TaxTMI 
TaxTMI 
2021 (2) TMI 127
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....the assessee claimed CENVAT credit amounting to Rs. 11,10,28,717/- and Rs. 61,99,545/- respectively. Since, the assessee was of the view that CENVAT credit would be granted, he offered these amounts as prior period income in assessment years 2010-11 and 2011-12. However, on being legally advised that it is not entitled to CENVAT credit pertaining to PSF/UDF and advertisement expenses, the assessee reversed the prior period income offered in Assessment Years 2010-11& 2011-12 in the impugned assessment year claiming it as deduction under section 37(1) of the Act. Further, the assessee also claimed deduction of Rs. 55,00,941/- being service tax paid on chartered flight and discount received on PSF/UDF by stating that while offering certain income on gross basis, the assessee has included service tax component which is not the income of the assessee. Assessee also claimed deduction of an amount of Rs. 8,29,749/- being interest on delayed payment of service tax. Being of the view that deduction claimed on account of service tax adjustment and interest on delayed payment of service tax is a prior period expenditure which has not accrued in the impugned assessment year, the Assessing Offi....
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....en during the year. Being aggrieved, the assessee is before us. 7. Reiterating the stand taken before the departmental authorities, the learned Counsel for the assessee submitted, PSF/UDF are levied by Airport Authority of India (AAI). Every passenger embarking the flight in the airport within its jurisdiction. He submitted, PSF / UDF is collected for provision of various services at the airport, such as, telephone, newspapers, water, toilet, maintenance of the airport, security of various airports including the capital cost towards purchase of assets like arms, metal detector, etc. He submitted, for administrative convenience, the AAI instead of collecting the PSF / UDF directly from passengers, has cast an obligation on the airlines whose flights are being used by the passengers embarking to collect the PSF / UDF from such passengers and to remit it to AAI. He submitted, since the assessee collects PSF / UDF on behalf of AAI, such amount collected along with service-tax and paid over to AAI has been claimed as expenditure in earlier assessment years. He submitted, assuming that assessee is entitled to CENVAT credit on service-tax collected on PSF / UDF and certain other items ....
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.... year. Further, he submitted that CENVAT credit cannot be allowed as it is not a liability of the assessee. He offered similar arguments with regard to service tax liability as well. 11. We have considered rival submissions in the light of decisions relied upon and perused the materials on record. As regards deduction claimed on account of CENVAT credit pertaining to PSF / UDF and advertisement expenses, the departmental authorities have rejected them on the ground that they are prior period expenditure. Facts on record reveal that the CENVAT credit pertained to service tax paid on PSF / UDF and advertisement expenses which were collected by the assessee on behalf of AAI have been allowed as expenditure to the assessee in assessment years 2006-07 and 2007-08. Subsequently, the assessee assuming that it is eligible to avail CENVAT credit on service tax on PSF / UDF and advertisement credited the CENVAT credit to the extent of expenditure claimed in the earlier years to the prior period income account created in assessment years 2010-11 and 2011-12 and offered them to tax. Subsequently, on the basis of legal opinion obtained from professionals, the assessee found that it is not....
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....was paid to the government account in the impugned assessment year and if on verification assessee's claim is found to be correct, the same has to be allowed. 13. As regards interest on delayed payment of service tax, it is a fact on record that learned Commissioner (Appeals) has accepted assessee's claim that such interest is not penal, but compensatory in nature. The doubt raised by him is only with regard to the fact whether the liability relating to such interest payment has arisen during the year. In view of the aforesaid, we direct the Assessing Officer to verify the date of actual payment of interest on delayed payment of service tax. If on verification it is found that the assessee has actually paid the interest in the impugned assessment year, the same should be allowed as deduction to the assessee. This ground is allowed subject to verification. 14. In ground II, the assessee has challenged the disallowance of Rs. 32,74,269 being the expenditure incurred for increase in share capital. 15. Briefly, the facts are that in course of assessment proceedings, the Assessing Officer noticed that the assessee had debited an amount of Rs. 40,92,638/- towards initial public ....