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Facts
The assessee challenged additions made under Section 43B and Section 41(1) of the Income Tax Act, 1961, which were confirmed by the Dispute Resolution Panel and Transfer Pricing Officer. The assessee had voluntarily disallowed certain statutory payments in AY 2020-21 and claimed them on a payment basis in AY 2021-22, while certain liabilities written back were already offered to tax.
Held
The Tribunal noted that the assessee had filed a rectification application under Section 154 of the Act regarding these additions, which was pending disposal. The Tribunal directed the Jurisdictional AO to dispose of the rectification application on merits after providing an opportunity to the assessee and verifying evidence.
Key Issues
Whether the additions made under Section 43B and 41(1) were erroneous, and if the pending rectification application should be decided before proceeding with the appeal.
Sections Cited
143(3), 144C(13), 144B, 92CA(3), 43B, 143(1)(a), 41(1), 234A, 234B, 234C, 154
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “I”: NEW DELHI
Before: SHRI M. BALAGANESH & SHRI SUDHIR PAREEK
O R D E R PER M. BALAGANESH, A. M.: 1. The Assessee, Hollister Medical India Pvt. Ltd (hereinafter referred to as „assessee) by filing the present appeal sought to set aside the impugned order dated 26.09.2024 passed by the Assessing Officer (AO) under section 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 (for short „the Act‟) inconsonance with the order passed by the Dispute Resolution Panel (DRP) dated 22.08.2024 u/s 144C(5) and order passed by Transfer Pricing Officer (TPO) under section 92CA(3) dated 31.10.2023 for AY 2021-22.
The assessee has raised the following grounds of appeal :-
“1. Ground No. I-Disallowance of statutory payment of Rs. 83,20,010/- paid under section 43B of the Act 1.1 On the facts and in the circumstances of the case and in law, the Assessment Unit, National Faceless Assessment Centre ('Ld. NFAC') has Page | 1 erred in continuing the mistake that the Centralised Processing Unit ('CPC') made in not allowing deduction for the sum of Rs. 83,20,010/-, being statutory liabilities covered under section 43B of the Act disallowed in the earlier year, claimed by the appellant on payment basis. 1.2 The Ld. NFAC failed to appreciate that the said amount was clearly reflected in the tax audit report and could not fall under adjustment under section 143(1)(a) inspite of specifically pointing it out. 1.3 The Appellant company therefore prays before Your Honour to direct the Ld. NFAC / CPC to delete the said adjustment.
2. Ground No. II - Addition of certain liabilities written back of Rs. 1,03,05,142/- under section 41 of the Act 2.1 On the facts and in the circumstances of the case and in law, the Ld. erred in continuing the mistake that the CPC made in making an addition to the tune of Rs. 1,03,05,142/-, being certain liabilities written back, and treating the same as profit taxable under section 41(1) of the Act. 2.2 The Ld. AO failed to appreciate that the said amounts were already credited to Profit & Loss account for the year under consideration (Note 16 to the financial statements) and was duly offered to tax while computing the taxable income and could not be brought to tax again inspite of specifically pointing it out. 2.3 The Appellant company therefore prays before Your Honour to direct the Ld. AO to delete the said addition as the same would tantamount to double taxation of the same amount.
3. Ground No. III- Non-consideration of corporate tax grounds while passing the DRP directions 3.1 The Ld. Dispute Resolution Panel ('DRP') erred in not adjudicating the additional grounds of objection filed and explained in the personal hearing with respect to corporate tax and presented before the Hon'ble bench. 3.2 The Appellant company prays Your Honour to treat the said DRP direction and final assessment order as bad in law and should be set aside.
4. Ground No. IV -Consequential levy of interest under section 234A and 2348 & 234C of the Act 4.1 On facts and in the circumstances of the case and in law and consequent to above, the Ld. NFAC has erred in levying the interest under section 234A, section 234B and section 234C of the Act.”
We have heard the rival submissions and perused the material available on record. On perusal of the grounds, it could be seen that assessee has challenged the additions made u/s 43B of the Act and u/s 41(1) of the Act by the ld CPC while issuing intimation u/s 143(1) of the Act. The assessee had filed rectification application u/s 154 of the Act before the Jurisdictional AO (JAO) on 11.04.2023 stating that these additions ought not to have been made on the ground that:- a. in respect of disallowance made u/s 43B of the Act are concerned, these are in respect of labour welfare dues, excise duty etc which was voluntarily disallowed by the assessee in the return of income for AY 2020-21 and the same were claimed on payment basis during the AY 2021-22 and accordingly allowable as deduction. b. in respect of addition made u/s 41(1) of the Act, the same is already offered to tax by the assessee in the return for AY 2021-22 and hence, it constitutes double addition.
The said rectification application filed before JAO is pending for disposal. In view of this, we direct the ld JAO to dispose of the rectification application filed by the assessee u/s 154 of the Act on merits after giving sufficient opportunity to the assessee and after due verification of evidences available . The assessee is at liberty to furnish fresh evidences, if any, in support of its contentions. Accordingly, the grounds raised by the assessee are allowed for statistical purposes by restoring it to the file of the ld AO in the above mentioned terms.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 07/08/2025.