Bando India Private Limited Vs ITO (ITAT Delhi)
Addition Deleted Due to Incorrect Accrual Taxation of Duty Drawback Income; ITAT Rejects Accrual Basis Taxation Due to Clear Statutory Provision Under Section 145B(3); Mismatch with CBEC Data Not Sufficient for Accrual Taxation of Duty Drawback Income.
In Bando India Private Limited Vs ITO, the Income Tax Appellate Tribunal, Delhi Bench, considered the taxability of duty drawback income for Assessment Year 2018–19. The assessee had filed its return declaring NIL income and offered duty drawback income on a receipt basis, consistent with its past accounting practice. During limited scrutiny, the Assessing Officer noted a mismatch between income declared and data from the Central Board of Excise and Customs, observing that a larger amount had been sanctioned. Since the assessee followed the mercantile system, the Assessing Officer taxed the balance amount of ₹9,25,662 on an accrual basis under Section 143(3), which was upheld by the CIT(A).
Before the Tribunal, the assessee argued that Section 145B(3) of the Income Tax Act, 1961 mandates taxation of duty drawback in the year of receipt and that this method had been consistently followed and accepted in earlier years. The Revenue contended that sanction of the amount created reasonable certainty of receipt, justifying taxation on accrual basis.
