ITO, NEW DELHI vs. SH. MAHESH KUMAR SHARMA, NEW DELHI

PDF · subscribers
ITA 5768/DEL/2015Status: DisposedITAT Delhi25 January 2017AY 2009-103 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s order, following the Delhi High Court's decision that if an expenditure is not claimed as a deduction, disallowance under Section 43B does not arise. However, the matter was set aside to the AO for verification of figures.

What were the facts?

The Revenue appealed the deletion of an addition of Rs. 32,54,937/- made under Section 43B of the Income Tax Act, 1961, concerning service tax. The assessee had not debited the service tax to its profit and loss account, nor was it payable as it was not collected.

What were the issues?

Whether service tax not debited to the profit and loss account and not collected is disallowable under Section 43B. Whether the matter should be remitted for verification of figures.

Which sections of the Income-tax Act were involved?

Section 43B

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-3’, NEW DELHI

Before: BEFORE SHRI J. SUDHAKAR REDDY

This is an appeal filed by the revenue directed against the order of the Commissioner of Income Tax (Appeals)-10, New Delhi dated 30/07/2015 for the assessment year 2009-10 on the following grounds.

1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 32,54,9371- made uls 438 of the Income Tax Act, 1961 by ignoring the provisions of section 438(a), which uses the expression 'any sum payable by way of tax' and service tax, therefore, qualify the term tax" used in the sub section.

2. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition without appreciating the fact that assessee has opted voluntary compliance Encouragement Scheme 2013 (VCES) and deposited the 50% of the amount of service tax pertaining to the asstt. year under consideration, later on 31.12.2013, whereas the due date of payment was 30.9.2009.

3. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition without appreciating the fact that assessee has failed to produce any documentary evidence from the concerned parties that service tax has not been paid by these parties to the assessee.

4. The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal.”

2.

I have heard Sh. Rajesh Kumar, the Ld.Sr.D.R. on behalf of the revenue and Mr. Varun Malik, the Ld. counsel for the assessee.

3.

On a careful consideration of rival submissions I find that the Ld.CIT (Appeals) has recorded at paragraph 4.2.2 of his order that the assessee has not debited the amount of service tax to its profit and loss account nor it was payable as the same was not collected.

3.1. This factual position could not be controverted by the Ld.DR. When an assessee does not claim an expenditure, the question of disallowing the same under section 43B of the Income Tax Act, 1961 (the Act) does not arise. The Hon’ble Delhi High Court in the case of Commissioner of income tax vs. Noble & Hewitt(i) (p) Ltd (2008) 166 taxman 48 (Delhi) has held as follows at para 6:

6. In our opinion since the assessee did not debited them out to the profit and loss account as an expenditure nor did the assessee claimed any deduction in respect of the amount and considering that the assessee is following the Mercantile system of accounting, the question of disallowing the deduction and not claimed would not arise.

3.2. Respectfully following the same I have to uphold the order of the First appellate authority. The Ld. DR submitted that the figures required to be 2 verified and that the issue may be remitted back to the file of the assessing officer for verification. The Ld. counsel for the assessee had no objection. In view of the above, I set aside the matter to the file of the AO for the purpose of verification of the figures of the assessee. The AO shall apply the decision of the Hon’ble Delhi High Court cited above.

4.

In the result the appeal of the revenue is allowed for statistical purposes.

Order pronounced in the open court on 25th January, 2017.

More judgments on Section 43B

All 7,161 judgments and leading authorities on Section 43B →

Recent GST High Court judgments

Search GST case law →