The Sonepat Coop. Sugar Mills Ltd., ... vs Assessee

This appeal by the assessee arises out of the order passed

by the CIT(A) on 19.10.10 in relation to the assessment year

2007-08.

2. The only ground raised in this appeal is against the

confirmation of addition of `1,83,034/- on account of Local Area

Development Tax not paid before the due date of filing the return

of income.

ITA No.5936/Del/2010

3. Briefly stated, the facts of the case are that the assessee, a

cooperative sugar mill, claimed deduction for Local Area

Development Tax of `1,83,034/- and equal amount was shown as

payable in its balance sheet. Since the said amount was not paid

before the due date of filing the return, the AO, impliedly invoking

the provisions of section 43B of the Income-tax Act, 1961

(hereinafter also called 'the Act'), made disallowance for the said

sum. The ld. CIT(A) upheld the disallowance and also directed the

AO to allow deduction for a sum of `93,338/-, being the amount

paid on 18.8.2006 allowed as per the order of the CIT(A) for the

AY 2006-07. The assessee is aggrieved this disallowance.

4. We have heard the ld. DR and perused the relevant material

on record. None appeared from the side of the assessee despite

notice during the course of hearing. However, someone came

immediately after the conclusion of hearing to submit that the

very payment of the Local Area Development Tax is under

challenge before the Hon'ble Supreme Court and the matter is

still sub judice.

2 ITA No.5936/Del/2010

5. In view of the fact that the amount was payable as at the

end of the year in its balance sheet implies that the assessee

claimed deduction for this sum in its Profit & Loss Account. As per

the mandate of section 43B, deduction can be allowed for such

sum only subject to the payment latest by the due date for filing

the return of income u/s 139(1) of the Act. Since the amount was

not paid by the assessee before the due date of filing the return,

in our considered opinion, the authorities below were justified in

making and sustaining its disallowance u/s 43B. In so far as the

contention about the amount possibly not becoming payable by

virtue of the likely judgment of the Hon'ble Supreme Court, we

find that if the amount turns out to be not payable, then, there

can be no question of deduction also. The disallowance u/s 43B

proceeds on the premise that the assessee initially claims

deduction which is not allowable because of the non-payment of

tax, duty or fees etc., before the due date. Whatever may be the

circumstance, the amount disallowed by the AO would require

addition in respect of the claim for deduction made by the

assessee in respect of the said sum for the year in question. We,

3 ITA No.5936/Del/2010

therefore, do not propose to interfere with the impugned order on

this score.

6. In the result, the appeal is dismissed.

The order pronounced in the open court on 07.01.2015.

Sd/- Sd/-

[A.T. VARKEY] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated, January, 2015.

dk

Copy forwarded to:

1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT

AR, ITAT, NEW DELHI.

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