ITA No.5618/Del/2012
Asstt.Year: 2009-10
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES `H' NEW DELHI
BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
AND
SHRI CHANDRAMOHAN GARG, JUDICIAL MEMBER
ITA NO. 5618/DEL/2012
ASSTT.YEAR: 2009-10
ACIT, vs Tirupati Udyog Ltd.
Circle 16(1), D-14, Second Floor,
New Delhi. Preet Vihar,
Delhi-110092
(PAN:AABCT3941R)
(Appellant) (Respondent)
Appellant by: Shri Amit Goel, FCA
Respondent by: Shri J.P. Chandrakar, Sr.DR
O R D E R
PER CHANDRAMOHAN GARG, J.M.
This appeal has been filed by the revenue against the order of the CIT(A)-
XIX, New Delhi dated 09.08.2012 in Appeal No. 224/2011-12 for AY 2009-10.
The sole ground raised by the revenue reads as under:-
"1. On the facts and in the circumstances of the case
and in law the learned CIT(A) has erred in deleting the
addition made by the AO under section 43B of the I.T. Act
amounting to Rs.18,76,023/- for the following reasons:
i) The CIT(A) failed to appreciate that the accountant of the
assessee has himself reported that the expense was incurred
but not paid.
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ITA No.5618/Del/2012
Asstt.Year: 2009-10
ii) Even if we accept the contention of the assessee that the
amount was not payable as export duty and could not be
disallowed u/s 43B of the I.T. Act, the amount was not an
allowable expense as it was not incurred for the purpose of
business.
iii) Contention of the assessee that the amount was not
debited to the Profit & Loss account could not be accepted
when the assessee's accountant has reported u/s 44AB of the
Act that the amount was incurred."
2. Apropos aforementioned ground, we have heard arguments of both the
sides and carefully perused the relevant material placed on record. Ld. DR
submitted that the learned CIT(A) has erred in deleting the addition made by the
AO under section 43B of the I.T. Act amounting to Rs.18,76,023/- because the
CIT(A) failed to appreciate that the accountant of the assessee has himself
reported that the expense was incurred but not paid. Even if we accept the
contention of the assesee that the amount was not payable as export duty and
could not be disallowed u/s 43B of the Act, the amount was not an allowable
expense as it was not incurred for the purpose of assessee's business. Ld. DR
vehemently contended that when the assessee's accountant has reported u/s
44AB of the Act that the amount was incurred, then the contention of the
assessee that the amount was not debited to Profit & loss account could not be
accepted. Supporting the assessment order, ld. DR submitted that the AO made
impugned disallowance u/s 43B of the Act which was deleted by the CIT(A)
without any justified and cogent reasoning. He finally prayed that the
impugned order may be set aside by restoring that of the AO.
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Asstt.Year: 2009-10
3. Replying to the above, ld. AR reiterated its arguments which were placed
before the CIT(A) and submitted that the AO made disallowance without
assigning any reason or uttering any word for making such disallowance and, on
the other hand, the CIT(A) rightly held that since the assessee did not debit the
amount of the Profit and loss account as an expenditure nor claimed any
deduction in respect of the amount and, therefore, the question of disallowing
the deduction not claimed would not arise and there was no case for the AO for
invoking provisions of section 43B of the Act in respect of export duty payable.
Ld. AR vehemently contended that the AO has not given any reason for making
impugned disallowance and the CIT(A) after considering and accepting the
explanation of the assessee rightly deleted the addition.
4. On careful consideration of above submissions and contentions, we
observe that from the assessment order, we clearly note that the AO has not
assigned any reason for making disallowance u/s 43B of the Act. During first
appellate proceedings, the assessee submitted detailed written submissions
before the CIT(A) and main relevant part of these submissions reads as under:-
"It may be submitted that the appellant has not claimed
this amount of Rs.1876023/- as expenditure. As a conservative
approach, the appellant has merely created a provision by
debited the customer A/c (SEZ Units) and crediting the export
duty payable account. The appellant has, as a matter of
abundant precaution raised debit note on these units so that, if
in future, the amount becomes payable, the appellant does not
have to suffer any loss. Your honour will appreciate that the
position of the appellant is more like a agent in as much as
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Asstt.Year: 2009-10
that it has to collect duty from the customers (SEZ Units) and
pay it to the Govt. Alc. The appellant has neither debited this
amount to its profit & loss account nor has it claimed the
deduction of this amount in any other manner. Since no
deduction has been claimed, there is case of making
disallowance thereof under any manner, either as made by the
A.O. u/s 43B or otherwise. In the case of CIT vs Noble and
Hewrit m Pvt. Ltd. (2008) 305 ITR 324 (Del), the Hon'ble
Delhi High Court held that where the amount was not debited
to P&L A/c, amount could not be disallowed u/s 43B.
It is further submitted that the amount of Rs.1876023/-
is not a "revenue receipt" or "income by any stretch of
imagination. The amount has neither been recovered from the
customers nor they have admitted to there liability for this
amount to the appellant. The appellant has, as an abundant
precaution raised a debit note on them to safeguard its interest
in view of uncertainty prevailing at that time. The judgment of
Hon'ble High Court has held that no duty was payable.
Accordingly there is no way by which the impugned amount of
Rs.1876023/- can be covered u/s 43B."
5. From the operative part of the impugned order, we observe that the
CIT(A) deleted the addition with following observations and conclusion:-
"The AR contended that the amount was not claimed as
expenditure and hence it cannot be disallowed u/ s 43B and
relied on the decision in the case of CIT vs. Noble and Hewitt
(I) Pvt. Ltd. (305 ITR 324) (Delhi).
The head notes reads as under:
"Held, dismissing the appeal, that since the assessee did
not debit the amount to the profit and loss account as an
expenditure nor claim any deduction in respect of the amount
and considering that the assessee was following the mercantile
system of accounting, the question of disallowing the
deduction not claimed would not arise."
The AR further contended that the amount was not
payable to the Government by way of tax, duty, cess, fee and
hence the amount is outside the scope of the provisions of
S.43B.
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Asstt.Year: 2009-10
The Hon'ble High Court has upheld that supplies made to
SEZ Units are outside the liability from taxes/ customs duty.
After careful consideration of the facts of the case, there is no
case for invoking provisions of S.43B in respect of export duty
payable. The AO has not given any reasons for making
disallowance. I am in agreement with the contentions of the
AR. The disallowance is hereby deleted."
6. Under above set of facts and circumstances of the case, we may point out
that the AO made alleged disallowance u/s 43B of the Act without assigning
any reason or without pointing out this issue to the assessee. On appeal before
the CIT(A), the assessee alleged that assessee has neither debited this amount to
its P&L account nor has it claimed the deduction of this amount in any other
manner. Placing reliance on the decision of Jurisdictional High Court of Delhi
in the case of CIT vs Noble and Hewitt (I) Pvt. Ltd. (supra), the CIT(A) granted
relief for the assessee with a final conclusion that there was no case for invoking
provisions of section 43B of the Act in respect of export duty payable. As noted
above, the Hon'ble Jurisdictional High Court of Delhi in the case of CIT vs
Noble and Hewitt (I) Pvt. Ltd. (supra) granted relief for the assessee with a final
conclusion that there was no case for invoking provisions of section 43B of the
Act in respect of export duty payable. As noted above, the Hon'ble
Jurisdictional High Court of Delhi in the case of CIT vs Noble and Hewitt (I)
Pvt. Ltd. (supra) dismissing the appeal of the revenue has held that since the
assessee did not debit the amount to the Profit and loss account as an
expenditure nor claimed any deduction in this respect, therefore, since the
assessee was following mercantile system of accounting, the question of
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Asstt.Year: 2009-10
disallowing the deduction which was not claimed would not arise. Ld. DR has
not disputed this factum that the assessee has neither debited the amount to the
Profit & loss account as an expenditure nor claimed any deduction in respect of
the impugned amount. Thus, we are unable to see any valid reason to interfere
with the conclusion of the CIT(A) and we uphold the same. Accordingly, sole
ground of the revenue being devoid of merits is dismissed.
7. In the result, the appeal of revenue is dismissed.
Order pronounced in the open court on 29th December, 2014.
sd/- sd/-
(J.S. REDDY) (CHANDRAMOHAN GARG)
ACCOUNTANT MEMBER JUDICIAL MEMBER
DT. 29th DECEMBER, 2014
`GS'
Copy forwarded to:-
1. Appellant
2. Respondent
3. C.I.T.(A)
4. C.I.T. 5. DR
By Order
Asstt. Registrar
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