2016 (11) TMI 371

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....ent ORDER P. C. 1. This appeal under Section 260A of the Income Tax Act, 1961 (the Act) challenges the order dated 31 October 2013 passed by the Income Tax Appellate Tribunal (Tribunal). The impugned order relates to assessment for Assessment Year 2009-10 2. The Revenue urges the following questions of law for our consideration : "(A) Whether, on the facts and in the circumsta....

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.... Question (A) : (a) The Respondent-Assessee is engaged in the business of broking in Government and other securities. The Respondent raises an invoice on its clients for the transaction done on its behalf in respect of its broking services. The total amount of bill in the invoice is the aggregate of brokerage and applicable service taxes thereon. During the subject assessment year, some of the ....

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....ay the service tax into the treasury is of the service provider, i.e. the Respondent-Assessee. The failure of its client / customer to pay service tax to the Respondent-Assessee would not absolve the obligation of the Respondent-Assessee to pay the same to the Government of India. In the above view, the CIT (Appeals) held that the deduction of the service tax paid to the Respondent Assessee was a ....

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....tax from its clients/customers. Non payment of such service tax into the treasury would normally result in demand and penalty proceedings under the Finance Act, 1994. Therefore, as rightly found by the CIT (Appeals) and the Tribunal, the payment is on account of expediency, exclusively and wholly incurred for the purposes of business, therefore, deductible under Section 37(1) of the Act. As the ab....