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Tax Publishers Allowability of year end provisions as business expenditure *Facts:* Assessee was granted benefit of year end expense provisions on estimated basis by the CIT(A) which was not in consonance with the revenue. On higher appeal by the revenue - Held against the revenue that year end expense provisions were an allowable expenditure. *Applied:* Novartis India Ltd. v. ACIT (ITAT Mumbai in ITA No. 7644/Mum/2017, dt. 28-9-2022) : 2022 TaxPub(DT) 8066 (Mum-Trib) CIT v. Triveni Engineering and Industries Ltd. (2011) 196 taxmann 94 (Delhi) : 2011 TaxPub(DT) 0667 (Del-HC) *Ed. Note:* One of the fine prints on this decision was the issue of neutrality - last year provisions disallowed ought to be allowed this year on actual spend basis and the disallowing of current year provisions once again will result in a neutral impact or minimal impact and unless the tax rate was different in both years the aspect becomes more academic in nature but for the fact of assessing the correct profits for a financial year and nothing beyond. In the same verdict the issue of disallowing provisions for non-deduction of TDS is also discussed where the case has been remanded to the AO to examine if the parties were identifiable out of the provisions so as to have triggered TDS obligations. There also the case is revenue neutral as once TDS is paid the expenditure is allowed in the year of the payment. AO's taking a stand that the expenditure did not pertain to that financial year and still warrants disallowance even upon TDS deduction in subsequent year ought to remember the fact that the disallowance was triggered by the same law under the same section which allows it upon TDS obligations being met in the year of TDS payment. *Case:* Dy. CIT v. Arvind Lifestyle Brands Ltd. 2023 TaxPub(DT) 5567 (Ahd-Trib)

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Allowability of year end provisions as business expenditure

Facts:

Assessee was granted benefit of year end expense provisions on estimated basis by the CIT(A) which was not in consonance with the revenue. On higher appeal by the revenue -

Held against the revenue that year end expense provisions were an allowable expenditure.

Applied:

Novartis India Ltd. v. ACIT (ITAT Mumbai in ITA No. 7644/Mum/2017, dt. 28-9-2022) : 2022 TaxPub(DT) 8066 (Mum-Trib)

CIT v. Triveni Engineering and Industries Ltd. (2011) 196 taxmann 94 (Delhi) : 2011 TaxPub(DT) 0667 (Del-HC)

Ed. Note: One of the fine prints on this decision was the issue of neutrality - last year provisions disallowed ought to be allowed this year on actual spend basis and the disallowing of current year provisions once again will result in a neutral impact or minimal impact and unless the tax rate was different in both years the aspect becomes more academic in nature but for the fact of assessing the correct profits for a financial year and nothing beyond. In the same verdict the issue of disallowing provisions for non-deduction of TDS is also discussed where the case has been remanded to the AO to examine if the parties were identifiable out of the provisions so as to have triggered TDS obligations. There also the case is revenue neutral as once TDS is paid the expenditure is allowed in the year of the payment. AO's taking a stand that the expenditure did not pertain to that financial year and still warrants disallowance even upon TDS deduction in subsequent year ought to remember the fact that the disallowance was triggered by the same law under the same section which allows it upon TDS obligations being met in the year of TDS payment.

Case: Dy. CIT v. Arvind Lifestyle Brands Ltd. 2023 TaxPub(DT) 5567 (Ahd-Trib)