TaxTMI 
TaxTMI 
2012 (7) TMI 525
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....1 are that the assessee in the profit loss account had shown a debit of Rs. 81.30 lakhs on account of services tax of Rs. 55.06 lacs paid along with the interest of Rs. 25.12 lacs. The background for such a payment is that the assessee company which is engaged in rendering range of communications services including advertising, sales promotion, direct marketing, corporate communications and public relations. It undertakes advertising and media planning for its clients and composite bills are raised for the services and expenses involved in the assignment. It receives creative fee for the creation of advertisement and commission for placement of advertisement in media from customers and has got registered itself for payment of service tax under the category "advertising agency services". It had paid service tax only on the income from creation of advertisement and commission received from customers for placement of advertisements in media. However, it had not paid service tax on the renegotiated prices and also on discounts/incentives received as the assessee was of the belief that these incomes are not liable for service tax. A survey was carried out by the service tax authorities ....
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....the payment of service tax was a statutory liability and there was no element of any penalty or fine. Since it is a statutory liability which have been paid during this year, the same is allowable under Section 43B. In support of his contention, he has relied upon the following case laws :- (i) CIT v. C.L. Gupta & Sons [2003] 259 ITR 513 (All.); (ii) CIT v. Dharampal Satyapal Sons Pvt. Ltd. [2011] 50 DTR 287 (Delhi); (iii) Dy. CIT v. Glaxo Smithkline Consumer Healthcare Ltd. [2007] 110 TTJ 183 (Chd.)(SB); (iv) Commercial Motors v. Dy. CIT [2007] 110 TTJ 596 (Delhi); and (v) ACIT v. Claridges Investment & Finances (P.) Ltd. [2007] 18 SOT 390 (Mum.). Relying on these case laws, he submitted that the same is allowable under section 43B. 6. On the other hand, learned CIT DR relying on the findings of the Assessing Officer as well as CIT(A) submitted that mere payment of service tax on the basis of show cause notice cannot be held to be a liability as the same has been paid by the assessee under protest and the matter was subjudiced before the service tax authorities. Until and unless a formal order is passed, it cannot be held that the....
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....evious year in which the liability to pay was incurred on the payment of such sum as per method of accounting regularly employed by the assessee as per section145. For the claim of deduction of the sum paid against the liability of tax, duty, cess, fee, etc., the year of payment is relevant which is to be taken into account. The year in which the assessee incurred the liability to pay such tax, duty etc., has no relevance and cannot be linked in the matter of giving benefit of deduction under Section 43B. The case laws as have been relied by the learned AR also supports this proposition of law specifically judgment of the Hon'ble Allahabad High Court in the case of CIT v. C.L. Gupta & Sons, reported in [2003] 259 ITR 513 (All.). Similar proposition has been held in the case CIT v. Dharampal Satyapal Sons Pvt. Ltd., reported in [2011] 50 DTR 287 (Delhi) and the Special Bench decision in the case of DCIT v. Glaxo Smithkline Consumer Healthcare Ltd., reported in [2007] 110 TTJ 183 (Chd.) (SB). Following the ratio laid down in the above case laws and since no contrary decision has been cited before us, therefore, on the facts and circumstances of the case, we hold that the amount o....
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..... 2,42,25,295/-. As a part of global re-structuring process of the Havas Group, a share purchase agreement dated 6th March, 2006 was entered into between Havas Advertising International SA (Havas International), assessee and another shareholder of Euro TM to transfer the shareholding of Euro TM to Havas International at cost of acquisition to the company. In view of the above restructuring process, 10,400 shares were transferred to Havas International at Rs. 2,42,25,295/- being the cost to the company in the year 2006-2007. So far as 8000 shares which were acquired on 18-1-2006, sold on 20-9-2006, was sold at Rs. 1,60,00,000/- i.e. on the same price as per the cost of acquisition in terms of agreement, therefore, the short term capital gain was computed at 'Nil'. Regarding balance shares of 2400, which were acquired in the year 2002, after availing indexation benefit, long term capital was computed as loss of Rs. 14,85,063/-. In support of this transaction, various documents were filed which have been mentioned at page 8 of the assessment order. 10.1 In response to the query raised by the Assessing Officer as to why the cost of acquisition of the shares should not be tak....
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....s per the valuation report of equity shares of Euro TM as on 31.12.2005, it was reported that NAV of one equity share of Euro TM is Rs. 208 only, based on which the value of total shares of the 8000 was approximately Rs. 16,64,000/-. Further, the Assessing Officer held that since both the buyers and sellers are closely related parties, allotment of the shares on such a high premium was highly unreasonable. He was of the view that the agreement was a self serving document entered into between two closely related parties, therefore, the cost the acquisition is to be determined with respect to the fair market value. After applying the principle of law laid down by the Hon'ble Supreme Court in the case of McDowell and Co. Ltd. v. CTO, reported in 154 ITR 148, he worked out the cost of acquisition of 8000 shares at Rs. 16,00,000/- and cost of acquisition of 2400 shares purchased in the year 2002 at Rs. 82,25,295/-. The sale consideration was taken @ 2330 per share and determined the sale consideration at Rs. 1,86,40,000/- and determined the short term capital gain at Rs. 1,70,40,000/-. However, on the long term capital gain on sale consideration of 2240 shares @ 2330/- per shares, h....
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....s have been accepted in the earlier years, the Assessing Officer cannot dispute the cost of acquisition as per the book value in the current assessment year. Regarding valuation report wherein it has been stated the cost of shares as on 31.12.2005 is at Rs. 208, and he submitted that the same was prepared only for the purpose of submission to RBI, which is evident from para 3 of the certificate given at page 72 of the paper book. He submitted that cost of acquisition is fully borne out by the terms of agreement by which the shares was allotted to the assessee at Rs. 1.60 crores for 8000 shares. It is also an admitted fact that the sum was also transferred as per the book value only. Therefore, the cost of acquisition for determining the short term capital gain has to be taken as per the book value which was the actual consideration. Regarding computation of sales price, learned AR submitted that the same is not being disputed seriously. 13. On the other hand, learned CIT DR relied heavily upon the finding given by the CIT(A) and the Assessing Officer and submitted that once the valuation report, evaluating the shares at Rs. 208 was available, the Assessing Officer was fully just....