SIEMENS LIMITED,MUMBAI V. ASSISTANT DIRECTOR OF INCOME TAX, CPC, BENGALURU

ITA 6678/MUM/2025

AI Insights

Siemens Limited appealed against the order of the Additional/Joint Commissioner of Income Tax (Appeals), Kolkata, which sustained an addition of Rs.6,62,28,591 to the assessee's income. This amount represented interest charged under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) for the assessment year 2020-21. The Centralized Processing Centre (CPC) initially made this upward adjustment while processing the return of income. The first appellate authority upheld this addition, stating that the interest paid to suppliers for delay in payments is not allowable as a deduction. The assessee argued that although a provision for this interest was made, it was not claimed as a deduction, and thus, its reversal should not result in an addition to income. The Tribunal directed a factual verification of these claims by the A.O.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 827648 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2020-2021
• Appeal Filed On: 17-10-2025
• Other Referred Cases: Sri Devi Tool Engineers (P.) Ltd. v. Assistant Director of Income-tax, CPC [2025] 175 taxmann.com 678 (Mumbai - Trib.)
• Laws Referred To: Micro, Small and Medium Enterprises Development Act, 2006
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: ARUN KANTI DATTA
• Assessee Lawyers: JEET KAMDAR
• Keywords: Opportunity of being heard

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT AND SHRI JAGADISH, ACCOUNTANT MEMBER ITA No. 6678/Mum/2025 (Assessment Year: 2020-21) Siemens Limited Birla Aurora, Level 21, Plot No. 1080, Dr. Annie Beseant Road, Worli, Mumbai-400 030 Vs. Asst. DIT, CPC Income Tax Department, Bengaluru – 560 500 PAN/GIR No. (Appellant) : (Respondent) Appellant by : Shri Jeet Kamdar Respondent by : Shri Arun Kanti Datta Date of Hearing : 17.12.2025 Date of Pronouncement : 05.01.2026 O R D E R Per Saktijit Dey, Vice President: This is an appeal by the assessee against the order dated 20.08.2025, passed by Additional/Joint Commissioner of Income Tax (Appeals), Kolkata for the assessment year (A.Y.) 2020-21. 2. The dispute in the present appeal is confined to addition of an amount of Rs.6,62,28,591/-, representing interest charged u/s. 23 of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). 3. Briefly stated, the facts are, the assessee is a resident corporate entity. While processing the return of income filed by the assessee u/s. 143(1) of the Act, the Centralized Processing Centre (CPC) made an upward adjustment of Rs.6,62,28,591/- on account of reversal of interest charged under MSMED Act. Printed from counselvise.com 2 ITA No.6678/Mum/2025 (A.Y. 2020-21) Siemens Limited vs. Asst. DIT 4. Contesting the said addition, the assessee preferred an appeal before ld. first appellate authority. While deciding the issue, ld. first appellate authority sustained the addition holding that interest charged u/s. 23 of MSMED Act, being interest paid to suppliers for delay in making payments for supply of goods and services is not allowable as deduction. 5. Before us, ld. Counsel appearing for the assessee submitted that keeping in view the provision contained u/s. 23 of MSMED Act, the assessee creates a provision in its account towards interest payable for delay in making payment to parties supplying goods. However, in case the parties do not claim interest, it is reversed. He submitted, though the provision was made in the account, but the assessee has not claimed it as deduction. Therefore, there is no question of adding the amount on reversal. In support of such contention, ld. Counsel relied upon the decision of the co-ordinate bench in case of Sri Devi Tool Engineers (P.) Ltd. v. Assistant Director of Income-tax, CPC [2025] 175 taxmann.com 678 (Mumbai - Trib.). Thus, he submitted, the A.O. may be directed to factually verify assessee’s claim and delete the addition. 6. The ld. Departmental Representative (ld. DR for short) relied upon the observations of departmental authorities. 7. We have considered rival submissions and perused the materials on record. It is the say of the assessee before us that though it has created the provision for the interest charged u/s. 23 of the MSMED Act, however, it has not claimed it as ‘deduction’ while computing its income. Keeping in view, such submission of the assessee, we direct the A.O. to factually verify assessee’s claim and, in case, it is found that the provision made was not Printed from counselvise.com 3 ITA No.6678/Mum/2025 (A.Y. 2020-21) Siemens Limited vs. Asst. DIT claimed as ‘deduction’ and has subsequently been reversed, there cannot be any addition of the said amount. While deciding the issue, the A.O. is required to provide reasonable opportunity of being heard to the assessee. Hence, grounds are allowed for statistical purpose. 8. In the result, the appeal is allowed for statistical purpose. Order pronounced in the open court on 05.01.2026 Sd/- Sd/- (Jagadish) (Saktijit Dey) Accountant Member Vice President Mumbai; Dated : 05.01.2026 Roshani, Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar) ITAT, Mumbai Printed from counselvise.com "