TaxTMI 
TaxTMI 
2021 (6) TMI 508
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....fore Ld. CIT(A) submitting that the assessee has not claimed the service tax liability as deduction in the profit & loss account and hence, the provisions of section 43B of the Act would not apply. The same was rejected by Ld. CIT(A) and hence, the assessee has filed an appeal against both original appellate order as well as rectification order. 4. The appeal filed by the assessee against the initial appellate order is barred by limitation by 443 days. The assessee has filed a petition requesting the bench to condone the delay. It is stated that the assessee had filed rectification application before Ld. CIT(A) and hence, the assessee did not file appeal initially. When the rectification application was rejected by the Ld. CIT(A), the assessee was advised that it should file appeal against both initial appellate order as well as against rectification order. Hence, the assessee has filed the appeal against initial appellate order belatedly. The Ld. A.R. submitted that the assessee was not keeping quiet after the receipt of appellate order and it was pursuing the matter by filing rectification application before Ld CIT(A), i.e., it was pursuing an alternative remedy. Hence, there wa....
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....cision rendered by Hon'ble Bombay High Court in the case of CIT Vs. Knight Frank (India) Pvt. Ltd. (2016) 72 Taxman.com 300 (Bom). 9. The Ld. D.R., on the contrary, submitted that the assessee did not furnish any detail regarding payment of outstanding liability of service tax either before A.O. or before Ld. CIT(A). She further submitted that service tax is a trading receipt. The provisions of sec.43B have been brought into the Act only to ensure prompt payment of various tax liabilities due to Government. Hence the provisions of sec.43B shall squarely apply even if the assessee has not routed the service tax collections and payments through profit & loss account. She submitted that, considering the object behind introduction of sec.43B, the provisions of section 43B of the Act shall be attracted. As per the provisions of sec. 43B, no addition shall be made if the tax liability is paid before the due date for filing return of income. However, the assessee has furnished details of payment till date. Accordingly, she submitted that the Ld. CIT(A) was justified in confirming the addition made by the A.O. u/s 43B of the Act. 10. We heard rival contentions and perused the record. In ....
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....td. Vs. CIT reported in 87 ITR 542 which reads as under: The amount realised on sales tax by the assessee in his character as an auctioneer formed part of its trading or business receipts. The Supreme Court further held that the fact that assessee credited the amount received as sales tax under the head "sales tax collection account" did not make any material difference. The liability to pay sales tax arises the moment sale or purchase is effected. The fact that that liability has not been quantified for payment, which the law enjoins an assessee to do, is not relevant in determining accrual of legal liability. If that is the position, in order to determine that liability where the assessee had not paid the amount, it must be, according to the scheme of the Sales Tax Act, an estimate of the assessee. In the instant case, it was never suggested that the estimate made by the assessee or the estimate for the relevant years was either excessive or inaccurate. Therefore, for an assessee who was maintaining accounts under the mercantile system of accounting the liability had arisen and if the assessee had estimated his liability, that liability the assessee was entitled to deduction.....
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.... (Pvt.) Ltd. (supra) has also observed that the assessee shall be entitled for the deduction on account of sales tax liability as and when it will be incurred irrespective of the actual payment. The relevant finding of the Hon'ble Apex court stands under: "the sales tax amount realised by the assessee formed part of its trading receipts. However, the assessee was entitled to deduction inasmuch as the liability had arisen for payment of sales tax for the relevant years, even though these amounts had not been paid to the sales-tax authorities". 6.3 Thus from the above, there remains no ambiguity to the fact that there was no dispute in connection with the deduction of certain expenses on actual payment basis. In view of the above, we are not inclined to rely on the judgment of Hon'ble Apex Court in the case of Chowringhee Sales Bureau (Pvt.) Ltd. being distinguishable from the present facts of the case. 6.4 Similarly, we further note that the other case laws as relied by the learned CIT (A) namely Sunder Printing Press (supra) and Ideal Sheet Metal Stampings & Pressing Pvt. Ltd. (supra) are distinguishable from the facts of the case on hand in so far these are related t....
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....e previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him 6.7 The above provisions deals with certain deduction allowable under the Act from the total income of the assessee but such deductions will not be allowed until and unless the actual payment is made by the assessee. In the case on hand, the assessee was neither showing any income on account of service tax collected from the assessee nor it was claiming any expenditure on account of such service tax. As such the assessee was showing the amount of service tax collected from the customers as liability without crediting the same in the profit and loss account and similarly it was making the payment of the service tax amount without debiting the profit and loss account. Moreover, there is no mandate under the Act to route the amount of service tax collected and paid through the profit and loss account. Therefore, in our considered view, there is no question of making the addition of the service tax amount to the total in....