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Income Tax Appellate Tribunal, MUMBAI “SMC” BENCH, MUMBAI
Before: SHRI SHAILENDRA KUMAR YADAV, JUDICIAL
This appeal has been filed by assessee against the order of Commissioner of Income-Tax (Appeals)-12, Mumbai, dated 08.10.2014 for A.Y. 2007-08 on following grounds:
“This Appeal is against the order passed by Commissioner of Income-tax (Appeals)-12, Mumbai, u/s.143(3) and relates to Assessment Year 2007-08.
1) Both the lower authorities erred in holding that service tax was required to be treated as a trading receipt in the case of the appellant under section 145A – Rs.30,52,581/-.
2) The contention of the lower authorities that an addition of Rs.30,52,581/- is required under the provisions of section 43B is erroneous. The Appellant submits the CIT(Appeals) ought to have directed the Assessing Officer to delete the said addition.
3) The learned Commissioner of Income Tax (Appeals) erred in not deleting the addition of Rs.2,60,127/- on account of delayed payment of employees contribution to provident fund.”
At the outset of hearing, ld. Authorized Representative submitted that he does not want to press ground no.3. So, same is dismissed as not pressed.
The only issue survives with regard to addition of Rs.30,52,581/-. Assessing Officer disallowed the said amount u/s.43B of the Act, which was confirmed by CIT(A). A.Y. 07-08 [Carat Media Services (India) Pvt. Ltd. vs. ITO] Page 3
Ld. Authorized Representative drew our attention to the fact that amount in question was not reflected in Profit & Loss account as evident from the page 39 of paper book. In this background, ld. Authorized Representative pointed out that this issue is covered in favour of assessee by the order of Hon’ble Bombay High Court in case of CIT vs. M/s. Calibre Personnel Services Pvt. Ltd. in Income Tax Appeal No.158 of 2013 with Income Tax Appeal No.160 of 2013, wherein Hon’ble Bombay High Court held as under:
“8. We are unable to appreciate the grievance of the revenue as the Delhi High Court in Noble & Hewitt Pvt. Ltd. (supra) has considered both Section 43B of the Act and also the issue of mercantile system of accounting followed by the assessee before it. The revenue is not able to point out why the decision of Delhi High Court requires reconsideration. In our view, the Delhi High Court’s decision in Noble & Hewitt Pvt. Ltd. (supra) has correctly held that Section 43B of the Act is a provision for allowing deduction of tax on payment but this can only be triggered if deduction with regard to taxes payable is claimed for arriving at taxable income.”
4.1 Facts being similar, so following same reasoning, we hold that the provisions of Section 43B for allowing deduction of payment only be triggered if deduction with regard to amount payable is claimed for arriving at taxable income. In case before us, nothing has been claimed in Profit & Loss account, so, following the reasoning of CIT vs. M/s. Calibre Personnel Services Pvt. Ltd. (supra), Assessing Officer is directed to grant relief to assessee as prayed. A.Y. 07-08 [Carat Media Services (India) Pvt. Ltd. vs. ITO] Page 4
In the result, the appeal filed by assessee is partly allowed.
Pronounced in the open Court on this the 04th day of August, 2016.