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2022 (1) TMI 1031 - AT - Income TaxRevisions u/s 263 by CIT - availability of VAT credit on deemed import and claim of the same as expense - HELD THAT:- There is no dispute to the fact that the assessee has shown purchases from Reliance Industries Ltd. SEZ which is the deemed import. The assessee on such purchases has claimed to have paid custom duty only which was shown along with the purchases. Principal CIT was of the view that in case of deemed import, there is no VAT liability and therefore the question of claiming the VAT input on such purchases does not arise. However, the assessee in the VAT return has claimed input VAT on such purchases which is not possible. As per the learned Principal CIT, this fact has not been verified during the assessment proceedings. Thus the order passed by the AO is erroneous insofar prejudicial to the interest of revenue. Assessee has claimed the benefit of input VAT in the VAT return on the deemed import. The copies of the invoices on sample basis are placed on record. On perusal of the details filed by the assessee, we note that the assessee has incurred VAT expenses on the deemed import which are eligible to be set off against the VAT output. Thus the finding of the learned principal CIT that there was no VAT input available to the assessee on the deemed import appears to be incorrect. Whether the assessee has claimed VAT input on the deemed import as an expense in the profit and loss account? - This fact, to our understanding, has not been verified by the AO. At the time of hearing the learned AR has also not brought anything on record suggesting that the assessee has not claimed VAT input on the deemed import as an expense in the profit and loss account. For this limited purpose, we hold that the order passed by the AO is erroneous insofar prejudicial to the interest of revenue. Accordingly, we do not find any reason to interfere in the finding of the learned Principal CIT and therefore we uphold the same. Hence the ground of appeal of the assessee is dismissed.
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