JESS IDEAS PVT. LTD.,MUMBAI vs. DCIT CIR. 6(3)(2), MUMBAI

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ITA 6524/MUM/2016Status: DisposedITAT Mumbai25 June 2018AY 2012-133 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 does not contemplate service tax liability before actual receipt of funds. The liability arises only upon receiving the consideration for the services rendered.

What were the facts?

The assessee's appeal concerned a disallowance under Section 43B for service tax that was not yet due. The assessee argued that the liability to pay service tax only arises upon receipt of funds.

What were the issues?

Whether service tax liability for the purpose of Section 43B arises before the actual receipt of consideration.

Which sections of the Income-tax Act were involved?

Section 43B

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, “J” BENCH, MUMBAI

For Appellant: Shri Paresh Saparia, AR

This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-12, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-12/IT 01/DCIT 6(3)(2)/15-16 dated 8.8.2016 under section 253 of the Income Tax Act, 1961(hereinafter ‘the Act’). The Assessment was framed by the Deputy Commissioner of Income Tax, 6(3)(2), Mumbai (in short DCIT) for the assessment year 2012-13 order dated 23.2.2015. The sole ground of appeal raised by the assessee relates to disallowance under section 43B on account of service tax, which was not due.

2.

At the outset of hearing, the Ld. A.R. of the assessee submits that the ground of appeal raised by assessee are covered by the decision of Hon’ble jurisdictional High Court in the case of CIT Vs. Ovira Logistics (P) Ltd. (2015) 377 ITR 129 (Bombay). On the other the Ld. D.R. for the assessee after going through the contents of the grounds of appeal and the order of High Court In Ovira Logistics(P) Ltd, fairly considered that the grounds raised by assessee are covered in favour of the assessee.

3.

we have considered the contentions of both the ld representatives of the parties and have gone through the orders of the lower authorities. The sole Ground of appeal relates to disallowance disallowance under section 43B of the Act of ₹9,75,079/- on account of service tax payable, which was not due. We have seen that the Hon’ble jurisdictional High Court in the case of CIT Vs. Ovira Logistics Pvt. Ltd. (supra) while considering the identical question of law held that section 43B of the Act does not contemplate liability to pay service tax before actual receipt of funds in the account of the assessee. The liability to pay service tax to the Government will arise only upon receiving the funds and not otherwise. Accordingly, when services are rendered, the liability to pay service tax in respect of consideration payable arise only upon receipt of such consideration and not otherwise. Considering the decision of Hon’ble jurisdictional High Court, we find that ground of appeal raised by assessee is covered in favour of the assessee.

4.

In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 25-06-2018.

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