M/S. PROGRESSIVE ENDEAVOURS PVT. LTD., ,PURBA MIDNAPORE vs. PR.CIT - 9, KOLKATA , KOLKATA

Case file suggests that the PCIT’s revision order under challenge has directed the Assessing Officer to consider the assessee’s service tax outstanding of ₹84,75,625/- not paid out of the total claim of ₹1,40,62,172/- to be exigible to 43B disallowance not considered in the assessment order dated 11.01.2016. he has therefore exercised his revision juri iction vested u/s. 263 of the Act in terming the said assessment as both erroneous as well as prejudicial to the interest of the ITA No.1074/Kol/2018 A.Y. 2013-14 M/s Progressive Endeavours Pvt. Ltd. Vs. Pr. CIT-9 Kol. Page 2 revenue on account of non-payment of the unpaid of the foregoing service tax component.

Both parties reiterate their respective stands against and in support of the PCIT’s revision direction under challenge. We find no reason to concur with PCIT direction to the Assessing Officer to consider assessee’s unpaid service tax component (supra) for the purpose of invoking sec. 43B disallowance in absence of actual payment. It transpires during the course of hearing that the assessee had nowhere claimed the impugned unpaid service tax in the relevant previous year. Hon'ble Delhi high court’s decision in CIT vs. Noble And Hewitt (I) (P) Ltd. (2008) 305 ITR 324 (Del) decided on 10.09.2007 holds that sec. 43B of the Act stipulating disallowance on account of actual non-payment of the specified heads of “expenditure” does not apply in absence of corresponding deduction claim raised by an assessee in its profit and loss account. Learned CIT-DR fails to dispute that the assessee had raised the very argument before PCIT in para-4 of sec. 263 order under challenge which has nowhere been rebutted on facts. We accordingly go by the above case law to conclude that the PCIT has erred in law in holding that assessee’s unpaid service tax amount of ₹84,75,625/- deserves to be considered for Sec. 43B disallowance. His revision order under challenge is accordingly held as not sustainable in the eyes of law. The same stands reversed accordingly.