TaxTMI 
TaxTMI 
2022 (6) TMI 1379
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.... by separate agreement between the assessee company and the flat owner) on which service tax was also collected during the year". 3. "The Ld. CIT(A) has erred in allowing the Maintenance Advance received for being taxed in respective assessment years ignoring the decision of the Hon'ble Supreme Court in the case of Sundaram Finance Limited vs. ACIT (2012) 349 ITR 356". 4. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored. 5. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above." ITA No. 45/Bang/2017 (Assessee's appeal) - A.Y. 2010-11 "Based on the facts and circumstances of the case and in law. Total Environment Building Systems Private Limited (hereinafter referred to as "Appellant"), respectfully craves leave to prefer an appeal against the appeal order passed by the learned Commissioner of Income-Tax (Appeals) - 7 [hereinafter referred to as the "learned CIT (A)-] under section 250 of the Income-tax Act, 1961 ("Act") on the....
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....ney diverted for payment of advance tax purpose. 13. The learned CIT (A) has failed to appreciate that there was no diversion of borrowed money and the borrowed money has been fully utilised wholly and exclusively for the purpose of business. The Appellant submits that each of the above grounds is independent and without prejudice to one another. The Appellant craves leave to add, alter, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide on the appeal in accordance with the law." 2. Following on the grounds raised by the assessee for assessment year 2011-12: "Based on the facts and circumstances of the case and in law, Total Environment Building Systems Private Limited (hereinafter referred to as "Appellant"). respectfully craves leave to prefer an appeal against the appeal order passed by the learned Commissioner of Income-Tax (Appeals) - 7 [hereinafter referred to as the "learned CIT (A)"] under section 250 of the Income-tax Act, 1961 (-Act") on the following grounds: That on the facts and circumstances ....
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....consideration, it filed its return of income on 27/09/2011 declaring total income of Rs. 16,63,25,758/-. The case was selected for scrutiny and notice under section 143(2) and 142(1) of the Act, was issued to assessee, in response to which representative of assessee appeared before the Ld.AO and filed requisite details as called for. The Ld.AO noted that, the assessee disclosed its income from construction projects by following percentage completion method of accounting. The Ld.AO noted that, the assessee received consideration under various heads like land cost, construction cost, customisation cost, car parking, eBay, architect fee, maintenance etc., however for the purpose of arriving at the sale to be booked on the basis of percentage completion of project, the assessee omitted to consider consideration received under the head maintenance. 3.2 The Ld.AO noted that the assessee disclosed only Rs. 1,22,32,859/-as maintenance income on completed project whereas it claimed the sum of Rs. 1,21,85,392/- as maintenance expenses on completed projects and claimed the same as expenditure by way of debiting it to the P&L account. The Ld.AO accordingly called upon assessee to furnish re....
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....al gain. 3.10 Aggrieved by the order of the Ld.CIT(A), the assessee as well as revenue are an appeal before the Tribunal. 4. Revenue is in appeal for AY:2010-11 on only one issue being the treatment of maintenance advance in the hands of the assessee. 5. Ground No.2 in assessee appeal and Ground No.2-3 in revenue for appeal are in respect of taxability of maintenance advance in the hands of assessee. 5.1 It is submitted that this issue arises in assessee's appeal for AY 2011-12, and revenue has not raked up any issue for ay 201112. Both sides submitted that facts are identical and therefore we are considering this issue for both the years under consideration. It is submitted that, the revenue in its appeal is aggrieved with the order of Ld.CIT(A), wherein the Ld.CIT(A) accepted the contentions of assessee by observing that the accounting treatment given for advance does not have much relevance as it depends on the income tax liability of a person depending on its nature of business and objects. The Ld.CIT(A) further directed the Ld.AO to compute the amount of expenditure incurred out of the maintenance advance received and then bring it to tax to which revenue is aggrie....
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....cted the Ld.AO to compute the amount of expenditure incurred out of the search total advances received for the year under consideration which is based on percentage completion method. 5.8 On perusal of the totality of facts and observations of the Ld. CIT(A), based on various judicial precedents relied by the Ld.AR, we are of the view that the direction issued by the Ld.CIT(A) to the Ld.AO is in accordance with law and cannot be found fault with. We also agree with the submissions of the Ld.AR that, the decision relied by the Ld.AO in case of Sundaram Finance Ltd vs. ACIT (supra) are rendered on different facts and are distinguishable with that of assessee in the present case. 5.9 We accordingly direct the Ld.AO to compute the maintenance attributable for the years under consideration based on the expenditure incurred and the services rendered by the assessee. Accordingly, for AY 2010-11, Ground No.2 raised by assessee stands allowed and Ground No.2-3 raised by revenue stands dismissed. For AY 2011-12, Ground no.2 stands allowed. 6. Ground No.3 raised by assessee in respect of addition made by the Ld.AO on account of unpaid service tax liability of Rs. 1,22,43,872/-. ....
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....e liability stood discharged by the assessee before filing of the return of income, a liberal view can be adopted in view of the decision of Coordinate Bench of this Tribunal in case of The Continental Restaurant & Café Co. v. ITO in ITA No.388/Bang/2021 vide order dated 11.10.2021. The relevant finding of the Tribunal reads as follows:- "7. I have heard rival submissions and perused the material on record. Admittedly, the assessee has not remitted the employees' contribution of PF of Rs.1,06,190 and ESI of Rs.16,055 totaling to Rs.1,22,245 before the due date specified under the respective Act. However, the assessee had paid the same before the due date of filing of the return u/s 139(1) of the I.T.Act. The Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. v. DCIT reported in 366 ITR 408 (Kar.) has categorically held that the assessee would be entitled to deduction of employees' contribution to PF and ESI provided the payment was made prior to the due date of filing of return of income u/s 139(1) of the I.T.Act. The Hon'ble jurisdictional High Court differed with the judgment of the Hon'ble Gujarat High Court in the cas....
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.... The Hon'ble Supreme Court in the recent judgment in the case of M.M.Aqua Technologies Limited v. CIT reported in (2021) 436 ITR 582 (SC) had held that retrospective provision in a taxing Act which is "for the removal of doubts" cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood (page 597). In this case, in view of the judgment of the Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. v. DCIT (supra) the assessee would have been entitled to deduction of employees' contribution of PF and ESI if the payment was made prior to due date of filing of the return of income u/s 139(1) of the I.T.Act. Therefore, the amendment brought about by the Finance Act, 2021 to section 36(1)(va) and 43B of the I.T.Act, alters the position of law adversely to the assessee. Therefore, such amendment cannot be held to be retrospective in nature. Even otherwise, the amendment has been mentioned to be effective from 01.04.2021 and will apply for and from assessment year 2021-2022 onwards. The following orders of the Tribunal had categorically held that the amendment to section 36(1)(va) and 43B of the I.T.Act by Finance Act, 2021 is ....
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....rmal Power Co. Ltd. Vs. CIT reported in (1998) 229 ITR 383 and Jute Corporation of India Ltd. Vs. CIT reported in 187 ITR 688, we are admitting the additional ground raised by the assessee. Accordingly, the application for raising additional ground stands allowed for the year under consideration. Accordingly additional ground raised by assessee vide application dated 22.06.2022 stands admitted. 8. The assessee received a sales tax assessment order and a notice of demand dated 17.06.2010 raising a demand of Rs.50,00,000/- pertaining the sales tax periods April 2008 to October 2008 and paid the same. Since the payment of the demand was made before the due date for filing the return for AY 2010-11, the same was claimed as a deduction for AY 2010-11 by the assessee. 9. The AO disallowed the same holding that since the demand pertains to AY 2009-10, the same could not be allowed in AY 2010-11. The CIT(A) upheld the same holding that the liability arose in AY 2011-12 and therefore could not allowed for AY 2010-11. 10. The Ld.AR submitted that assessee received the sales tax assessment order and a notice of demand of Rs. 50 lakhs pertaining to sales tax. April 2008 to Octob....
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....rce Industries Ltd, the issue involved is relating to interest paid on late payment of advance-tax. Therefore, the issue involved in the present case is not relating to late remittance of advance-tax but late remittance of TDS. Therefore, the issue involved is whether the interest paid by the assessee to the government can be termed as compensatory or penal in nature. In our considered view, the assessee has deducted the tax on behalf of the third party and failed to remit the same within the due date and the interest charged on such amount is only compensatory in nature. Here we notice that the co-ordinate bench of this Tribunal has already held the same view in the case of STUP Consultants (P.) Ltd. (supra) by observing as under :- '7. We have heard the rival contentions of both the parties and perused the material available on record. In the instant case, AO has disallowed the interest expenses incurred by the assessee on account of late deposit of service tax and TDS after having reliance on the judgment of Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. v. CIT (1998) (supra). The relevant extract of the judgment reads as under :- FACTS ....
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....quently interest was charged on the delayed payment of advance tax. In the above judgment the Hon'ble Apex Court held that as Income-tax paid by the assessee is not allowable deduction and therefore interest emanating from the delayed payment of income tax (advance tax) is also not allowable deduction. However the facts of the instant case before us are distinguishable as in the case before us the interest was paid for delayed payment of service tax & TDS. The interest for the delay in making the payment of service tax & TDS is compensatory in nature. As such the interest on delayed payment is not in the nature of penalty in the instant case on hand. The issue of delay in the payment of service tax is directly covered by the judgment of Hon'ble Apex Court in the case of Lachmandas Mathura v. CIT reported in 254 ITR 799 in favour of assessee. The relevant extract of the judgment is reproduced below : "The High Court has proceeded on the basis that the interest on arrears of sales tax is penal in nature and has rejected the contention of the assessee that it is compensatory in nature. In taking the said view the High Court has placed reliance on its....
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....mitted that though the assessee did not deduct taxes at source on the interest paid to NBFCs, it is submitted that where the payee has paid the taxes directly, no disallowance under section 40(a) would be warranted. Reliance is placed on CIT v. Sahara India Commercial Corpn. Ltd. Reported in [2017] 88 taxmann.com 719 (Allahabad) where it was held that where the payee had paid the taxes, the assessee could not be treated as an assessee in default under section 201 of the Act. 17.2 Based on the above we remand to the Ld.AO to verify if the payee has paid the taxes on the interest component paid by the assessee. If the submission is found to be correct, the disallowance is directed to be deleted. Accordingly this ground raised by the assessee stands allowed for statistical purposes. 18. Ground no.9-10 for AY 2010-11 & Ground No.2011-12 for AY 2011-12 are in respect of disallowance of depreciation on computer software for non deduction of TDS under section 40(a)(ia) of the Act. 18.1 This issue is covered in favour of assessee by the decision of Hon'ble Karnataka High Court in case of PCIT vs.Tally Solutions (P.) Ltd reported in (2021) 123 taxmann.com 21. Hon'ble Court held ....
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....or the purpose of business of the assessee and therefore, the said expenditure is a deductible claim. Thus, section 40 refers to the outgoing amount chargeable under this at and subject to TDS under Chapter XVII-B. The deduction under section 32 is not in respect of the amount paid or payable which is subjected to TDS; but is a statutory deduction on an asset which is otherwise eligible for deduction of depreciation. Section 40(a)(i) and (ia) of the Act provides for disallowance only in respect of expenditure, which is revenue in nature, therefore, the provision does not apply to a case of the assessee whose claim is for depreciation, which is not in the nature of expenditure but an allowance. The depreciation is not an outgoing expenditure and therefore, provisions of Section 40(a)(1) and (ia) of the Act are not applicable. In the absence of any requirement of law for making deduction of tax out of expenditure, which has been capitalized and no amount was claimed as revenue expenditure, no disallowance under section 40(a)(i) and (ia) of the Act would be made. It is also pertinent to note that depreciation is a statutory deduction available to the assessee on a asset, which is whol....