Relief to Adani Power Ltd: ITAT Allows Deduction u/s 43B of Income Tax Act as there is No Inconsistency in Amount Reported in Tax Audit and Amount Claimed in Return of Income [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) allowed the deduction under Section 43B of Income tax Act as the tax auditor himself has certified that amount claimed under Section 43B of the Income Tax Act,1961 as pre-existing liability which was paid by the assessee in the previous year and the assessee has also claimed the same amount while filing the return of income.

The  assessee Adani Power Ltd. filed its return of income declaring total income of Rs.71.64 crores. The Assessing Officer (AO) disallowed the deduction of Rs. 1,75,59,741/- under Section 43B of the Income Tax Act.

Aggrieved by such order the assessee filed appeal before the Commissioner of Income tax (Appeals)[CIT(A)] which deleted all adjustments except adjustment made under Section 43B of the Act amounting to Rs. 1,75,59,741/-.

Further aggrieved the assessee filed an appeal before the Tribunal. The Authorised Representative of the assessee submitted that the assessee has claimed Rs. 1,75,59,741/-under Section 43B of the Income Tax Act as the same has been paid during the year under consideration and has been disallowed by the assessee in preceding previous years.

Further he submitted that the assessee has also claimed the same amount by filing the return of income. Accordingly, it was submitted before us that there is no inconsistency in amount reported in the tax audit report and the amount claimed by the assessee in it’s return of income.

The Departmental Representative (DR) relied on the observations made by CIT(A) in the appellate order.

The Bench comprising of Smt. Annapurna Gupta, Accountant Member and Siddhartha Nautiyal, Judicial Member observed that the tax auditor in their Tax Audit Report has specifically pointed out that sum of Rs. 1,75,59,741/- pertains to claim of bonus under Section 43B of the Income Tax Act, and that the said liability pre-existed on the first day of the previous year and that the same was actually paid by the assessee during the previous year under consideration.

Accordingly, it is seen that the tax auditor himself has certified that amount of Rs. 1,75,59,741/- under Section 43B of the Income Tax Act as pre-existing liability which was paid by the assessee in the previous year (refer Clause 26(i)(A)(a) of the Tax Audit Report) and the assessee has also claimed the above amount while filing the return of income.

Further, the assessee also produced before us Clause 26(i)(B)(b) of the Tax Audit Report for Assessment Year 2018-19 i.e. the immediately preceding assessment year, wherein it has been mentioned by the tax auditor that the amount of bonus amounting to Rs. 1,75,59,741/- has not been paid before the due date and hence disallowed under Section 43B of the Income Tax Act.

It is observed that the aforesaid amount of Rs. 1,75,59,741/- was disallowed in the return of income filed by the assessee for Assessment Year 2018-19 and hence was not claimed by the assessee in the immediately previous assessment year.

Therefore the appeal of the  assessee was allowed.

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