Relief for IndiGo: ITAT Upholds Deletion of Rs. 11.05 Crore Disallowance u/s 37 as AO’s Final Assessment Confirms Nil Income [Read Order]
The AO disallowed expenses of Rs. 38.48 crore under section 37 while processing the return under section 143(1) of the Act
The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) upheld the deletion of Rs. 11.05 crore disallowance under section 37 in favor of Interglobe Aviation Limited ( IndiGo ), observing that the Assessing Officer (AO )’s final assessment under section 143(3) of Income Tax Act,1961confirmed nil income after proper scrutiny, leading to the dismissal of the Revenue’s appeal.
The Revenue-appellant appealed against the order passed by Joint Commissioner of Income Tax (Appeals) [JCIT (A)] for the assessment year 2019-20 dated 30.08.2024. The main issues were whether JCIT (A) was right to accept the assessee’s claim on the section 37 disallowance of Rs. 11.05 crore without examining the details or evidence, and whether the decision was flawed because the reasons were not explained in the order.
In this case, Interglobe Aviation Limited,respondent-assessee , the departmental representative pointed out that the AO disallowed expenses under section 37 in the order passed under section143(1) of the Act.
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The JCIT (A) deleted this disallowance because the assessee said the amount was already taxed in the income return, which would cause double taxation. The representative said the JCIT (A) should have asked the assessee for details or reconciliation and disagreed with the JCIT (A)’s decision.
The assessee counsel said the AO checked all the information and completed the assessment under section 143(3) and 144B, confirming the taxable income as nil. He argued that the additions in the earlier section 143(1) order were preliminary and were settled in the final order under section 143(3) of the Act.
The two member bench comprising Anubhav Sharma (Judicial Member) and S.Rifaur Rahman ( Accountant Member) reviewed the submissions and records. The assessee declared nil income in the return. The AO disallowed expenses of Rs. 38.48 crore under section 37 while processing the return under section 143(1). On appeal, JCIT (A) deleted this disallowance after checking the facts and evidence.
The case was later scrutinized, and the AO accepted the return under section 143(3) after proper verification. Since the section 143(1) order merged with the section 143(3) order, the Revenue had another chance to verify the records, which the AO found satisfactory. The tribunal dismissed the Revenue’s appeal.
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