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TMI Blog2019 (3) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... d Loss Account in the preceding year. No such charge was created by the assessee in the previous year since the amount was not paid by the assessee in the said year. Only on payment of said amount, the assessee debited the same to the Profit and Loss Account. It is undisputed that LBT is to be allowed as expenditure. We find no merit in the orders of authorities below in denying the same to the assessee on the ground that the amount was not shown as payable in the preceding year. The express provisions of section 43B of the Act provides that irrespective of previous year in which the liability to pay such sum was incurred by the assessee, according to the method of accounting regularly employed by him, the said sum would be allowed only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent appeal is against denial of expenditure incurred on account of Local Body Tax (LBT) amounting to ₹ 43,73,913/- which was claimed as deductible under section 43B of the Act, since the said amount was paid during the year under consideration, though it related to prior period. 4. Briefly, in the facts of the case, the assessee was engaged in the business of retail trade in liquor i.e. IMFL Country liquor. The case of assessee was picked up for scrutiny. On going through Trading Account, the Assessing Officer noted that the assessee had debited Local Body Tax (LBT) of ₹ 99,67,827/-. The assessee was asked to give the details of LBT tax paid with supporting challans. The Assessing Officer noted that in addition to current ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the year, hence the claim was made under section 43B of the Act, which was denied by the Assessing Officer on the ground that it was not debited to the accounts in the previous year. He further pointed out that reliance placed upon by the Assessing Officer on the decision of Ahmedabad Bench of Tribunal in Deepak Nitrite Ltd. Vs. DCIT (2012) 139 ITD 213 (Ahd Trib.) is not correct as the disallowance in the case was on account of interest expenditure and not the State levy. He further placed reliance on the decision of Pune Bench of Tribunal in DCIT Vs. Eagle Agro Farms Pvt. Ltd. in ITA Nos.2649 2639/PUN/2016, relating to assessment years 2006-07 2007-08, order dated 08.02.2019, wherein the prior period expense which were covered und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said deduction is to be allowed while computing the income under section 28 of that previous year in which such sum was actually paid by him. Such is the proposition laid down in section 43B of the Act, which opens with non abstinent clause Notwithstanding anything contained in any other provisions of the Act . . In other words, where the assessee is following a particular method of accounting and any amount was incurred for carrying out the business in any of the years, then the same if covered under the provisions of section 43B of the Act is to be allowed in the year of payment. 10. In the facts of present case, where the assessee was following mercantile system of accounting, then LBT which is 10% of purchase cost was chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him. Accordingly, we hold that the assessee is entitled to the aforesaid claim under section 43B of the Act. 11. Coming to the reliance placed upon by the authorities below on the decision of Ahmedabad Bench of Tribunal in Deepak Nitrite Ltd. Vs. DCIT (supra), the issue which arose was the claim of deduction on account of penal interest and penalty of ₹ 1,70,186/-. The Tribunal held that interest paid on sales tax was not of penal in nature and was to be allowed as business expenditure and the matter was remitted to verify whether in earlier years, unpaid amount of sales tax was added to the income or not. The assessee had not claimed the said expenditure in earlier years and hence, the said proposition is not applicable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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