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2019 (3) TMI 643 - ITAT PUNELocal Body Tax (LBT) - claimed as deductible u/s 43B - said amount was paid during the year under consideration, though it related to prior period - no provision was made in the earlier years - HELD THAT:- Where the assessee is following a particular method of accounting and any amount was incurred for carrying out the business in any of the years, then the same if covered under the provisions of section 43B of the Act is to be allowed in the year of payment. In the facts of present case, where the assessee was following mercantile system of accounting, then LBT which is 10% of purchase cost was chargeable to the Profit and Loss Account in the preceding year. No such charge was created by the assessee in the previous year since the amount was not paid by the assessee in the said year. Only on payment of said amount, the assessee debited the same to the Profit and Loss Account. It is undisputed that LBT is to be allowed as expenditure. We find no merit in the orders of authorities below in denying the same to the assessee on the ground that the amount was not shown as payable in the preceding year. The express provisions of section 43B of the Act provides that irrespective of previous year in which the liability to pay such sum was incurred by the assessee, according to the method of accounting regularly employed by him, the said sum would be allowed only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him. Accordingly, we hold that the assessee is entitled to the aforesaid claim under section 43B - Decided in favour of assessee.
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