2022 (12) TMI 691

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....ed in deleting the addition of Rs.1,79,91,058/- made by the AO u/s 43B of the I. T.Act , 1961 on account of non depositing of Service Tax till 29.09.2012 i.e., before the due date of filing of its return of income, as per Annexure-IV of the 3CD Report. The Service Tax collected from the clients but not paid to the Service Tax Deptt. is an income of the assessee irrespective of the fact whether or not the Service Tax is routed through P&L Account of not." 3. Brief facts of the case are that in this case, in the order passed under section 143 (3) of the Income-tax Act, 1961 (for short 'the Act'), AO noted that there were unpaid service tax amounting to Rs.1,79,91,057.80. AO opined that provisions of section 43B are applicable. He m....

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....of the assessee., though the same has not been paid by the assessee till the due date of filing of the return of income u/s 139(1). It is to be noted that the service tax collected on services rendered, is a liability collected on behalf of the Government to be deposited to the credit of the Government account. It is not treated as an income nor is payment thereof treated as charge against profit or expenses in the Profit & Loss Account of the assessee. In fact, it is not routed through Profit & Loss Account at all and never forms part of any head of income/ expenditure. It is neither an expense nor a deduction or a charge against the profits of the assessee. It is neither credited and included in income at the time of rec....

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....bove submissions. He held that service tax is collected on services rendered which is a liability collected on behalf of the Government to be deposited to the credit of the Government account. It is not treated as an income nor the payment thereof is treated as charge against profit or expenses in the Profit & Loss account of the assessee. He noted that it is not routed through P&L account at all and never forms part of any head of income or expenditure. That it is a liability for the company and it has to be paid to credit of the Government account to extinguish the said liability. Therefore, he directed that the addition be deleted. 6. Against this order, Revenue is in appeal before us. We have heard both the parties and perused the re....

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....dvertising Pvt. Ltd. vs. ACIT (supra) adjudicated the identical issue as under :- " Ld. Counsel of the assessee submitted that issue involved is squarely covered in favour of the assessee by the following decisions. 6. (I) ACIT V. Real Image Media Technologies (P) Ltd. 114 ITD 573 (Mad.) (II) CIT V. Noble & Hewitt India Pvt. Ltd. 166 Taxman 48 (DELHI). 7. Ld. Departmental representative on the other hand could not rebut the submissions of the Ld. Counsel of the assessee. 8. We have carefully considered the submissions. We find that in the case of ACIT V. Real Image Media Technologies Pvt. Ltd. (Supra) the tribunal had as under :- "(1) S. 43B starts with the non-obstante clause and specifies that ....

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....s made on account of disallowance u/s 43B." 9. We further find that in the case of CIT Vs. Noble and Hewitt India Pvt. Ltd. (Supra) Hon'ble Delhi High Court has held as under :- "In our opinion since the assessee did not debit the amount to the Profit & Loss Account as an expenditure nor did the assessee claim any deduction in respect of the amount and considering that the assessee is following the mercantile system of accounting, the question of disallowing the deduction not claimed would not arise. Ld. Counsel for the revenue submits that the assessee has sought to evade tax under the mercantile system of accounting. We are of the view that it is not for the revenue authorities to tell the assessee how to maintain its ac....