M/S. ZENITH EXPORTS LIMITED,KOLKATA vs. DCIT, CIRCLE - 5(1), KOLKATA, KOLKATA

This appeal filed by the assessee is directed against the order of Ld. CIT(A) – 2, Kolkata dated 10.10.2017.

The issue involved in Ground No. 1 relates to the disallowance of Rs. 11,89,168/- made by the AO and confirmed by the Ld. CIT(A) u/s 43B of the Income Tax Act, 1961.

The assessee in the present case is a company which is engaged in the business of export of industrial leather, hand gloves, silk fabrics and make-ups. The return of income for the year under consideration was filed by it on 15.09.2012 declaring a total income of Rs. 1,49,98,354/-. During the course of assessment proceedings, it was noticed by the AO that the liability on account of bonus and leave salary payable to the employees for the immediately preceding year i.e. A.Y. 2011-12 was actually paid by the assessee to the extent of Rs. 11,89,168/- during the Assessment Year: 2012-13 M/s. Zenith Exports Ltd. year under consideration and the same was claimed as deduction. According to the AO, the said liability having been paid by the assessee on or before the due date of filing the return of income for A.Y. 2011-12 i.e. 30.09.2011, the same was allowable as deduction for A.Y. 2011-12 u/s 43B of the Act and not for the year under consideration i.e. A.Y. 2012-13. He accordingly disallowed the claim of the assessee for the said deduction. On appeal, the Ld. CIT(A) confirmed the said disallowance made by the AO.

We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the deduction on account of bonus and leave salary payable for A.Y. 2011-12 was claimed by the assessee in the year under consideration i.e. A.Y. 2012-13 on payment basis as per the provisions of section 43B of the Act. The AO however disallowed the said deduction claimed by the assessee by holding that the assessee having paid the said liability on or before the due date for filing the return of income for A.Y. 2011-12, the deduction was allowable for A.Y. 2011-12 as per the proviso to section 43B and not for A.Y. 2012-13 on payment basis. In this regard, it is observed that the proviso to section 43B is applicable only when the sum is actually paid by the assessee on or before the due date of filing the return of income for the relevant year and the evidence of such payment is furnished by the assessee along with such return. In the present case, there is nothing brought on record to show that such evidence was furnished by the assessee company along with its return of income for A.Y. 2011-12 and no such case was even made out by the AO. In our opinion, the condition stipulated in the proviso to section 43B thus was not satisfied by the assessee company in order to claim the amount in question as deduction in A.Y. 2011-12 and this being so, the Assessment Year: 2012-13 M/s. Zenith Exports Ltd. deduction of the said amount was rightly claimed by the assessee on payment basis in the year under consideration i.e. A.Y. 2012-13. In that view of the matter, we delete the disallowance made by the AO and confirmed by the Ld. CIT(A) u/s 43B and allow Ground No. 1 of the assessee’s appeal.

As regards the common issue involved in Ground No. 2 and 3 relating to the addition of Rs. 1,48,120/- made by the AO and confirmed by the Ld. CIT(A) on account of alleged undisclosed income on the basis of statement contained in Form 26AS, the learned counsel for the assessee has contended that the amount reflected in the relevant 26AS statement was never received by the assessee and the same, therefore, cannot be treated as the income of the assessee. A perusal of the assessment order however shows that the assessee was given an opportunity by the AO to reconcile the discrepancy found in the 26AS statement but the assessee could not offer any satisfactory explanation and admitted before the AO that the amount in question representing its income was not credited to the profit and loss account. Keeping in view the same, we do not find any merit in Ground No. 2 and 3 raised by the assessee in this appeal and dismiss the same.

In the result, the appeal of the assessee is partly allowed. Order Pronounced in the Open Court on 19th December, 2018.