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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा सदस्य, राजेन्द्र के अिुसार/ PER Rajendra A.M.- Challenging the order dated 01/10/2014 of the CIT(A)- 14, Mumbai, the Assessing Officer (AO) has filed the present appeal. Assessee-company, engaged in the business of Turnkey contracts for water treatment plants, filed its return of income on 13/10/2010 declaring total income of Rs. 8.91 crores. The AO completed the assessment under section 143(3) on 28/03/2013 determining the income at Rs. 9.30 crores.
Effective ground of appeal
is about payment made by the assessee under the „head property tax‟. During the course of assessment proceedings, the AO found that the assessee had claimed an expenditure of Rs. 35 lakhs on account of property tax under the head „administrative overheads‟. He directed the assessee to file explanation in that regard. After considering the submissions of the assessee, the AO held that the judgment about the dispute of property tax was delivered in the month of July, 2010, that the accounts of the assessee had been finalized on 31/03/2010, that the provisions of property tax was only a contingent liability, that as per the provisions of the Act contingent liability cannot be allowed while determining the assessable income of an assessee. Therefore, he made an addition of Rs. 35 lakhs to the income of the assessee.
3. Aggrieved by the order of the AO, the assessee preferred an appeal before First Appellate Authority (FAA). Before him, it was argued that it had a factory premises in the (A.Y. 2010-11) MIDC area of Navi Mumbai, that none of the local authorities were provided facilities like road, water etc. to the factories, that they were asking for taxes all the factory owners refused to pay the taxes, that the matter went upto the Hon‟ble Apex Court, that the assessee had made a provision for Municipal Taxes during the year, that it also made a payment of Rs.34.78 lakhs on 11/10/2010. A copy of the receipt evidencing the payment of property tax was submitted before the FAA. After considering the submissions of the assessee and the assessment order, he held that Municipal Taxes of Rs.34.78 lakhs were paid on 11/10/2010, that the assessee had filed its return of income on 13/10/2010, that due date of filing of the return for the year under appeal was 15/10/2010 as notified by the CBDT‟s order dated 27/09/2010 (F.No.225/72/2010/ITA.II). He further observed that the taxes were paid before the due date of filing of the return and referred to the proviso to section 43B of the Act. As the Municipal Taxes were paid before the due date of filing of return, so, he deleted the addition of Rs. 34.78 lakhs, made by the AO.
During the course of hearing before us, the Departmental Representative (DR) supported the order of the AO. The Authorized Representative (AR) relied upon the order of the FAA and contended that it was not a contingent liability, that liability has crystallized, that as per Accounting Standard-4 liability towards Municipal Taxes were allowable. He referred to page No. 46 of the paper book.
We have heard the rival submissions and perused the material before us. We find that the AO had made the disallowance treating the liability as contingent liability, that the FAA allowed the appeal of the assessee observing that that payment was made before due date of filing of return. In our opinion, the order of the FAA does not need any interference from our side as the property taxes were paid before due date of filing of return, that the provisions of section 43B were rightly analyzed by the FAA and were applied in correct manner. Therefore, upholding his order, we decide the effective ground of appeal against the AO. As a result, appeal filed by the AO stands dismissed. फलतः धनधावररती अधधकारी द्वारा दाधखल की गई अपील नामुंजूर की जाती है. Order pronounced in the open court on 26th Oct., 2016. आदेश की घोर्णा ख ले न्द्यायालय में ददनाुंक 26th अक्तोबर, 2016 को की गई । Sd/- Sd/-Sd/- Sd/- Sd/- (सी. एन. प्रसाद / C.N. Prasad) (राजेन्द्र / Rajendra) न्द्याधयक सदस्य / JUDICIAL MEMBER लेखा सदस्य / ACCOUNTANT MEMBER म ुंबई Mumbai; ददनाुंकDated : 26/10/2016. 2