Case Law Details
JCIT (LTU) Vs M/s. Texas Instruments (India) Pvt. Ltd. (ITAT Bangalore)
As per the submissions made by Ld A.R, we notice that the disallowance of Rs.5.54 crores made by the AO forms part of Provision for expenses amount of Rs.9.71 crores created on 31.3.2006 relevant to AY 2006-07. It was submitted that the above said amount of Rs.9.71 crores represented year end provision for expenses created as per accounting principles. There is no dispute with regard to the fact that the above said amount of Rs.9.71 crores (included in the amount of Rs.24.77 crores) was disallowed by the assessee voluntarily in AY 2006-07, meaning thereby, the assessee did not claim Rs.9.71 crores as deduction at all in AY 2006-07.
As per the provisions of the Act, if the assessee has got any benefit from an amount, which was claimed as deduction in an earlier year, then such benefit is taxable. However, when the assessee has not claimed the amount as deduction at all in an earlier year, any benefit obtained from it cannot be subjected to tax under the Act. In the instant case, the assessee has disallowed the provision amount of Rs.9.71 crores while computing total income for AY 2006-07, meaning thereby, the assessee has not claimed the amount of Rs.9.71 crores as deduction in AY 2006-07. The assessee has reversed the entire amount of Rs.9.71 crores in the year relevant to AY 2007-08 by crediting the same to expenditure account/P & L a/c. Out of the amount so reversed, the assessee has incurred expenses to the tune of Rs.4.17 crores. The assessee has not incurred expenses for the balance amount of Rs.5.54 crores and hence it has increased the profit/total income of the assessee. Since it was not claimed as deduction in AY 2006-07, the same cannot be subjected to tax during the year under consideration. Accordingly, we are of the view that the Ld CIT(A) was justified in deleting the disallowance of Rs.5.54 crores. Accordingly, we uphold his order passed on this issue.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
The revenue has filed this appeal challenging the order dated 30-03-2018 passed by Ld CIT(A)-2, Bengaluru and it relates to the assessment year 2007-08. The only issue urged by the revenue is whether the Ld CIT(A) was justified in deleting the addition of Rs.5,53,30,473/- made by the AO u/s 40(a)(i) of the Income-tax Act,1961 [‘the Act’ for short].
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