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TMI Blog2019 (4) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... On the facts and circumstances of the case and in law the Ld. Commissioner of Income tax(Appeals) erred in confirming the disallowance of VAT expense of Rs. 3,76,14,295/-, without appreciating the fact that the same is incurred in normal course of business and allowable expenses as per IT Act, 1961 The assessment for impugned AY was framed by Ld. Deputy Commissioner of Income Tax, Central Circle-2(3), Mumbai [AO] in scrutiny assessment u/s 143(3) of the Income Tax Act, 1961 on 31/03/2016 wherein the returned loss of Rs. 532.60 Lacs was reduced to Rs. 156.46 Lacs on account of disallowance of Value Added Tax [VAT] for Rs. 376.14 Lacs. As evident from grounds of appeal, the disallowance of VAT made by Ld. AO and as confirmed by first appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was submitted that said liability arose out of goods purchased by the assessee from the defaulting dealers, who failed to pay the said liability and therefore, the liabilities pertained to business operations only. The proof of payment was also submitted during the assessment proceedings. Finally, it was also submitted that the payment made by the assessee was covered u/s 43B of the Act and allowable as a business expenditure in terms of CBDT Circular Nos. 496/25.09.1987 & 674/29.12.1993. 2.5 However, not convinced, Ld. AO opined that in terms of Section 43B, the deduction was to be allowed only in the year in which the sum was actually paid by the assessee and therefore, payment made in AY 2012-13 could not be allowed in impugned AY pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AT and hence, the aforesaid payment crystalized during impugned AY which was allowable u/s 37(1) of the Act. Our attention has been drawn to the submissions made, in this regard, during first appellate proceedings. Our attention has further been drawn to Schedule-6 of the financial statements of earlier AY 2012-13 to submit that the deduction of the same was never claimed by the assessee which is self-evidentiary from the fact that the assessee had claimed deduction only to the extent of Rs. 31.82 Lacs in that year. 3.2 So far as the deduction of Rs. 224.34 Lacs is concerned, our attention is drawn to the fact the aforesaid payment, in fact, pertained to earlier years and lower authorities proceeded on wrong assumption that the payment aro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been paid by the assessee in different installments over AY 2012-13 to 2014-15 and claimed as deduction in impugned AY u/s 43B and u/s 37(1). The deduction of amount of Rs. 253.18 Lacs has already been allowed by the revenue during assessment proceedings itself and therefore, there is no dispute with respect to deduction to that extent. The payment of the demand is also not in dispute since the assessee has already placed on record proof of payment during assessment proceedings. Therefore, the payment made by assessee during AY 2014-15 but before due date of filing of return u/s 139(1) was clearly covered by the provisions of Section 43B. Both the lower authorities, in our opinion, fell in error, to observe that the aforesaid liability pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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