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2022 (4) TMI 540 - AT - Income TaxDisallowance of sales tax liability - Prior-period item - claim under the provisions of Section 43B - HELD THAT:- As per Section 43B of the Act such sum as mentioned in Clause- ‘a’ of Section 43B of the Act shall be allowed as a deduction only during the previous year in which such sum is actually paid. Irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed. Only exception to this is the payments which have not been paid during a particular financial year but paid before the due date of furnishing the return of income u/s 139(1) of the Act and in such cases the amount paid can be claimed as expenditure in the income tax return. Now, going through the facts of the case, we find that the year under appeal is AY 2013-14. The alleged amount pertains to AY 2005-06 and AY 2010-11 and such liability did not exist at that point of time and, therefore, there was no possibility to make the payment during the relevant assessment year or before the due date of filing of return of income for such assessment year. The fact is that the liability of sales tax payment crystallized during the AY 2013-14 post sales tax assessment completion/sales tax proceedings. The assessee made the payment during the year which is not in dispute. Therefore, in our considered view provisions of Section 43B of the Act are squarely applicable on the alleged sum and the assessee as rightly claimed it as deduction against income for AY 2013-14. CIT(A) erred in sustaining the disallowance made by the AO, as the alleged sum of ₹ 12,32,290/- is eligible as a deduction against the income for AY 2013-14 as per provisions of Section 43B of the Act. The addition so made by the AO stands deleted and ground nos. 1 to 4 raised by the assessee in the instant appeal are allowed.
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