The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT )ruled that no disallowance under Section 43B of the Income Tax Act,1961 could be imposed for unclaimed Goods and Service Tax ( GST ) due to the lack of deduction.
Munjal Auto Industries Ltd.,the appellant-assessee,filed an appeal against the order issued by the Commissioner of Income Tax (Appeals)[CIT(A)] on February 28, 2024, concerning the assessment year ( AY ) 2018-19.
Get a Copy of GST Question Compendium with 500 Real World Queries, Click Here
The assessee raised several grounds of appeal, primarily alleging violations of the principles of natural justice and challenging the disallowance of Goods and Service Tax ( GST ) amounting to ₹13,27,094 under Section 43B of the Act.
The appellant contended that the CIT(A) failed to provide a proper opportunity for a hearing and improperly upheld the Assessing Officer’s ( AO ) disallowance without considering the relevant provisions of the Faceless Appeal Scheme, 2021. Additionally, it argued that the disallowance under Section 43B was erroneous as the appellant did not claim the GST amount in the Profit and Loss Account.
The CIT(A) had relied on previous judgments to support the AO’s actions.
However, upon review, it was established that the assessee had not claimed the GST as a deduction, and therefore, following the precedent set by the Allahabad High Court in CIT vs. U P Hotels Pvt. Ltd., it was concluded that no disallowance could be warranted under Section 43B. The Tribunal noted that the provisions of Section 43B were applicable only when the assessee claimed a deduction for the amount.
Get a Copy of GST Question Compendium with 500 Real World Queries, Click Here
The findings also referenced the case of P.K. Parikh HUF vs. ITO, which further supported the view that since the assessee treated the GST amount as a current liability without debiting it to the profit and loss account, the AO had no jurisdiction to impose a disallowance.
The two member bench comprising Siddhartha Nautiyal ( Judicial Member ) and Dr.BRR Kumar ( Accountant Member ) ruled that since the assessee had not claimed any deduction and did not route the GST through the Profit and Loss Account, the appeal was allowed, and the disallowance under Section 43B was reversed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
