EVEREST BLOWER SYSTEMS PVT. LTD,DELHI V. DCIT CIRCLE 7 (1) NEW DELHI, NEW DELHI

ITA 3102/DEL/2024

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The case involves Everest Blower Systems Pvt. Ltd., the appellant, contesting an order by the Commissioner of Income Tax (Appeals) which upheld the disallowance of certain contingent liabilities as expenditures under section 37 of the Income Tax Act, 1961. The liabilities in question were Rs. 1,37,16,613 for Guaranty and Rs. 1,70,59,350 for Capital Commitments. The appellant argued that these were not claimed in the Profit and Loss Account, a fact later verified by the Departmental Representative. The tribunal, after reviewing the submissions and the verified records, ruled in favor of the appellant, allowing the appeal and setting aside the disallowance.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 472458 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-11-2024
• Assessment Year: 2021-2022
• Appeal Filed On: 27-06-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK KUMAR UPADHYAY
• Assessee Lawyers: SHAILESH GUPTA; CHARTERED ACCOUNTANT
• Section: 143(1); 37

Judgement Text

" आयकर अपीलीय अिधकरण िदʟी पीठ “बी”, िदʟी ŵी िवकास अव̾थी, Ɋाियक सद˟ एवं ŵी एस įरफौर रहमान, लेखाकार सद˟ क े समƗ IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”, DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER & SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER आअसं.3102/िदʟी/2024 (िन.व. 2021-22) ITA No.3102/DEL/2024 (A.Y.2021-22) Everest Blower Systems Pvt. Ltd., 1st Floor, B-44, Mayapuri Industrial Area, Phase-I, Delhi 110064 PAN: AAPCS-0860-A ...... अपीलाथᱮ/Appellant बनाम Vs. Deputy Commissioner of Income Tax, Circle 7(1), New Delhi 110001 ..... ᮧितवादी/Respondent अपीलाथŎ Ȫारा/ Appellant by : Shri Shailesh Gupta, Chartered Accountant ŮितवादीȪारा/Respondent by : Shri Vivek Kumar Upadhyay, Sr. DR सुनवाई कᳱ ितिथ/ Date of hearing : 18/11/2024 घोषणा कᳱ ितिथ/ Date of pronouncement : : 19/11/2024 आदेश/ORDER PER VIKAS AWASTHY, JM: This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)/Additional/Joint Commissioner of Income Tax (Appeals)-10, Mumbai (hereinafter referred to as 'the CIT(A)') dated 30.04.2024, for assessment year 2021-22. 2. The solitary issue in appeal is against disallowance of expenses u/s. 37 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act’) being the contingent 2 ITA No. 3102/DEL/2024 (AY 2020-21) liability of Rs. 3,07,75,963/- comprising of, Guaranty Rs.1,37,16,613/- and Capital Commitments Rs.1,70,59,350/-. 3. Shri Shailesh Gupta, appearing on behalf of the assessee submitted that the Centralized Processing Centre(CPC)/has erred in disallowing expenditure on account of contingent liability u/s. 37 of the Act, whereas the assessee has never claimed the contingent liability as expenditure in its books of accounts. He referred to Profit and Loss Statement for the year ended 31st March 2021 at page 33 of the paper book to support his contentions. He submitted that against the intimation u/s. 143(1) of the Act, the assessee filed appeal before the CIT(A). The CIT(A) without examining the records dismissed appeal of the assessee. 4. The ld. DR vehemently supported the impugned order. He stated that disallowance has been made on the basis of Tax Audit Report. However, the ld. DR sought time to verify from the records as to whether; the assessee has debited expenditure of contingent liability in P&L Account. The time sought by the ld. DR was allowed. The DR after verifying the records made a statement that as per the P&L Account for the year ended 31.03.2019 placed in the paper book, the assessee has not claimed contingent liability as expenditure. 5. Both sides heard. The short issue in appeal is with regard to disallowance of contingent liability u/s. 37 of the Act. The contention of assessee is that the assessee has not claimed contingent liability in the nature of Guaranty Rs.1,37,16,613/- and Capital Commitments Rs.1,70,59,350/- in the P&L Account. A perusal of Profit and Loss Account for the year ended 31st March 2021 relevant to the assessment year 2021-22 shows that such expenditure has not been debited by 3 ITA No. 3102/DEL/2024 (AY 2020-21) the assessee. This fact has been verified by ld. DR. Once the expenditure has not been claimed by the assessee in the P&L Account, there is no question of disallowance of the same. 6. We find merit in appeal by the assessee, hence, the same is allowed. Order pronounced in the open court on Tuesday the 19th day of November, 2024. Sd/- Sd/- (S RIFAUR RAHMAN) (VIKAS AWASTHY) लेखाकार सद᭭य/ACCOUNTANT MEMBER ᭠याियक सद᭭य/JUDICIAL MEMBER िदʟी/Delhi, ᳰदनांक/Dated 19/11/2024 NV/- ᮧितिलिप अᮕेिषतCopy of the Order forwarded to : 1. अपीलाथᱮ/The Appellant , 2. ᮧितवादी/ The Respondent. 3. The PCIT 4. िवभागीय ᮧितिनिध, आय.अपी.अिध., िदʟी /DR, ITAT, िदʟी 5. गाडᭅ फाइल/Guard file. BY ORDER, //True Copy// (Dy./Asstt. Registrar) ITAT, DELHI "