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

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ITA 1074/KOL/2018Status: DisposedITAT Kolkata08 May 2019AY 2013-142 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The tribunal held that Section 43B disallowance applies only to actual payments of specified expenditures and not to unpaid amounts where no deduction was claimed. The PCIT erred in law by directing disallowance for unpaid service tax.

What were the facts?

The PCIT directed the Assessing Officer to consider disallowance under Section 43B for unpaid service tax, deeming the assessment erroneous and prejudicial to revenue. The assessee's service tax outstanding was ₹84,75,625/- out of a total claim of ₹1,40,62,172/-.

What were the issues?

Whether Section 43B disallowance can be invoked for unpaid service tax when no deduction was claimed by the assessee. Whether the PCIT's revision order under Section 263 was justified.

Which sections of the Income-tax Act were involved?

Section 43B,Section 263

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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Income Tax Appellate Tribunal, KOLKATA BENCH “C” KOLKATA

Before: Shri S.S.Godara & Dr. A.L. Saini

PER S.S.Godara, Judicial Member:

- This assessee’s appeal for assessment year 2013-14 Pr. Commissioner of Income Tax-9 Kolkata’s order dated 26.03.2018 passed in case No.M.No. PcIT- 9/Kol/S.263 Proceeding/2017-18/3760-376, in proceedings u/s 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused.

2.

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 jurisdiction 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.

3.

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.

4.

This assessee’s appeal is allowed. Order pronounced in the open court 08/05/2019 (लेखा सद%य) ("या'यक सद%य) (Dr.A.L. Saini) (S.S.Godara) (Accountant Member) (Judicial Member) Kolkata, *Dkp, Sr.P.S (दनांकः- 08/05/2019 कोलकाता । आदेश क" ""त"ल"प अ"े"षत / Copy of Order Forwarded to:- 1. अपीलाथ"/Appellant-M/s Progressive Endeavours Pvt.Ltd. C/o Mahadev Ghosh, Advocate, BF-199, Salt Lake, Sector-I,

2.

""यथ"/Respondent-Pr. CIT-9, Aayakar Bhawan, Dakshin, Gariahat Road, (South) Kol-68 3. संबं3धत आयकर आयु4त / Concerned CIT Kolkata 4. आयकर आयु4त- अपील / CIT (A) Kolkata 5. 7वभागीय "'त'न3ध, आयकर अपील"य अ3धकरण, कोलकाता / DR, ITAT, Kolkata 6. गाड< फाइल / Guard file. By order/आदेश से, // सहायक पंजीकार आयकर अपील"य अ3धकरण, कोलकाता ।

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