Case Law Details
Adani Power Ltd. Vs Assessing Officer (ITAT Ahmedabad)
Introduction: In a recent case, the Income Tax Appellate Tribunal (ITAT) ruled in favor of Adani Power Ltd., allowing a bonus deduction under Section 43B of the Income Tax Act. This decision overturned an earlier order by the Commissioner of Income Tax (Appeals) and has significant implications for the assessment year 2019-20.
Background: Adani Power Ltd. initially filed its income tax return for the assessment year 2019-20, declaring a total income of Rs. 71.64 crores. However, the Income Tax Department issued a notice under Section 143(1) of the Act, making certain adjustments. Upon appeal, most of these adjustments were deleted, except for one specific adjustment made under Section 43B of the Act, amounting to Rs. 1,75,59,741.
ITAT’s Decision: The ITAT reviewed the case and observed that the claim made by Adani Power Ltd. under Section 43B was justified. This section allows for certain deductions when specific conditions are met. In this instance, Adani Power Ltd. claimed a deduction of Rs. 1,75,59,741 under Section 43B. The tax auditor, in the Tax Audit Report, certified that this amount was related to a bonus and pertained to a pre-existing liability. Furthermore, the auditor stated that this bonus amount had been paid during the relevant assessment year.
The ITAT noted that the tax auditor’s certification was explicit, indicating that the bonus was a pre-existing liability and had indeed been paid during the assessment year under consideration. It was also highlighted that the same amount was correctly disclosed by Adani Power Ltd. in its tax return. Notably, the Income Tax Department had not disallowed this amount in any of the preceding assessment years.
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