Thar Automobiles Pvt. Ltd., a New Delhi-based company involved in trading Honda Two-wheelers, appealed against the order dated November 9, 2018, by the Commissioner of Income Tax (Appeals)-9, New Delhi, for the assessment year 2014-15. This case, presided over by Judicial Member Ms. Suchitra Kamble and Accountant Member Mr. Prashant Maharishi, was brought into contention due to the upholding of certain additions under Section 43B of the Income Tax Act.
The primary contention involved two specific additions upheld by the CIT(A). The first was an addition of Rs 670,742 under the ledger head “Reserve and Surplus of the Employees.” The company argued that this liability was carried forward from previous years (2009-10 to 2012-13) and was not covered under Section 43B, which deals with certain types of payments made by a taxpayer.
The second addition of Rs 68,580 related to registration fees collected from customers for the registration of sold vehicles with the Registrar of Transport Office (RTO). Thar Automobiles contended that these fees were collected on behalf of customers and should not be considered a direct liability of the company under Section 43B.
The tribunal analyzed the provisions of Section 43B and concluded that neither of the liabilities claimed by the Income Tax Office fell under the categories specified in the section, which typically includes taxes, duties, cess, and other expenses paid by a taxpayer. Consequently, both additions were ordered to be deleted, providing relief to Thar Automobiles. The ruling highlighted the importance of understanding the specific provisions and exclusions within tax laws.
This ruling underscores the critical nature of proper documentation and the understanding of liabilities under various sections of the Income Tax Act. It also emphasizes the tribunal’s role in adjudicating disputes based on a detailed examination of facts and legal provisions.
Order pronounced in open court on May 20, 2020, marked a significant relief for Thar Automobiles, setting a precedent on how similar cases might be handled concerning the interpretation of Section 43B liabilities.
Thar Automobiles Appeals Against Additional Tax Liabilities for AY 2014-15
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