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Facts
The assessee company filed its return of income which was processed by CPC with a prima facie adjustment for GST payable and a further addition for provision written back. The CIT(A) deleted both these adjustments.
Held
The Tribunal held that the prima facie adjustment for GST, which was unpaid, should be examined by the AO to determine if it was discharged before the due date for filing the return. However, the deletion of the addition for provision written back was found to be justified.
Key Issues
Whether the deletion of prima facie adjustment for unpaid GST liability and provision written back by the CIT(A) was justified.
Sections Cited
143(1), 143(3)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax (Appeals), Thane [CIT(A)] dated 23.04.2024 for Assessment Year (AY) 2021-22.
Brief facts of the case are that the respondent assessee is a company incorporated under the provisions of Companies Act, 1956. The respondent assessee filed the return of income for AY 2021-22 on 15.03.2022 disclosing total income of Rs. Olam Agro India Pvt. Ltd. 2,03,94,08,400/-. The said return of income was processed by the CPC vide intimation dated 22.09.2022 u/s. 143(1) of the Income Tax Act, 1961 (the Act) determining the income at Rs. 317,92,78,380/- by making prima facie adjustment of GST payable of Rs. 1,17,6841,801/- and also made further addition of Rs. 1,66,34,933/- being the provisions written back.
Being aggrieved, an appeal was filed before the CIT(A) who vide the impugned order directed the AO to delete the prima facie adjustment taking into consideration the finding of the Tax Auditor that there was no impact on the Profit & Loss A/c. due to non accounting of GST through Profit & Loss A/c. Similarly, the CIT(A) also deleted the addition of Rs. 1,66,34,933/- considering the submission of the assessee that this amount was also credited to the Profit & Loss A/c. and no separate addition is required.
Being aggrieved, the Revenue is in appeal before this Tribunal in the present appeal.
The learned CIT-DR contended that the CIT(A) ought not have deleted the prima facie adjustment of Rs. 117,68,41,801/- being GST liability on sale of finished goods. Similarly, it is submitted that the prima face adjustment made in the intimation u/s. 143(1) is repeated in the assessment made u/s. 143(3) of the Act. Thus, he submitted that the CIT(A) without examining the facts simply deleted the addition.
On the other hand, the learned counsel for the assessee submitted that the order of the CIT(A) is passed on proper appreciation of facts and requires no interference. It is further submitted that whether the assessee follows inclusive method and exclusive method of accounting does not have impact on the profit of the company placing reliance on the decisions: - i) Indo Nippoon Chemicals Co. Ltd. [2003] 130 Taxman 179 (SC) ii) CIT v. Diamond Dye Chem Ltd. [2017] 88 taxmann.com 499 (Bombay HC) iii) DCIT v. M/s. Stone India Ltd. (ITA No. 2200/KOL/2010) (Kolkata-Trib) iv) Sunshield Chemicals (P.) Ltd. v. ITO [2015] 64 taxmann.com 161 (Mumbai-Trib) v) Mahindra & Mahindra Ltd. v. DCIT [2020] 113 TAXMANN.COM 230 (Mumbai-Trib) 7. We have heard the rival contentions and perused the material available on record. Ground No. 1 is general in nature. Ground No. 2 challenges the deletion of prima facie adjustment of Rs. 117,68,41,801/-. The CPC made the prima facie adjustment of Rs. 117,68,41,801/- by holding that GST liability remains unpaid. The GST collected partake the character of business receipts. Therefore, the same should have been offered to tax. However, the same is allowable as deduction on payment basis. The material on record does not indicate whether this liability was discharged before due date for filing of return of income. Therefore, the matter is restored to the file of AO. Similarly ground No. 3 challenges deletion of Olam Agro India Pvt. Ltd. addition of Rs. 1,66,34,933/- being provision written back. The CIT(A) deleted the same on the ground that the same was offered to tax and it is credited to Profit & Loss A/c. We do not find any perversity in the findings of the CIT(A). Therefore, the ground stands dismissed.
In the result, the appeal filed by the Revenue stands partly allowed for statistical purposes.
Order pronounced in the open court on 31st July, 2025.