| Question And Answer | |
|---|---|
| Subject: | Allowability of SAD Refund denied by Custom Authorites |
| Category: | Income-Tax |
| Querist: | Arun Kumar Arora |
| Answered by: | Research Team |
| Tags: | Business expenditure, Custom refund application |
| Date: | May 23, 2021 |
SAD Refund was applied 6 to 7 years ago with the Custom Authorities.The said amount was shown as Refund Receivable in the Balance Sheet in the year of payment of SAD custom Duty. However , the same was never offered as income. Now Custom department has rejected the said Refund application and the said amount has been debited to Profit and Loss Account.Whether this amount is allowable in current year in view of Provisions of Section 43-B,Bad Debts and Prior Period Expenses.
It may be difficult to answer without knowing the full facts . We presume that the assessee had made a claim for refund of custom duty paid and shown it as receivable in the balance sheet . In case the assessee has shown the custom duty refund as income in the profit and loss account and offered the income for taxation , when the claim is rejected the assessee can claim as business loss or bad debt , however if income is not offered as income the claim is not allowable . The tax consultant may be able to guide after verifying the facts .