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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 ..... ce 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 pertained to FY 2013-14, which is not the case here. Upon perusal of demand notices and copies of challans, we have already noted that demand pertained to earlier several financial years. This being the case, the conditions of Section 43B were fulfilled and the assessee was eligible to claim the deduction of ₹ 224.34 Lacs as per the judgment rendered in Allied Motors (P) Ltd. Vs. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 1. 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 ₹ 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 ₹ 532.60 Lacs was reduced to ₹ 156.46 Lacs on account of disallowance of Value Added Tax [VAT] for ₹ 376.14 Lacs. As evident from grounds of appeal, the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared these dealers as Hawala Dealers and publish their name on the MVAT website though the assessee claimed that the transactions were genuine. Therefore, it was then decided to claim the sales tax payment as an expenditure in the impugned AY u/s 43B. 2.3 Similarly, the payment of ₹ 253.18 Lacs paid by the assessee during AY 2013-14 was claimed as an expenditure during impugned AY. Lastly, similar payment made before due date of filing of return of income u/s 139(1) amounting to ₹ 224.34 Lacs was claimed as an expenditure during impugned AY. 2.4 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and drawing our attention to the submissions as made before first appellate authority, the Ld. Authorized Representative for Assessee [AR], Shri Suchek Anchaliya, submitted that the payment of ₹ 151.79 Lacs was made in AY 2012-13 and the same was reflected as Temporary Advances in the Balance Sheet under the assumption that the assessee would claim the refund of sales tax payment. However, during impugned AY, it was realized that some of the dealers from whom purchases were made by the assessee, had not paid sales tax collected from the assessee to the Sales Tax Department and therefore, the assessee became illegible to claim input credit of VAT and hence, the aforesaid payment crystalized during impugned AY which was allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2-13 or belong to FY 2012-13 and paid before due date of filing of return of income u/s 139(1). Since none of the condition is being satisfied by the assessee, the payments did not qualify for deduction in impugned AY. 4. We have carefully heard rival submissions and perused relevant material on record as placed before us. The undisputed position that emerges is that the assessee has been saddled with Sales Tax Demand pertaining to financial years 2005-06 to 2011-12 which is evident from various notices of tax demand issued by the Sales Tax Department / VAT Department against the assessee and as placed before us. The same is corroborated by the copies of challans placed in the paper-book. This demand has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012-13. Upon perusal of financial statements for AY 2012-13, we find that the assessee has claimed an expenditure of ₹ 31.82 Lacs only in that AY and therefore, this deduction was not claimed in earlier AY, as alleged by Ld. AO. With a view to fortify this fact further, the assessee has placed on record an affidavit of one of the directors of the assessee company which would dispel the apprehensions raised by Ld. AO. Therefore, considering the factual matrix, this deduction was allowable to the assessee u/s 37(1). We hold so. 6. However, with a view to protect the interest of the revenue, it is made clear that if any benefit / refund accrues to the assessee in future against these payments, in any manne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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