ITAT Directs Re-adjudication on allowbility of property tax paid in earlier years

Rare Townships Private Limited Vs DCIT (ITAT Mumbai)

Whether the adjustment of amount paid in earlier years on behalf of Collected BSD against the property tax liability of the assessee during the year under consideration would make the claim eligible for deduction under section 43B of the Act.

Rare Townships Private Limited contested a decision by the Commissioner of Income Tax (Appeals)-54, Mumbai, regarding the disallowance of property tax payments totaling Rs.1,74,00,780 for AY 2018­19. The crux of the matter revolves around the interpretation of Section 43B of the Income Tax Act, 1961, pertaining to the allowance of deductions for certain payments.

Rare Townships Pvt Ltd, a company engaged in construction projects in Mumbai, filed its income tax return for AY 2018-19, reporting a loss. The Assessing Officer (AO) scrutinized the return and disallowed the claimed deduction of Rs.1,74,00,780 under Section 43B for property tax payments made in previous years. Additionally, the AO questioned the credit for TDS claimed by the company.

The company appealed to the CIT(A), who upheld the disallowance, citing that the property tax payments were not made during the relevant assessment year. The dispute hinges on whether the adjustment of property tax payments against the company’s own liability qualifies for deduction under Section 43B.

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