ALLOWABILITY OF SERVICE TAX PAID

[S.C. WADHWA]

An individual has given his property on rent from 01/07/06 @ Rs. Twenty lacs per month inclusive of all taxes at present and in future, if any, as per agreement.

After levy of service tax w.e.f. 01/07/07, we raised bill on tenant for Rs. 2000000/- plus services tax leviable at that time. But he refused to give service tax by quoting the clause mentioned in the agreement i.e. Rent is inclusive of all taxes leviable at present as well as in future if any.

We paid service tax for the period from 01/07/07 to 31/03/08 and claimed the same in our Income tax return as under:

1. Rent inclusive of all taxes recd.                 2000000X9                 18000000

2. Less; Property tax paid                                                                      100000

3. Service Tax @ 12.36% Paid                                                            1969064

4. Actual rental income shown in return                                           16030936

From 01/04/08, no service tax was paid in the light of first judgement on service tax received from Delhi high court and we filed our income tax return for the year 01/04/08 to 31/03/09 by taking income of Rs. 2000000X12 (rs. 24000000/-).

Now our query is :

As per finance budget 2012-13, the govt. has made amendment in Section 80 of the Finance Act, that no penalty to be imposed if service tax payable upto 06/03/12 alongwith interest to be paid within six months from the date of assent from the president on the finance bill.

We paid service tax for the year 2008-09 on 24/03/12 and now we want to get benefit in our I.T. return for the A.Y. 2012-13.

But our consultant denied that being an individual he could not get benefit of service tax paid now.

Please give your expert opinion on the matter by quoting any notification or judgement etc.

AI Summary

Landlord Seeks to Revise Tax Return After Paying Service Tax; Consultant Advises Against Claiming Benefit An individual rented out property with a clause stating rent was inclusive of all current and future taxes. After service tax was levied from 01/07/07, the tenant refused to pay the additional tax. The landlord paid the service tax for 2007-08 and adjusted the rental income in the tax return. No service tax was paid for 2008-09 due to a court judgment. With the 2012-13 budget amendment allowing penalty waivers for service tax paid by 06/03/12, the landlord paid the tax for 2008-09 and sought to revise the income tax return. The consultant advised against claiming the service tax benefit, but a forum participant suggested revising the return if assessments are not finalized.