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Tax Publishers JCIT v. Texas Instruments (India) (P) Ltd. [ITA No. 1958/Bang/2018, dt. 16-12-2020] : 2020 TaxPub(DT) 5389 (Bang-Trib) Disallowance of year-end provisions voluntarily offered due to non-deduction of TDS and subsequent reversal of the same in the books -- Taxability thereof *Conclusion:* The reversed provision in the books in the next assessment year was already offered to tax and thus cannot be taxed again. *Facts:* Assessee had made year end provisions in assessment year 2006-07 -- Rs. 15.06 + Rs. 9.71 = 24.77 crores. Since no TDS was done on these year end provisions they disallowed the same and offered the same to tax in assessment year 2006-07. Subsequently in the next financial year/assessment year 2007-08 they claimed the Rs. 15.06 as an expense which was paid and on which TDS was also done which was also allowed as a deductible expense. The issue was on the reversal of the Rs. 9.71 crores which was again alleged to be subject to tax due to the reversal entry in the books. Assessee's plea was since the same was offered to tax in the earlier assessment year the same cannot be taxed once again. On appeal Commissioner (Appeals) upheld the views of the assessee on facts. On higher appeal -- Held against the revenue that there was no requirement to interfere with the correct order of the Commissioner (Appeals) and the provision which was offered since already offered to tax in assessment year 2006-07 cannot be taxed once again. *Editorial Note:* The case is a classic example of tax planning by voluntarily offering the expense as a disallowance so as to avoid disallowances under section 40(a)(i) and then claiming it in the actual year of payment. The overflow reversal also cannot be taxed again obviously. It will only have timing impact vis-a-vis killing the opportunity to the assessing officer to make disallowances which are genuine and not warranted as well. Disallowances on this domain once done set a precedence for assessees generally.

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JCIT v. Texas Instruments (India) (P) Ltd. [ITA No. 1958/Bang/2018, dt. 16-12-2020] : 2020 TaxPub(DT) 5389 (Bang-Trib)

Disallowance of year-end provisions voluntarily offered due to non-deduction of TDS and subsequent reversal of the same in the books -- Taxability thereof

Conclusion: The reversed provision in the books in the next assessment year was already offered to tax and thus cannot be taxed again.

Facts:

Assessee had made year end provisions in assessment year 2006-07 -- Rs. 15.06 + Rs. 9.71 = 24.77 crores. Since no TDS was done on these year end provisions they disallowed the same and offered the same to tax in assessment year 2006-07. Subsequently in the next financial year/assessment year 2007-08 they claimed the Rs. 15.06 as an expense which was paid and on which TDS was also done which was also allowed as a deductible expense. The issue was on the reversal of the Rs. 9.71 crores which was again alleged to be subject to tax due to the reversal entry in the books. Assessee's plea was since the same was offered to tax in the earlier assessment year the same cannot be taxed once again. On appeal Commissioner (Appeals) upheld the views of the assessee on facts. On higher appeal --

Held against the revenue that there was no requirement to interfere with the correct order of the Commissioner (Appeals) and the provision which was offered since already offered to tax in assessment year 2006-07 cannot be taxed once again.

Editorial Note: The case is a classic example of tax planning by voluntarily offering the expense as a disallowance so as to avoid disallowances under section 40(a)(i) and then claiming it in the actual year of payment. The overflow reversal also cannot be taxed again obviously. It will only have timing impact vis-a-vis killing the opportunity to the assessing officer to make disallowances which are genuine and not warranted as well. Disallowances on this domain once done set a precedence for assessees generally.