TaxTMI 
TaxTMI 
2019 (10) TMI 309
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....id am amount was neither debited to P & L Account nor claimed in computing Total Income and therefore the same was not liable to be disallowed. (c) Without prejudice and in the alternative the CIT(A) ought to have directed the AO to allow the Service Tax on the basis of payment i.e. in A.Y.2014-15. 2. The CIT(A) has also erred in confirming disallowance of Rs. 1,61,905/- being Interest on late payment of Service Tax and since Sec.43B does not apply the said amount was not liable to be disallowed. It is also submitted by your Appellant that Interest for payment of Service Tax not being in nature of Penalty, the same ought to have been allowed as expenditure u/s.37 of the Act. It is therefore submitted that relief claimed above be allowed and the order of the Assessing Officer be modified accordingly. Your Appellant reserves right to add, alter, amend to withdraw any or all Ground of Appeal. The 1st issue raised by the assessee in ground No. 1 is that the learned CIT (A) erred in upholding the addition made by the AO for Rs. 25,40,376/- on account of delayed payment of service tax under the provisions of section 43B of the Act. 2. The facts in brief are that the assessee ....
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....essee on account of service tax which was not paid within the due date as trading receipt and therefore the same is liable to be included the total income of the assessee. The learned CIT (A) in support of his view relied on the following orders/judgments. (i) Madhya Gujarat Vij Co. Ltd. Vs ITO , ITA No. 2583/Ahd/2010 and CO No. 145/Ahd/2013(A.Y. 2006-07) vide order dated 09.11.2016 (ii) CIT v Sunder Printing Press (2005) 143 taxman 49 (ALL) (iii) CIT v Ideal Sheet Metal Stamping and Pressing (P) Ltd (2007) 290 ITR 295 4. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us. The learned AR before us reiterated the submissions as made before the authorities below after having reliance on the orders/judgments as cited before them. 5. On the other hand the learned DR vehemently supported the order of the authorities below. 6. We have heard the rival contentions of both the parties and perused the materials available on record. The major thrust of the learned CIT (A) was that the impugned amount of service tax, not deposited within the due date of filing return, has to be treated as trading receipts in view of the judgment of Hon'ble Supreme ....
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....the revenue urges that the decision of the Calcutta High Court in Chowringhee Sales Bureau (P.) Ltd.'s case (supra) covers the point in its favour. We are unable to agree. In that case it was held that the liability to pay sales tax arose the moment a sale or purchase was effected and if an assessee was maintaining accounts on the mercantile system it would be entitled to deduction of the estimated liability of sales tax, even though such sales tax had not been paid to the sales tax authorities. The question there concerned was the entitlement of the assessee to deduction under sections 10(1) and 10(2)(xv) of the Indian Income-tax Act, 1922. The decision is clearly distinguishable in its application to the present case. Here we are concerned with an assessee who has not even claimed any deduction on the ground of service tax and has not debited the amount to its Profit & Loss Account. Moreover the provisions of section 43B of the Act are quite clear in this regard. The decision of the Calcutta High Court in Chowringhee Sales Bureau (P.) Ltd.'s case (supra) was not in the context of the applicability of section 43B of the Act." 6.2 We further note that the Hon'ble Supreme C....
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....oods and the determination of the inventories. As such the provision of section 145A of the Act requires the assessee to include the amount of any tax, duty, cess or fee in the value of the purchases, sales and inventories. The provision of section 145A of the Act does not require the assessee to include the amount of service tax either in the purchases or sales. Therefore, we are not inclined to place our reliance on the case laws as referred by the learned CIT-A in his order. 6.6 Now, the controversy arises whether the impugned amount of service tax for Rs. 25,40,376/- paid after the due date of filing of income tax return, is liable to be added to the total income of the assessee under the provisions of section 43B of the Act. At this juncture, we are inclined to refer the relevant provisions of section 43B of the Act which reads as under: Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- [(a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or] XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX s....
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....e have heard the rival contentions and perused the record. The crux of the issue raised in this Cross Objection is whether provisions of section 43B of the Act apply to the service ta payable at the end of the year. In the case of assessee amount of Rs. 13.56 lacs was added to the net profit as profit and loss account towards inadmissible items at the time of filing return of income. Post assessment, assessee preferred appeal before ld. CIT(A) raising the ground that service tax payable was not wrongly added to the net profit by applying the provisions of section 43B of the Act because service tax payable was not reflected in the profit and loss account With CO No.145/Ahd/2013 Asst. Year 2006-07 and it was a mere liability in the balance sheet for tracking the tax payable because in this case assessee is a mere collecting agent. This ground of the assessee was allowed by ld. CIT(A). In order to further examine the issue that whether service tax payable is covered under the provisions of section 43B sub-section(a) of the Act, we find that section 43B sub-sec.(a) of the Act refers to any sum payable by the assessee by way of tax, duty, cess or fees. Now taking example of service tax ....
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....hat the Finance Act 2018, w.r.e.f. 01-04- 2017, has amended the provisions of section 145A of the Act requiring the assessee to include the amount of service tax in the value of the purchases and sales. But such amendment is applicable with effect from 1 April 2017. The relevant extract of the section reads as under: "For the purpose of determining the income chargeable under the head "Profits and gains of business or profession",- (i) *** (ii) the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation; (iii) *** (iv) *** Provided *** Provided further *** Explanation 1.-For the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment. 6.13 From the above, it is also clear that there was no obligation on the part of the assessee to show the amount of servic....