What did the Tribunal hold?

The Tribunal restored the issue to the Assessing Officer to decide afresh after awaiting the final outcome of the sales tax litigation. The assessee is responsible for informing the AO about the finality of the proceedings.

The assessee claimed sales tax expenditure pending before the High Court. The payment was made in earlier years, but the liability was not considered final due to ongoing litigation.

What were the issues?

Whether sales tax expenditure claimed by the assessee, pending litigation, is allowable. The finality of the liability in light of ongoing sales-tax disputes.

Electronics Corporation of India… vs ACIT | ITAT Hyderabad 2022

Income Tax Appellate Tribunal, Hyderabad ‘B‘ Bench, Hyderabad

Before: Before Shri S.S. Godara & Shri Laxmi Prasad Sahu

For Respondent: Shri Y.V.S.T. Sai

Hearing: 13.01.2022Pronounced: 25.02.2022

IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘B‘ Bench, Hyderabad (Through Video Conferencing) Before Before Shri S.S. Godara, Judicial Member AND Shri Laxmi Prasad Sahu, Accountant Member Assessment Year: 2014-15 Electronics Corporation of Vs. The Asst. Commissioner of India Limited, Income Tax, Hyderabad. Circle 17(1), Hyderabad. PAN : AAACE4809L. (Appellant) (Respondent) Assessee by: None. Revenue by: Shri Y.V.S.T. Sai. Date of hearing: 13.01.2022 Date of pronouncement: 25.02.2022 O R D E R Per S. S. Godara, J.M.

This assessee’s appeal for A.Y. 2014-15 arises from the Commissioner of Income Tax (Appeals) – 5, Hyderabad’s order dated 16.05.2018 in case No.0442/2016-17/CIT(A)-5 involving proceedings u/s 143(3) of the Income Tax Act, 1961 [in short, ‘the Act’]. Case called twice. None appears at assessee’s behest. It is accordingly proceeded exparte.

The assessee’s sole substantive grievance canvassed in the instant appeal challenges correctness of both the lower authorities’ action disallowing its sales tax expenditure charged off to profit and loss account amounting to Rs.1,54,92,359/- in the course of assessment dt.16.12.2016 as upheld in the CIT(A)’s order reading as under :

We find with the able assistance of both the parties that the assessee had claimed the impugned sales tax expenditure regarding an issue which was stated to be pending before the hon’ble jurisdictional high court. This is coupled with the fact that it had made the actual payment of the impugned sales tax; although in earlier years, as per the CIT(A)’s discussion itself. And sufficiently indicates that it is not a case of mere provision thereof per se as per the Revenue’s stand in light of the detailed discussion. Mr. Sai also highlighted the alleged fact that the assessee has not considered the impugned liability as having attained finality whose sole reason appears for pendency of the corresponding sales-tax litigation in above terms.

Faced with this situation, we deem it appropriate to restore the instant issue back to the Assessing Officer to be decided afresh after awaiting final outcome of the assessee’s corresponding sales- tax litigation. It is further made clear that it shall be assessee’s onus only to apprise the learned Assessing Officer about finality of the foregoing proceedings and thereafter, he shall proceed as per law within three effective opportunities of hearing. Ordered accordingly.

This assessee’s appeal is allowed for statistical purposes in above terms.

Order pronounced in the Open Court on 25th February, 2022.

ELECTRONICS CORPORATION OF INDIA LIMITED,HYDERABAD vs. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-17(1), HYDERABAD

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