Howe Robinson Shipping India Pvt. Ltd Vs ACIT (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT) Delhi, in the case of Howe Robinson Shipping India Pvt. Ltd. versus the Assistant Commissioner of Income Tax (ACIT), has remitted two key disallowances back to the tax authorities for re-verification. The appeal, pertaining to Assessment Year (AY) 2020-21, addressed issues related to a contingent liability disallowance and a disallowance for delayed employee provident fund (EPF) contributions.
Howe Robinson Shipping India Pvt. Ltd., engaged in the ship brokering business, had filed its original income tax return declaring a NIL income on February 11, 2021. However, during processing under Section 143(1) of the Income Tax Act, 1961, on December 18, 2021, the tax department made two adjustments: a disallowance of Rs. 83,46,490 on account of “contingent liability” and a disallowance of Rs. 1,69,124 for EPF contributions.
The assessee subsequently appealed these adjustments to the Additional/Joint Commissioner of Income Tax (Appeals) [Addl./JCIT(A)], who confirmed both disallowances. This led the assessee to file the present appeal before the ITAT Delhi.
Contingent Liability Disallowance (Rs. 83,46,490)
The first set of grounds raised by the assessee challenged the disallowance of Rs. 83,46,490, arguing that this sum, being a contingent liability, was not charged or debited to the Profit & Loss Account and therefore should not have been added back to income.
