2017 (12) TMI 1811

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....he Income Tax Act, 1961, dated 07.03.2014. 2.The Revenue has raised the following grounds of appeal: "1. That is the facts and in law of the case the ld. CIT(A) erred in deleting the deduction of Rs. 96,78,546/- under the Service Tax claim written off. The assessee had relinquished the impugned claim which therefore, cannot be termed as normal business loss or a bad debt. 2. That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or all the time of hearing." 3. The brief facts qua the issue are that the assessee filed its return of income, declaring total income of Rs. 3,62,37,460/- for the Assessment Year 2011-12. The assessee's case was selected for scrutiny u/s 143(2) of the Act and As....

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....as stated that no appeal is filed against the order passed by service tax authority therefore it was a refusal on the part of the assessee to regain the receivable amount. This loss is not normal business loss and also not a kind of bad debt (business loss). The claim against the payment of service tax for the period prior to 01.04.2010 (though the assessee did not show the books of accounts for all the earlier assessment years to prove that the service tax, which was claimed to be deposited from own account really not debited within the profit & loss accounts of respective assessment years), had been made to the government and now declaring the same as written off without preferring any appeal (when the opportunity is there), is tantamount....

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....rried the matter to the ld. CIT(A), who has allowed the claim of the assessee. The ld. CIT(A)noted that the service tax paid on various export related services such as GTA Transport Services, technical testing and analysis service, port services etc. paid during the Financial Year 2006-07 to 2010-11 were reflected in the Balance Sheet under the head Service Tax Refundable Account. The assessee was supposed to obtain refund on account of Service Tax payments made and therefore it had not debited in the Profit & Loss Account. Therefore, CIT(A) noted that such claims are allowable as per the provisions of section 37 of the I.T. Act 5. Not being satisfied with the order of the ld. CIT(A), the Revenue is in appeal before us. The Ld. DR for th....

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..... Counsel has defended the order passed by the ld. CIT(A). 7. Having heard the rival submissions and perused the materials available on record, we note that the assessee claimed the expenditure as per mercantile system of accounting. During the Financial Year 2010-11, in the instant case of the assessee, the Service Tax Authorities have passed various orders and the total claim of refund had been allowed to the extent of Rs. 78,43,992/- and the balance refund was not allowed, which is at Rs. 96,78,546/-. The balance amount of refund at Rs. 96,78,546/-, which had been disallowed by the Service Tax Officer, therefore, the same amount had been written off by the assessee by debiting the same to the Profit & Loss Account. The Assessing Offic....