2020 (7) TMI 777

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....of hearing none appeared on behalf of assessee in spite of issuance of notice for hearing more than one occasion and Ld. Departmental Representative(DR), was present for the appellant Revenue. In the absence of any appearance by the assessee, the appeal is being disposed of ex parte qua the assessee, after hearing Ld. DR for the Revenue on merits in terms of Rule 24 of the Income Tax Appellate, Tribunal, Rules, 1963. 3. The grounds of appeal raised by the revenue are as follows: 1. That on the facts and circumstances of the case, whether the Ld. CIT(A) was correct in deleting the disallowances of outstanding service tax liability of Rs. 1,89,52,413/- when the assessee had failed squarely during the course of scrutiny proceedings as well ....

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.... Profitand Loss Account and for this the assessee relied on various judicial pronouncements. 5. However, Assessing Officer was of the view that as per the provisions of clause (a) of section 43B read with proviso to section 43B, there is no ambiguity that any sum payable by the assessee by way of tax, duties, cess or fee, by whatever name called under any law shall be allowed as deduction only in the year in which such sum is paid by the assessee or if it is paid before the due date of filling of return and evidence of such payment is furnished along with the Income Tax Return (ITR). In this context, the assessee was therefore, asked to explain vide a show cause notice dated 30.12.2015 that why the sum of Rs. 1,89,52,413/- on account of se....

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.... addition as the liability of service tax was not paid before the due date of filing of I.T. Return. The A/R emphasized that the service tax liability has not been taken through the P & L A/c. Therefore, disallowance u/s.43B can't be made. This is based on principle that since service tax receipts has not been routed through P & L A/c. Therefore, it does not form part of receipt and since it does not part of the trading receipt, therefore, disallowance u/s.43B could not have been made. In the remand report, the A.O. has emphasized that service tax liability has been paid in subsequent years and only part of the amount has been paid and some amount was waived by the Service Tax Department. The law on this issue is very clear in CIT vs. Noble....