additional evidence without remand:
The Revenue raised a procedural issue regarding the admission of additional evidence by the CIT(A) without seeking a remand report from the Assessing Officer. The Tribunal considered the arguments presented by both parties. The Revenue contended that the assessee had not provided details of excise duty payments on raw materials to the AO but only before the CIT(A). On the other hand, the assessee maintained that all details and evidence, including challans, were submitted to the AO as well. The Tribunal reviewed the contentions and observed that the issue was primarily related to the deletion of additions under section 145A and the disallowance of customs duty expenses, both of which were decided in favor of the assessee. Therefore, the Tribunal did not find any reason to interfere with the CIT(A)'s decision on the admission of additional evidence without remand.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the additions made under section 145A and to allow the customs duty expense deduction in accordance with the provisions of section 43B. The Tribunal found that the legal positions and precedents supported the assessee's case on both issues, leading to the rejection of the Revenue's appeal.