TaxTMI 
TaxTMI 
2020 (4) TMI 123
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....ion of the AO in disallowing a sum of Rs. 1,25,39,228/- of service tax u/s 43B of the I.T. Act, 1961. The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quasing the said disallowance of Rs. 1,25,39,228/-.'' 2.1 The assessee is a company and was engaged in the business of providing cable TV distribution to cable operators. The assessee company filed its return of income on 21-09-2012 declaring Nil income after adjusting the brought forward business loss of Rs. 1,41,45,146/-. During the course of assessment proceeding, the AO noted that the assessee has not paid the service tax liability of Rs. 1,25,39,228/-. Accordingly, the AO asked the assessee to show cause....
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....sessee was not liable to pay Service Tax upto 30-06-2011. The ld.AR of the assessee further referred to the details of outstanding of Service Tax and submitted that out of Rs. 1,25,39,228/- a sum of Rs. 1,21,38,957/- was opening balance as on 01-04-2011. Therefore, the said amount was even outstanding at the beginning of the year and the entire outstanding amount of Rs. 1,25,39,228/- was relating to the period prior to 30-06-2011. Thus the ld.AR of the assessee submitted that when it was not payable under the provisions of Service Tax Rules, 1994 exists at the relevant point of time then the same cannot be disallowed by invoking the provisions of Section 43B of the Act. The ld.AR of the assessee further contended that the assessee has not ....
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....fore, this system of accounting is contrary to the accounting standard and it is a devise to bypass the provisions of Section 43B of the Act. The ld. DR relied on the orders of the lower authorities as well as the decision dated 23-03-2018 of ITAT Delhi Benches in the case of M/s. Hemkunt Infratech (P) Ltd vs DCIT (ITA No. 6683/Del/2017 for the Assessment Year 2013-14). 2.4 In rebuttal, the ld.AR of the assessee has submitted that the decision relied on by the ld. DR is not applicable in the facts of the present case as the said decision was for the Assessment Year 2013-14 relating to the period after the amendment of Service Tax Act and Rules w.e.f. 30-06-2011. Further in the said case, the assessee despite collection of the amount not de....
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....and which has not been disallowed U/s 43B of the Act then the assessee cannot take the benefit of Section 43B in future when the said service tax is paid because the assessee has not included this amount as part of turnover. The Hon'ble Bombay High Court in the case of CIT Vs Knight Frank (India) Pvt. Ltd.(supra) has held in para 7 as under: "7. Regarding question (ii): (a) It is an admitted position before us that the respondent assessee had not claimed any deduction on account of the service tax payable in order to determine its taxable income. In the above view, there can be no occasion to invoke Section 43B of the Act. (b) Mr. Suresh Kumar, learned Counsel for the Revenue fairly states that the issue stands concluded against t....