ANIL SURESH NAIK,PUNE vs. DCIT, CIRCLE 2, PUNE

The only grievance of the assessee is that ld.CIT(A) erred in confirming the action of the Assessing Officer denying deduction on Commercial Taxes paid at Rs.1,39,464/- solely on the ground of prior period expenditure.

We have heard the rival submissions and perused the record placed before us. We observe that the assessee is an individual and filed the return of income for A.Y. 2015-16 filed on 30.09.2015 declaring income of Rs.1,46,97,070/-. Assessment u/s.143(3) of the Act was completed accepting the returned income. Thereafter, reassessment proceedings were carried out u/s.147 of the Act for examining the claim of expenditure of MVAT and CST payment of Rs.1,39,464/- and Rs.1,964/- respectively as not allowable as they pertained to A.Y. 2010-11 being prior period expenditure. Ld. Assessing Officer reassessed the income at Rs.1,48,36,534/- after disallowing the expenditure claimed for Commercial Taxes at Rs.1,39,464/-. Assessee carried the matter before ld.CIT(A) but failed to get any relief. Now the assessee is in appeal before this Tribunal.

We have gone through the record and observe that the Commercial Taxes liability crystallised during the year and the same is discernible from the details filed in the paper book showing that letter dated 27.10.2014 was issued to the assessee for payment of outstanding tax liability. It is not the case of the Revenue that the alleged payment is in the nature of any penalty and therefore it is merely a tax payment on account of input credit declined for non payment of tax by the vendors. Since the liability for the alleged expenses has been crystallised during the year and genuine business expense has been incurred therefore the same deserves to be allowed. Alleged disallowance of Rs.1,39,464/- is hereby deleted. Finding of ld.CIT(A) is reversed. Grounds of appeal raised by the assessee are allowed.

In the result, the appeal of the assessee is allowed.