M/S S V G EXPRESS SERVICES vs. COMMISSIONER OF INCOME TAX

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 122 / 2017 M/s. SVG Express Services, D-76, Ghiya Marg, Bani Park, Jaipur. ----Appellant Versus Commissioner of Income Tax, Circle-I, Central Revenue Building, Department of Income Tax, Statue Cirlce, C-Scheme, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. S. L. Poddar on behalf of Mr. N. L. Agarwal For Respondent(s) : Mr. Anuroop Singhi with Mr. Aditiya Vijay Mr. N. S. Bhatti _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 12/12/2017 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal of the assessee reversing the view taken by CIT(A). 2. This court while admitting the appeal on 09.05.2017 framed the following question of law:- “Whether the Ld. ITAT was justified under law while sustaining the addition of the amount of Rs. 88,79,713/- on the basis of Form 26AS only while the said amount which was pertaining to service tax was not included in the profit and loss account of the assessee for the AY 2012-2013, ignoring the settled principle of law that provisions of Section 43B can’t be invoked for making additions on

(2 of 3) [ITA-122/2017] account of tax liabilities where the same has not been claimed as deduction?” 3. Counsel for the appellant has contended that the Tribunal has not properly considered the judgment of Delhi High Court in the case Income Tax Appeal No.839/2007 (Commissioner of Income Tax-8 Vs. Noble & Hewitt (India) (P) Ltd.) decided on 10th September, 2007 wherein which has been reproduced as under:- “In our considered since the assessee did not debit the amount to the P&L a/c 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 rise.” 4. He contended that the aforesaid judgment has been followed by the Bombay High Court in Income Tax Appeal No.158/2013(Commissioner of Income Tax-8 Vs. M/s Calibre Personnel Services Pvt. Ltd., Mumbai) decided on 2nd February, 2015 wherein which reads as under:- “We are unable to appreciate the grievance of the Revenue as the Delhi High Court in Noble & Hewitt Pvt. Ltd. (Supra) has considered both Section 43B of the Act and also the issue of mercantile system of accounting followed by the assessee before it. The revenue is not able to point out why the decision of Delhi High Court requires reconsideration. In our view, the Delhi High Court’s decision in Noble & Hewitt Pvt. Ltd. (supra) has correctly held that Section 43B of the Act is a provision for allowing deduction of tax on payment but this can only be triggered if deduction with regard to taxes payable is claimed for arriving at taxable income”

(3 of 3) [ITA-122/2017] 5. Counsel for the respondent has contended that the judgment passed by the Tribunal just and proper. He has supported the reasoning adopted by the Tribunal in paragraph 3.3 which reads as under:- “The ld DR is heard who has relied heavily on the order of the Hon’ble Supreme Court decision in case of Chowringhee Sales Bureau 87 ITR 542 and submitted that the ld CIT(A) has rightly held the service tax collected as part of the professional receipts and given that the same has not been deposited by the due date of filing of return of income, the same is not allowable under section 43B of the Act.” 6. We have heard both the parties. 7. In view of the observations made by the Delhi High Court in Noble & Hewitt (India) (P) (Supra), as reproduced above. The case of the assessee is covered by the same observations of Delhi High Court. Hence, the issue is answered in favour of the assessee against the department. 8. The appeal stands allowed. (VIJAY KUMAR VYAS), J. (K.S. JHAVERI), J. B.M.G./Gourav/25