I SHARE BUSINESS SERVICES (INDIA) PVT LTD,HYDERABAD V. DCIT., CIRCLE 2(1), HYDERABAD

ITA 480/HYD/2024

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The case involves M/s. I Share Business Services (India) Private Limited, which appealed against the order of the Learned First Appellate Authority that confirmed a disallowance of Rs.1,95,13,023/- on account of GST made by the Centralised Processing Centre (CPC) under section 143(1) of the Income Tax Act, 1961. The primary contention was whether the disallowance under section 43B was applicable when the GST amount was not routed through the profit and loss account. The Tribunal, referencing judgments from the Hon'ble Chhattisgarh High Court and the Delhi High Court, concluded that since the amount was not claimed as an expenditure, the disallowance was not applicable.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 846391 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Hyderabad
• Assessment Year: 2022-2023
• Appeal Filed On: 07-05-2024
• Other Referred Cases: Grand Motors Vs. Income Tax Officer, Dalip Singh Rathore Vs. Income Tax Officer, ATS Real Estate Builders Private Limited Vs. Dy. CIT, CIT Vs. Noble and Hewitt (India) Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A. SRINIVAS; WAY OF TAX; DUTY
• Keywords: Set aside; Question of law
• Section: 43B

Judgement Text

" ITA No 480 of 2024 M/s. I Share Business Services India Pvt Ltd Page 1 of 7 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ DB-A ‘ Bench, Hyderabad ŵी रिवश सूद,Ɋाियक सद˟ एवं ŵी मधुसूदन साविड़या लेखा सद˟ समƗ | Before Shri Ravish Sood, Judicial Member A N D Shri Madhusudan Sawdia, Accountant Member आ.अपी.सं /ITA No.480/Hyd/2024 (िनधाŊरण वषŊ/Assessment Year: 2022-23) M/s. I Share Business Services (India) Private Limited Hyderabad PAN:AABCI1308R Vs. Dy. CIT Circle 2(1) Hyderabad (Appellant) (Respondent) िनधाŊįरती Ȫारा/Assessee by: Shri A. Srinivas, CA राज̾ व Ȫारा/Revenue by:: Shri D. Praveen, Sr. AR सुनवाई की तारीख/Date of hearing: 23/03/2026 घोषणा की तारीख/Pronouncement: 25/03/2026 आदेश/ORDER Per Madhusudan Sawdia, A.M.: This appeal is filed by I Share Business Services (India) Private Limited (“the assessee”), feeling aggrieved by the order passed by the Learned Addl/JCIT(A)-9, Mumbai, (“Ld. First Appellate Authority”) dated 19.03.2024 for the A.Y.2022-23. Printed from counselvise.com ITA No 480 of 2024 M/s. I Share Business Services India Pvt Ltd Page 2 of 7 2. The assessee has raised the following grounds of appeal: “1. The order of the Appellate Commissioner is contrary to law, facts and circumstances of the case. 2. The Appellate Commissioner erred in confirming the disallowance of Rs.1,95, 13,023/-, on account of GST made by the CPC in an Intimation u/s.143(1). 3. The Appellate Commissioner ought to have seen that the amount of GST liability was not routed through the profit and loss account and hence the provisions of section 43B will not apply. 4. The Appellate Commissioner erred in applying the provisions of section 145A. 5. Any other grounds which the Assessee may urge either before or at the time of the hearing.” 3. The brief facts of the case are that the assessee is a company stated to be engaged in the business of providing backend services to other corporate entities, filed its return of income for the Assessment Year 2022–23 on 25.10.2022 declaring total income of Rs.3,92,95,100/-. The Centralised Processing Centre (“CPC”), while processing the return of income of the assessee under section 143(1) of the Income Tax Act, 1961 (“the Act”), made a disallowance of Rs.1,95,13,023/- towards GST under section 43B of the Act vide intimation dated 15.03.2023. 4. Aggrieved by the said intimation of CPC, the assessee preferred an appeal before the Ld. First Appellate Authority. The Ld. First Appellate Authority, after considering the submissions of the assessee, dismissed the appeal of the assessee. Printed from counselvise.com ITA No 480 of 2024 M/s. I Share Business Services India Pvt Ltd Page 3 of 7 5. Aggrieved with the order of the Ld. First Appellate Authority the assessee is in appeal before this Tribunal. The Learned Authorised Representative (“Ld. AR”) submitted that the only issue arising out of the grounds of appeal of the assessee is with regard to the disallowance of Rs.1,95,13,023/- made under section 43B of the Act by CPC. It was submitted that the assessee is following the exclusive method of accounting and, accordingly, has not claimed any amount as expenditure on account of the said amount of Rs.1,95,13,023/- in its Profit and Loss Account. It was further submitted that since the assessee has not claimed the said amount as expenditure, no disallowance can be made under section 43B of the Act. The Ld. AR, in support of his contention, relied on the following judicial precedents: (a) Hon'ble High Court of Chhatttisgarh in the case of Grand Motors Vs. Income Tax Officer in TAXC No.207 of 2024 dated 25.11.2024 (b) ITAT Delhi Bench in the case of Dalip Singh Rathore Vs. Income Tax Officer, 179 taxmann.com 191 (Del. Tribunal) (c) ITAT Delhi Bench in the case of ATS Real Estate Builders Private Limited Vs. Dy. CIT in ITA No.1207/ Del/2024 dated 27.01.2025 6. Per contra, the Learned Departmental Representative (“Ld. DR”) relied on the orders of the lower authorities, particularly para no. 6.7 of the order of the Ld. First Appellate Authority, wherein the Ld. First Appellate Authority distinguished the judgment of the Hon’ble Delhi High Court in the case of CIT Vs. Noble and Hewitt (India) Pvt. Ltd., relied upon by the assessee, Printed from counselvise.com ITA No 480 of 2024 M/s. I Share Business Services India Pvt Ltd Page 4 of 7 and dismissed the appeal of the assessee. Accordingly, the Ld. DR submitted that the disallowance made by CPC and sustained by the Ld. First Appellate Authority requires no interference. 7. We have considered the rival submissions and perused the material available on record. The only issue for our consideration is whether the disallowance of Rs.1,95,13,023/- made under section 43B of the Act is sustainable in the facts and circumstances of the case. We find that it is an undisputed fact that the assessee is following the exclusive method of accounting and has not claimed the amount of Rs.1,95,13,023/- on account of GST as expenditure in its Profit and Loss Account. In this regard, we have gone through para nos. 8 to 13 of the order of the Hon’ble Chhattisgarh High Court in the case of Grand Motors Vs. ITO (supra), which is to the following effect: “8. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the record with utmost circumspection. 9. In order to consider the plea raised at the Bar, it would be appropriate to notice Section 43B(a) of the IT Act, which states as under: - \"43B. Certain deductions to be only on actual payment. —Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of— (a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or xxx xxx xxx 10. In this regard, decision of this Court in M/s Ganapati Motors's case (supra) would be more relevant in which the Printed from counselvise.com ITA No 480 of 2024 M/s. I Share Business Services India Pvt Ltd Page 5 of 7 issue before the Court was, whether Section 43B of the IT Act is attracted even when the assessee does not claim any deduction on the strength of that provision and considering the said question, this Court held in paragraph 3 as under: - \"3. The Assessing Authority, on the instant issue, noticed that the assessee's claim regarding the treatment of VAT in the Books of Accounts has been verified from the Books and that has been found to be in order. The Assessing Authority also found that VAT has been found separately accounted for in the Books of Accounts. The only ground on which the Assessing Authority refused to exclude the VAT collected by the dealer from the profit of business is on the basis that the VAT component was not paid off on or before the due date for furnishing the return in relation to the previous year under Section 139(1) of the Income Tax Act. The First Appellate Authority also noticed that it is an undisputed fact that the Appellant did not charge VAT to the Profit and Loss account. It was therefore noted by the First Appellate Authority that in such circumstances, the liability may still be unpaid, but it cannot be disallowed being not claimed as deduction in the Books of Accounts.\" 11. Similarly, the Delhi High Court in the matter of Commissioner of Income-tax v. Noble & Hewitt (I) (P.) Ltd. [2008] 166 Taxman 48/305 ITR 324 (Delhi) held in paragraph 6 as under: - \"6. In our opinion since the assessee did not debit the amount to the Profit & Loss Account as an expenditure nor did the assessee claim any deduction in respect of the amount and considering that the assessee is following the mercantile system of accounting, the question of disallowing the deduction not claimed would not arise.\" 12. Reverting to the facts of the case, it is admitted position on record that the appellant / assessee did not claim the amount of Rs. 62,32,262/- in his profit and loss account as an expenditure / deduction, nor the appellant claim deduction in respect of that account under Section 43B of the IT Act. In that view of the matter, the Assessing Officer, the CIT(A) and the ITAT, all three authorities have concurrently erred in holding that the appellant has claimed deduction / expenditure under Section 43B of the IT Act adding to its taxable income. Accordingly, the impugned order passed by the ITAT holding that the appellant is liable to pay tax on Rs. 62,32,262/-, is liable to be and is hereby Printed from counselvise.com ITA No 480 of 2024 M/s. I Share Business Services India Pvt Ltd Page 6 of 7 set aside. The substantial question of law is answered in favour of the assessee and against the Revenue. 13. The tax appeal is allowed to the extent indicated herein- above.” 8. On perusal of the above, we find that after considering the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Noble and Hewitt (India) Pvt. Ltd., it has been categorically held that if the assessee has not claimed any expenditure in its Profit and Loss Account, then no disallowance in respect of that expenditure can be made under section 43B of the Act. In the present case, there is no dispute with regard to the fact that the assessee has not claimed the amount of Rs.1,95,13,023/- on account of GST as expenditure in its Profit and Loss Account. Therefore, respectfully following the judgment of the Hon’ble Chhattisgarh High Court in the case of Grand Motors Vs. ITO (supra), we hold that no disallowance under section 43B of the Act can be made in the hands of the assessee when no such expenditure has been claimed by the assessee in its profit & loss account. Accordingly, we direct the Ld. AO to delete the addition of Rs.1,95,13,023/- made under section 43B of the Act. 9 In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 25th March, 2026. Sd/- Sd/- (RAVISH SOOD) JUDICIAL MEMBER (MADHUSUDAN SAWDIA) ACCOUNTANT MEMBER Hyderabad, dated 25th March, 2026. Vinodan/sps Printed from counselvise.com ITA No 480 of 2024 M/s. I Share Business Services India Pvt Ltd Page 7 of 7 Copy to: S.No Addresses 1 M/s. I Share Business Services (India) (P) Ltd, Flat No.406, Archana Arcade St. Johns Road, Secunderabad 500025 2 Dy.CIT Circle 2(1) Signature Towers, 10th Floor, Opp: Botanical Gardens, Kothaguda, Kondapur, Hyderabad 500084 3 Pr. CIT - Hyderabad 4 DR, ITAT Hyderabad Benches 5 Guard File By Order Printed from counselvise.com KAMALA KUMAR ORUGANTI Digitally signed by KAMALA KUMAR ORUGANTI Date: 2026.03.26 11:57:01 +05'30' "