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ACIT, Circle 16(1), New Delhi. Vs Tirupati Udyog Ltd. D-14, Second Floor, Preet Vihar, Delhi-110092
December, 30th 2014
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.


                                                                                1
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.

                                                                               2
ITA No.5618/Del/2012
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

                                                                                 3
ITA No.5618/Del/2012
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.

                                                                           4
ITA No.5618/Del/2012
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

                                                                                 5
ITA No.5618/Del/2012
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




                                                                               6

 
 
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