TaxTMI 
TaxTMI 
2021 (2) TMI 462
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....grounds of appeal:- The order of the Commissioner of Income Tax (Appeals) ["CIT (A)"] is contrary to law, facts and circumstances of the case. 2. Disallowance of service tax written off 2.1 The CIT (A) erred in confirming the disallowance made by the AO for the refund of input service tax written off amounting to Rs. 51,65,869. 2.2 The CIT (A) failed to appreciate that the Appellant is operating in Special Economic Zone (SEZ) and as such it is exempt from service tax. 2.3 The CIT (A) ought to have appreciated that since the Appellant is not liable to service tax, the Appellant is eligible to claim the input service tax charged by the suppliers as refund from the Service Tax department. 2....
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.... brought forward business losses and unabsorbed depreciation under normal provisions of the Income Tax Act, 1961 (hereinafter the 'Act') and book profit of Rs. 80,25,61,835/- under the provisions of Section 115JB of the Act. The case was taken up for scrutiny and during the course of assessment proceedings, the AO noticed that the assessee has debited an amount of Rs. 51,65,869/- towards Service Tax written off account. Therefore, called upon the assessee to explain as to why Service Tax written off cannot be disallowed u/s.37(1) of the Act. In response, the assessee submitted that the assessee has availed various input services during the financial year relevant to assessment years 2008-09 & 2009-10 and has followed an accounting method wh....
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....869/-. 5. Being aggrieved by the assessment order, assessee preferred an appeal before CIT(A). Before the CIT(A), the assessee has filed detailed written submissions along with certain judicial precedents which has been reproduced at page 3 to 7 of ld.CIT(A) order. The sum and substance arguments of assessee before the CIT(A) are that Service Tax paid on input services and kept as input tax credit pending adjustment against output service tax payable as an item of expenditure, deductible u/s.37(1) of the Act, when such input tax credit is written off and debited to profit & loss account. The ld.CIT(A) after considering relevant submissions of the assessee rejected the arguments taken by the assessee and confirmed addition made by the AO ....
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....h cannot be allowable as deduction u/s.37(1) of the Act. 8. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. There is no dispute with regard to the fact that the assessee has written off input Service Tax during the impugned financial year relevant to assessment year 2010-11. But, the dispute is with regard to deductibility of input service tax. The AO has disputed deduction claimed by the assessee on three grounds. The first and foremost objection of the AO was that input service tax written off was not an item of expenditure deductible u/s.37(1) of the Act, because the assessee has not rooted said expenditure through profit & loss account. The second obse....
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.... debited to profit & loss account when the assessee has not availed input tax credit or if assessee avails input tax credit then the Service Tax component is taken out from the profit & loss account and treated as current assets pending adjustment against output taxes payable on goods or services. In this case, the assessee has accounted input services exclusive of service tax and treated service tax component as input tax credit pending adjustment. Further, when the application filed by the assessee for refund was rejected by the Department, the assessee has written off said input tax credit and debited in to profit & loss account. Therefore, the second observation of the AO would also fails. Coming to the third observation of the AO, the ....