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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI ANIL CHATURVEDI, AM & SHRI PARTHA SARATHI CHAUDHURY, JM
आयकर अपीलीय अधधकरण न्यायपीठ रायपुर में । IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM आयकर अपील सं. / ITA No. 239/RPR/2017 धनधाारण वषा / Assessment Year : 2013-14 The Deputy Commissioner of Income Tax -1(1), 32/32 Bungalows, Bhilai. Dist. Durg (C.G.)-490 006 .......अपीलाथी / Appellant बनाम / V/s. M/s. Ganpati Motors, G.E. Road, Supela, Bhilai-490 006. PAN : AAEFG6628E ……प्रत्यथी / Respondent Assessee by : Shri S.R. Rao Revenue by : Shri R.P. Namdev
सुनवाई की तारीख / Date of Hearing : 09.05.2019 घोषणा की तारीख / Date of Pronouncement : 09.05.2019 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the Revenue emanates from the order of Ld. CIT(Appeals)-II, Raipur (C.G.) dated 02.06.2017 for the assessment year 2013-14 as per following grounds of appeal on record:
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“1. Whether in law and on facts and circumstances of the case the Ld. CIT(A) was justified in deleting the addition of Rs.1,55,60,822/- & Rs.13,424/- made by the Assessing Officer by applying the provisions of Section 43B of the IT Act, 1961 on account of unpaid entry tax and VAT liability when particularly, the Hon'ble Supreme Court in the case of Chowringhee Sales Bureau (P) Ltd. Vs. CIT (1973) 87 ITR 542 has held that unpaid sales tax liability has to be included as part of receipts of the assessee and thereby in the present case, the provision of section 43B are attracted. 2. Whether in law and on facts and circumstances of the case the Ld. CIT(Appeals) was justified in allowing the assessee to route his VAT and Service Tax amount out of his regular profit and loss account in contravention of section 145A of the I.T.Act. 3. Whether in law and on facts and circumstances of the case, the Ld. CIT(A) was justified in considering unpaid VAT and service Tax as allowable in contravention of section 43B of the I.T.Act, 1961. 4. The order of the Ld. CIT(A) is erroneous both in law and on fact. 5. Any other ground that may be adduced at the time of hearing.”
The crux of the grievance of the Revenue is deletion of addition of Rs.1,55,60,822/- & Rs.13,424/- made by the Assessing Officer by applying the provisions of section 43B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) on account of unpaid entry tax and VAT liability.
Before the Ld. CIT(Appeals), detailed written submissions have been filed by the assessee and therein it was submitted that the issue stands covered in favour of the assessee in the assessee’s own case by the Jurisdictional Tribunal in ITA No.67/BLPR/2012 for the assessment year 2009-10. It was further submitted that the assessee has been maintaining a
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separate account and did not charge VAT to the profit and loss account. In such circumstances it was submitted that the liability may still be unpaid but it cannot be disallowed being not claimed as deduction in the books of accounts. The Ld. CIT(Appeals) after considering the assessment order, submissions of the Ld. AR and the facts and circumstances of the case held as follows:
“5. I have considered the grounds of appeal, gone through the submissions of the appellant and seen the order of the AO. I find that the impugned issue is covered in favour of the appellant by the hon’ble jurisdictional tribunal in the appellant’s own case in ITA No. 67/BLPR/2012 dated 30.10.2015. The hon’ble Tribunal held as under: “Having heard the submissions of both the sides, we are of the considered opinion that the issue as raised by the Revenue Department now stood squarely covered by several decisions. In the case of India Carbon Limited vs. Inspecting Asstt. Commissioner of Anr,(1993) 200 ITR 0759, the hon’ble Gauhati High Court has opined that Section 43B applies only when assessee claims deduction for any amount payable by way of tax. or duty. According to the Hon ’ble Court, where no claim of deduction is made and that there was no charge made in the profit and loss account, then such liability could not be disallowed by invoking the provisions of section 43B of the Income tax Act. Further in the case of CIT vs. Noble & Hewitt (India) (P) Ltd., (2008) 305 ITR 324 (Del.) it was opined that although the assessee was following mercantile system of accounting and collected the service tax but it was not debited to P&L Ale. as an expenditure by distinguishing Chowringhee Sales Bureau (P) Ltd. Vs. CIT (1997) 110 ITR 385 (Cal) the hon ’ble Delhi High Court has held that the question of disallowing u7s.43B did not arise. In the light of above decisions as well as considering the admitted factual position that the assessee has maintained an exclusive method of accounting however the said “VAT Tax account” has reflected the details of tax collected and tax paid which was reflected in the balance sheet of the assessee and did not form part of the P&L A/c. therefore the view taken by the CIT(A) deserves to be approved. In the result we find no force in the ground of Revenue which is dismissed”.
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At the time of hearing, Ld. AR of the assessee vehemently argued that the issue is squarely covered by the decision of assessee’s own case by the Hon'ble Jurisdictional High Court of Chhattisgarh at Bilaspur and decided in favour of the assessee in Tax Case (Income Tax Appeal) No. 30 of 2016 and Tax case (Income Tax Appeal) No. 8 of 2017.
On the other hand, the Ld. DR has placed reliance on the order of Assessing Officer.
We have perused the case records and considered the judicial pronouncement placed before us. We find that not only the issue is covered in favour of the assessee by the decision of the Co-ordinate Bench of the Tribunal but also by the decision of the Hon'ble Jurisdictional High Court Chhattisgarh at Bilaspur. The relevant part of the decision of the Hon'ble Jurisdictional High Court is as follows:
“2. Heard learned Counsel for the revenue and learned Counsel for the respondent-assessee. The fundamental issue that arises for decision is, as to whether a particular amount which is subject matter of the appeal is to be treated as relatable to Value Added Tax (VAT) payable by the assessee and, if so, whether it has to be actually paid by him before filing of the return under the Income Tax Act. This question is relevant, having regard to the manner in which the question of law has been framed. The issue as to whether Section 43-B of the Income Tax is attracted even when the assessee does not claim any deduction on the strength of that provision may also be relevant. 3. The Assessing Authority, on the instant issue, noticed that the assesse's claim regarding the treatment of VAT in the Books of
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Accounts has been verified from the Books and that has been found to be in order. The Assessing Authority also found that VAT has been found separately accounted for in the Books of Accounts. The only ground on which the Assessing Authority refused to exclude the VAT collected by the dealer from the profit of business is on the basis that the VAT component was not paid off on or before the due date for furnishing the return in relation to the previous year under section 139(1) of the Income Tax Act. The First Appellate Authority also noticed that it is an undisputed fact that the Appellant did not charge VAT to the Profit and Loss account. It was therefore noted by the First Appellate Authority that in such circumstances, the liability may still be unpaid, but it cannot be disallowed being not claimed as deduction in the Books of Accounts. 4. With the aforesaid fact situation, we are unable to hold that the Tribunal was in error in law in dismissing the revenue’s appeal making a reference to the decisions referred to by it. 5. The decision of the Apex Court in Chowringhee Sales Bureau (P) Ltd. Vs. CIT, AIR 1973 SC 376 = (1973) 87 ITR 542, dealt with a case where the contents of the Profit and Loss account apparently showed that though the assessee had attempted to show that there is a separate account for tax collected, the collection would have been only of a composite amount. The transaction dealt with in Chowringhee's case (supra) related to auction and the nature of the income derived by an auctioneer in the process of auction. In contradistinction thereto, are the decisions of the High Court in Delhi Commissioner of Income Tax v. Noble & Hewitt (India) (P) Ltd., 2008 305 ITR 0324, which make a nice distinction between Chowringhee's case and instances where Profit and Loss accounts and Service Tax accounts are maintained separately following mercantile system of accounting. As rightly noticed therein, it is not for the Income Tax department to make out a case relating to the correctness or otherwise of the mercantile system of accounting, resorted to and maintained by an assessee. The acceptability or otherwise of the accounts in a mercantile system would obviously be a matter of concern for other taxation authorities. 6. In the case in hand, as already noted, the fact situation that the Assessing Authority and the First Appellate Authority did not doubt the modality of the accounting system adopted by the assessee is an outstanding phenomenon which goes in favour of the assessee. Under such circumstances, it is not necessary for the authorities to consider whether Section 43-B of the Income Tax is to be relied on by the assessee to claim any deduction. 7. For the aforesaid reasons, on the facts and circumstances of the case in hand, we answer to the question formulated in these appeals in
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the negative, that is to say, against the revenue and in favour of the assessee.”
Respectfully following the aforesaid decisions, we uphold the relief provided by the Ld. CIT(Appeals) to the assessee on this issue. Hence, grounds raised by the Revenue are dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced on 09th day of May, 2019.
Sd/- Sd/- ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER रायपुर/ RAIPUR ; ददनांक / Dated : 09th May, 2019. SB आदेश की प्रधतधलधप अग्रेधषत / Copy of the Order forwarded to : 1. अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The CIT (Appeals)-II, Civil Lines, Raipur (C.G) 4. The Pr. CIT-2, Raipur (C.G) 5. धवभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, रायपुर बेंच, रायपुर / DR, ITAT, Raipur Bench, Raipur. गार्ा फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
धनजी सधचव / Private Secretary आयकर अपीलीय अधधकरण, रायपुर / ITAT, Raipur.
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Date 1 Draft dictated on 09.05.2019 Sr.PS/PS 2 Draft placed before author 09.05.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member
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5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order