SUMITOMO MITSUI CONSTRUCTION COMPANY LTD.,NEW DELHI vs. ACIT (INTERNATIONAL TAXATION), CIRCLE=3(1)(2), NEW DELHI

We have heard the parties and perused the materials on record. Briefly the facts are, the assessee is a non-resident company incorporated in Japan. As stated by the Assessing Officer, the assessee, basically, is a construction company jointly formed by the merger of Mitsui Construction Company Limited and Sumitomo Construction Company Limited.

Be that as it may, for the assessment year under dispute, the assessee filed its return of income on 01.12.2014 declaring total income of Rs.13,320/-. Subsequently, the assessee filed a (M/s. Sumitomo Mitsui Construction Company Ltd.) revised return of income declaring business income of Rs.48,90,540/- and income from royalty/Fees for Technical Services (FTS) amounting to Rs.26,50,44,898/-. Pertinently, in the revised return of income, the assessee itself claimed deduction of Rs.37,13,814/- under Section 43B of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), being the amount actually paid during the year. Whereas, he disallowed a sum of Rs.1,53,89,254/- under the said provision, as the amount was not paid on or before the due date of filing of return of income. In course of assessment proceeding, the assessee having discovered that it has erroneously disallowed the amount of Rs.1,53,89,254/- under Section 43B of the Act, as, the amount was actually paid before the due date of filing of return of income, whereas, it has claimed deduction of Rs.37,13,814/-, the amount actually required to be disallowed, filed a revised computation of income revising its claim of deduction under Section 43B of the Act. However, while completing the assessment under Section 143(3) of the Act vide order dated 21.12.2017, the Assessing Officer completely ignored the revised computation of income filed in course of assessment proceeding and proceeded to compute the income as per the revised return of income filed by the (M/s. Sumitomo Mitsui Construction Company Ltd.) Assessee. Though, the assessee filed an application under section 154 of the Act before the Assessing Officer seeking rectification of the assessment order, however, no action was taken. Being aggrieved, the assessee preferred an appeal before learned Commissioner (Appeals).

After considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner (Appeals) observed that as per the materials available on record, the assessee has furnished evidence for deduction claimed of Rs.37,13,814/- under Section 43B of the Act. Thus, he held that the Assessing Officer has correctly allowed deduction of Rs.37,13,814/- under section 43B of the Act. As far as the claim of assessee in the revised computation filed in course of assessment proceeding, learned Commissioner (Appeals) observed that the assessee had not furnished any valid evidence to demonstrate that the actual allowable deduction under Section 43B was to the tune of Rs.1,53,89,254/-. Basis such observation, learned Commissioner (Appeals) rejected assessee’s claim.

Before us, learned counsel for the assessee has vehemently argued that all evidences relating to the revised claim of deduction of Rs.1,53,89,254 was not only filed in course of (M/s. Sumitomo Mitsui Construction Company Ltd.) assessment proceeding, but was also furnished before the first appellate authority.

In response, learned Departmental Representative submitted, in case the evidences filed by the assessee have not been considered by the departmental authorities, the issue can be restored back to the Assessing Officer for re-examination.

Having considered rival submissions, we find, the fact that the assessee has made revised claim of deduction under Section 43B of the Act amounting to Rs. 1,53,89,254/- in course of assessment proceeding is not disputed. It is further observed, while the Assessing Officer has completely ignored the revised claim of the assessee, learned Commissioner (Appeals) has refused to entertain it on the ground that supporting evidences were not filed at any stage. Now, it is fairly well settled, though, before the Assessing Officer, the Assessee can make a revised claim only through a revised return of income filed under Section 139(5) of the Act, however, there is no such restriction before the appellate authority. Therefore, the revised claim made by the assessee can be entertained by the appellate authority, subject to, factual verification. In the facts of the present appeal, revised claim of the assessee qua deduction claimed under Section 43B of (M/s. Sumitomo Mitsui Construction Company Ltd.) the Act has been rejected by learned first appellate authority simply due to lack of supporting evidences. However, it is the contention of the assessee before us that supporting evidences, in fact, were filed both before the Assessing Officer and learned Commissioner (Appeals). Without entering into the controversy, whether the assessee has filed the supporting evidences qua its revised claim of deduction under Section 43B of the Act, we are inclined to restore this issue to the file of the Assessing Officer for examining the claim of deduction made by the assessee under Section 43B of the Act in the revised computation of income based on the evidences available on record.

Further, liberty is granted to the assessee to furnish any other evidence before the Assessing Officer in support of its revised claim of deduction under Section 43B of the Act. It is made clear, the Assessing Officer has to decide the revised claim of the assessee strictly in accordance with the evidences filed by the assessee. With the aforesaid observation, issues are restored back to the file of the Assessing Officer. Ground nos. 1 to 4 are allowed for statistical purposes.

Ground No. 5, being consequential in nature, does not require adjudication at this stage.

In the result, the appeal is allowed for statistical purposes.