Pfizer Limited Vs Deputy Director of Income Tax (ITAT Mumbai)
Conclusion: Assessee was entitled to claim deductions related to taxes paid under protest and the settlement of tax disputes under various state government amnesty schemes under section 43B and CIT(A) was not correct in rejecting the submissions advanced by assessee without appreciating the aforesaid factual matrix and the material on record.
Held: In the instant case, assessee had claimed for deductions related to taxes paid under protest and the settlement of tax disputes under various state government amnesty schemes. It had filed its return of income for the assessment year 2022-2023, claiming a deduction of INR 5.3 crore under Section 43B, which allowed for the deduction of certain taxes on a payment basis. The amount in question represented taxes such as Central Sales Tax (CST), Entry Tax (ET), and Value Added Tax (VAT) that assessee had settled through amnesty schemes or had made payments under protest in earlier years. However, CPC rejected assessee’s claim during the processing of its return, leading to a disallowance of the claimed deduction. Assessee contended that the payments made under protest had been rightly included in the tax deduction claim, supported by the certification of its tax auditor. Despite the submission of these documents, CIT(A) upheld the CPC’s decision, citing insufficient supporting documentation. Upon appeal, ITAT considered the facts and found merit in assessee’s arguments. Tribunal ruled that the deduction was valid under Section 43B, as the payments were made in the relevant assessment year after the disputes were settled through the amnesty schemes. Furthermore, Tribunal noted that the CPC had failed to provide Pfizer with adequate notice in accordance with the proviso(s) to Section 143(1)(a) before making the disallowance, which was a procedural lapse. It was held that deduction under Section 43B was claimed in respect of payment of Taxes already made as certified by the Tax Auditor in Clause 26(i)(A)(a)(4). Thus, CIT(A) had proceeded to reject the submissions advanced by the Assessee without appreciating the aforesaid factual matrix and the material on record. Assessee was not put to notice in terms of proviso(s) to Section 143(1)(a) before making the adjustment/disallowance of INR.5,31,52,923/- under consideration. Thus, the disallowance of INR.5,31,52,923/-made by the CPC under Section 143(1) of the Act in respect of deduction claimed by assessee under Section 43B could not be sustained and was, therefore, deleted.
