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Income Tax Appellate Tribunal, DELHI BENCH: ‘B’ NEW DELHI
Before: MS. SUSHMA CHOWLA & DR. B.R.R.KUMAR
आदेश आदेश / ORDER आदेश आदेश PER SUSHMA CHOWLA, JM: The appeal filed by assessee is against order of CIT(A)-37, New Delhi, dated 01.04.2015 relating to assessment year 2012-13 against the order passed u/s section 143(3) of the Income-tax Act, 1961 (in short ‘the Act’).
ITA No:509/Del/2017 Assessment Year: 2012-13
The only issue in the present appeal is against the claim of service tax write off of Rs.22,73,576/-.
Briefly facts and circumstances in the case are that the assessee during the year under consideration had debited a sum of Rs.22,73,576/- on account o service tax recoverable/written off. The Assessing Officer asked to furnish the details in this regard. In response thereto, the assessee pointed out that “the service tax recoverable is the amount of service tax on which credit is not allowed under the Service tax Act. Hence, it is to be claimed in the P/L account in the audited financial statement of the assessee company.” The Assessing Officer was of the view that where service tax is collected by the assessee at the time of raising invoices upon the respective parties towards services provided, the said amount was to be deposited in the government account. He thus observed that the transaction would not entitle the same as allowable deduction under the Income tax Act. He thus disallowed the sum of Rs. 22,73,576/- and added the same in the hands of the assessee. The CIT(A) noted and observed as under:-
“W.e.f 1st March 2015, time limit for availment of Cenvat Credit has been extended to one year from the date of invoice. This implies that Cenvat credit on inputs and input services which could be earlier (as provided for w.e.f. 01.09.2014) availed within the period of six months from the date of invoice can now (w.e.f. 1.3.2015) be availed within a period of one year from the date of invoice.”
4.4. ……………….. Page | 2
ITA No:509/Del/2017 Assessment Year: 2012-13
4.5. The same has been pronounced in following judgements : CCE, Ahmedabad vs Lubi Electronics -2009 (245) E.L.T. 551 (Tri-Ahmd) J.V.Strips v. Commissioner-2007 (218) E.L.T. 252 (Tribunal. In the above said judgements, it was held that there is no provision for denying credit of cenvat because of delay in claiming of Cenvat by receiver of service nor there is any time limit for taking credit in the Cenvat Credit Rules and therefore there is no specific time limit to avail Cenvat credit by service receiver. Further, even the supplementary instructions issued by the Central Board of Excise and Customs also do not prescribe any time limit for the purpose to credit allowed. Hence, receiver of service can avail input tax credit on services received by him without any time limit under Rule 4(1) of Cenvat credit rule.”
The assessee is in appeal against the order of the CIT(A).
Ld.AR for the assessee pointed out that any input of service tax paid was to be set off against the service tax receivable. The assessee was following such a method. But once the assessee realized that service tax was not recoverable then the service tax paid was debited to the accounts in later years. He placed reliance on the decisions of Hon’ble Delhi High Court in the case of CIT vs M/s. Samtel India Ltd. in order dated 26.09.2013 and the decision of Hyderabad Bench of the Tribunal in the case of M/s. NCS Distilleries P.Ltd. vs ITO in ITA No.699/Hyd/2012, Assessment Year 2008-09 vide order dated 16.09.2014.
ITA No:509/Del/2017 Assessment Year: 2012-13
Ld.DR for the Revenue on the other hand pointed out that for services rendered, service tax was recoverable and the set off against service tax paid could be claimed in subsequent years.
We have heard the rival contentions and perused the record. The limited issue arising in the present appeal is against the claim of deduction on account of the service tax paid in the earlier years, but debited during the year. The case of the assessee before us is that the assessee was engaged in the manufacturing of auto parts and on the inputs i.e. raw material service tax was paid by it which in turn could be set off against the service tax receivables. The assessee had not debited the said service tax paid in the relevant year, as the assessee thought of adjustment against the service tax receivable. But, in the year under consideration the assessee debited the said amount of service tax paid as it was of the view that the same could not be set off against service tax receivable and hence, the claim of deduction. The said claim of the assessee was not allowed by the authorities below on the ground that it was pre-mature for the assessee to avail the benefit of Cenvat credit. As under the Act, the said benefit on inputs and inputs services could be availed later also. The counter claim of the assessee is that since it realized that the said input could not be set off hence, the claim made in the books of accounts, merits to be allowed in the hands of the assessee.
We are of the view that the assessee is at liberty to make the aforesaid claim in the year of its choice and the claim made in the year under consideration, merits to be allowed in the hands of the assessee. We find
ITA No:509/Del/2017 Assessment Year: 2012-13 that the said issue has been decided by the various benches of Tribunal including the decision of Hyderabad Bench of the Tribunal in the case of M/s. NCS Distilleries P.Ltd. vs ITO (supra). We hold that the write off of Cenvat credit is an allowable expenditure u/s 37(1) of the Act, in the year it was debited to the books of accounts. Hence, the grounds raised by the assessee in this appeal are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 16th day of October, 2019.