No disallowance u/s 43B if expenditure not claimed in Profit and Loss Account

No disallowance u/s 43B can be made if expenditure has not been not claimed by the assessee in Profit and Loss Account

In a recent judgment, ITAT Hyderabad has held that if the assessee has not claimed any expenditure in its Profit and Loss Account, then no disallowance in respect of that expenditure can be made under section 43B of the Income Tax Act, 1961 (the Act).

ABCAUS Case Law Citation:
5081 (2026) (03) abcaus.in ITAT

In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the disallowance u/s 43B on account of GST made by the CPC in an Intimation u/s.143(1).

The Centralised Processing Centre (“CPC”), while processing the return of income of the appellant assessee under section 143(1) of the Act made a disallowance towards GST under section 43B of the Act vide intimation. First Appellate Authority dismissed the appeal of the assessee.

Before the Tribunal, the appellant submitted that assessee was following the exclusive method of accounting and, accordingly, had not claimed any amount of GST as expenditure in its Profit and Loss Account. It was further submitted that since the assessee had not claimed the said amount as expenditure, no disallowance can be made under section 43B of the Act. In support of his contention, the assessee relied on various judicial precedents of Hon’ble High Court and ITATs.

The Tribunal observed that it was undisputed that the assessee was following the exclusive method of accounting and had not claimed the GST amount as expenditure in its Profit and Loss Account.

The Tribunal further observed that the Hon’ble Chhattisgarh High Court after considering the judgment of the Hon’ble Delhi High Court had categorically held that if the assessee has not claimed any expenditure in its Profit and Loss Account, then no disallowance in respect of that expenditure can be made under section 43B of the Act.

Therefore, respectfully following the judgment of the Hon’ble Chhattisgarh High Court the Tribunal held that no disallowance under section 43B of the Act can be made in the hands of the assessee when no such expenditure had been claimed by the assessee in its profit & loss account.

Accordingly, the Tribunal directed the AO to delete the addition made under section 43B of the Act.

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