TMI Blog2016 (1) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision of Section 43B overrides the method of accounting consistently followed and provides for the deduction of statutory liabilities in the year of payment irrespective of the year in which the liability is incurred. - Decided in favour of assessee Disallowance on account of Panchayat tax - CIT(A) deleted the addition - Held that:- We find that the expenses on account of panchayat tax was debited under the head 'prior period expenses' by the Auditor of the Company. We further note that the said expenses were crystallized during the year upon the assesee being served a notice of demand. Though, the some part of the demand pertained to earlier years, we are in full agreement with the conclusion drawn by the CIT(A) on this point th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71,42,093/- u/s. 43B of the Act, disregarding the fact that assessee has claimed deduction without treating the same as actual liability in its books of account. (ii) learned CIT(A) erred in law in deleting disallowance of ₹ 3,66,000/- wrongly claimed on account of prior period expenses, disregarding the fact that assessee follows mercantile system of accounting. (iii) learned CIT(A) erred in law in deleting addition of ₹ 29,382/- made on a/c of disallowance of foreign commission u/s40(a)(i) of the IT Act disregarding the fact that assessee company failed to deduct tax at source in terms of the provisions of Section 195. 2. The ground no.1 relates to deletion of disallowance of ₹ 3,71,42,093/- u/s.43B of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee in earlier year. The relevant para no.4.6 of CIT(A) is reproduced as under: 4.6 As the appellant has paid the amount of ₹ 3,71,42,093/-towards excise duty by way of adjustment of refund against the above demand of ₹ 4.55 crores and therefore, it is entitled for deduction of this amount of ₹ 3,71,42,093/- u/s 43B of the IT Act provided that such amount of ₹ 3,71,42,093/- has not been claimed by the appellant in earlier years u/s 43B or under any other section of the IT Act. The appellant's AR and the appellant in above submission dated 27-07- 2012 and submission dated 17-08-2012 have stated that the refund of ₹ 3,71,42,093/- has not been claimed in any of the earlier previous years u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re by the Excise Department which means that the demand raised by the department stands discharged to the extent of ₹ 3.71 crore. We note that the order passed by the CIT(A) had taken into consideration all the issues raised concerning the all the material aspects of the case and clear cut finding was given that assessee was entitled to the said deduction u/s.43B of the Act on the payment basis and further held that the demand raised was not on account of penalty as claimed by the A.O.but was a routine demand. We are in full agreement with CIT(A) on this point. The assessee has also given note in the notes to accounts to the annual account mentioning the facts qua the said demand raised by the Excise Department and adjustment of ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision under which deductions are allowed on the payment of duties and taxes. In other words, the provision of Section 43B overrides the method of accounting consistently followed and provides for the deduction of statutory liabilities in the year of payment irrespective of the year in which the liability is incurred. The case of the assessee is squarely covered by the ratio laid down in the various decisions discussed above and by respectfully following these decisions, we dismiss the appeal of the Revenue on this point. 4. The issue in the second ground of appeal relates to the deletion of disallowance on account of Panchayat tax of ₹ 3,66,000/-. 5. The brief facts are that the assessee received notice for panchayat tax during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the current year which is consistent to the practice followed by the assessee. We, therefore, dismiss the appeal of Revenue on this ground. 6. The third ground of appeal related to deletion of addition of ₹ 29,382/- made disallowance on account of foreign commission. 7. During the year, the assessee debited ₹ 29,382/- on account of export commission. The ld. A.O. disallowed the said expense by holding that the assessee has not complied with the provision of tax deduction at source and therefore, the said expense was not deductible under the provisions of Section 40(a)(i) of the Act and also observed that similar expenses were also disallowed in the earlier years. The ld. CIT(A) deleted the disallowance on the ground tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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