M/s. S.D. Lal, , Solapur V. Income-tax Officer, Ward - 1(2), Solapur

ITA 365/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7760 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 19-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / ITA NO.365/PUN/18 / ASSESSMENT YEARS : 2015-16 M/S. S.D. LAL, 3, SOUTH SADAR, SOLAPUR 413002 PAN : AAEFS8653D VS. ITO, WARD-1(2), SOLAPUR (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSE D BY THE CIT(A)-7, PUNE ON 27-12-2017 IN RELATION TO THE ASSESSMENT YEAR 2015-16. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST CONFIRMATION OF DISALLOWANCE OF RS.6,49,017/- MADE BY THE ASSESSING OFFICER U/S.43B OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). APPELLANT BY SMT. DEEPA KHARE RESPONDENT BY SHRI RAJESH GAWALI DATE OF HEARING 09-01-2019 DATE OF PRONOUNCEMENT 09-01-2019 ITA NO.365/PUN/2018 M/S. S.D. LAL 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESS EE IS A RETAIL DEALER ENGAGED IN THE TRADING OF IMFL AND COUNTRY LIQUOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WA S OBSERVED THAT THE ASSESSEE PAID LOCAL BODY TAX (LBT) OF RS.59,20,707/-, WHICH INCLUDED A SUM OF RS.6,49,017/- OF LBT PERTAINING TO EARLIER YEAR WHICH WAS RECOVERED BY SMC AUTHORITIES DURING THE YEAR UNDER CONSIDERATION. THE ASSESS EE SUBMITTED THAT PAYMENT OF RS.6,49,017/- WAS MADE BECAUSE OF THE DEMAND RAISED BY THE COMPETENT AUTHORITIES IN THIS YEAR AND HENCE, THE SAME SHOULD BE ALLOWED. NOT CONVINCED, THE AO MADE ADDITION, WHICH CAME TO BE CONFIRMED IN THE FIRST APPEAL. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE PAID LBT @ 8% IN THE PRECEDING YEAR, AS AGAINST THE CORRECTLY APPLICABLE RATE OF 10%. IT WAS ONLY IN THE COURSE OF ASSESSMENT BY THE COMPETENT AUTHORITY THAT THE DEMAND FOR THE REMAINING 2% WAS RAISED AND DEPOSITED BY THE ASSESSEE. THE AUTHORITIES HAVE CANVASSED A VIEW THAT SINCE SUCH AN AMOUNT IS A PRIOR PERIOD EXPENSE, TH E SAME CANNOT BE ALLOWED AS DEDUCTION ON PAYMENT MADE IN THE ITA NO.365/PUN/2018 M/S. S.D. LAL 3 INSTANT YEAR. IN OUR CONSIDERED OPINION, THIS VIEW OF THE AUTHORITIES IS NOT IN ACCORDANCE WITH THE SETTLED LEGAL POSITION. THE HONBLE SUPREME COURT IN CIT VS. BHARAT CARBON & RIBBON MANUFG CO. P.LTD. (1999) 239 ITR 505 (SC) HAS HELD THAT A STATUTORY LIABILITY ACCRUES ON ISSUANCE OF DEMAND NOTICE. THEIR LORDSHIPS LAID DOWN IN THIS CASE THAT EXCISE DEPARTMEN T HAVING ISSUED DEMAND NOTICE ASKING ASSESSEE TO PAY BASIC EXCISE DUTY AND SPECIAL EXCISE DUTY FOR PAST YEARS DURING TH E PREVIOUS YEAR IN QUESTION, LIABILITY ACCRUED AT THAT STAGE AND ASSESSEE IS ENTITLED TO DEDUCTION THEREOF IRRESPECTIVE OF THE F ACT THAT ASSESSEE HAS CHALLENGED THE DEMAND BY WAY OF WRIT PETITION. IN VIEW OF THE RATIO LAID DOWN IN THIS CASE, WE ARE SATISFIED THAT THE LIABILITY TO PAY ADDITIONAL 2% AROSE IN THE EXTANT YEAR, WHEN THE DEMAND WAS RAISED. ONCE IT IS HELD THAT THE LIABILITY WAS INCURRED IN THE INSTANT YEAR, THE CASE OF THE REVENUE AUTHORITIES FALLS. SINCE THE AMOUNT IN QUESTION WAS ADMITTEDLY PAID BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION, WE HOLD THAT THE SAME IS NOT DISALLOWABLE U/S.43B OF THE ACT. THE IMPUGNED ORDER IS OVERTURNED TO TH AT EXTENT. ITA NO.365/PUN/2018 M/S. S.D. LAL 4 5. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH JANUARY, 2019. SD/- SD/- (VIKAS AWASTHY) (R.S.SYAL) JUDICIAL MEMBER VICE PRESID ENT PUNE; DATED : 09 TH JANUARY, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-7, PUNE 4. 5. THE PR.CIT-6, PUNE , , SMC / DR SMC, ITAT, PUNE; 6. % / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.365/PUN/2018 M/S. S.D. LAL 5 DATE 1. DRAFT DICTATED ON 09-01-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 09-01-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *