MEDIA EXPERTS P. LTD,MUMBAI vs. DCIT CIR 3(2), MUMBAI

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ITA 5825/MUM/2013Status: DisposedITAT Mumbai19 October 2016AY 2010-113 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 interest paid on delayed payment of service tax is compensatory in nature and has the same character as service tax. Therefore, it is an allowable deduction under Section 43B(a) of the Income Tax Act.

What were the facts?

The assessee paid interest on delayed remittance of service tax collected from customers. The Assessing Officer disallowed this interest, and the CIT(A) confirmed the disallowance.

What were the issues?

Whether interest paid on delayed remittance of service tax is an allowable deduction under Section 43B(a) of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 43B(a)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI D. KARUNAKARA RAO & SHRI AMARJIT SINGH

For Appellant: Shri Milin Bakhai
For Respondent: Shri B. Satyanarayana Raju, DR
Hearing: 06.10.2016Pronounced: 19.10.2016

सुनवाई की तायीख / Date of Hearing : 06.10.2016 घोषणा की तायीख /Date of Pronouncement : 19.10.2016 आदेश / O R D E R PER D. KARUNAKARA RAO, AM:

This appeal filed by the assessee on 27.9.2013 is against the order of the CIT (A)-4, Mumbai dated 19.7.2013 for the assessment year 2010-11. In this appeal, assessee raised the following ground which read as under:- “Ld CIT (A) has erred in confirming the action of the AO in disallowing interest paid on service tax of Rs. 4,34,210/- on the ground that interest on service tax is not covered under the purview of section 43B(a) of the Act. On the facts and in the circumstances of the case and in law, the disallowance of Rs. 4,34,210/- ought to be deleted”.

2. Briefly stated relevant facts of the case are that the assessee is engaged in the business of „investment, finance, commission and consultancy‟. Assessee filed the return of income declaring the total income of Rs. 95,36,550/- under normal provisions and Rs. 94,58,709/- u/s 115JB of the Act. Assessment was completed u/s 143(3) of the Act and the assessed income was determined at Rs.99,70,760/-. In the assessment AO made disallowance of Rs. 4,34,210/- on account of payment of interest on service tax to the Government. Aggrieved, assessee carried the matter in appeal before the first appellate authority.

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