DCIT, CUTTACK vs. DIPENDRA BAHADUR SINGH, KEONJHAR

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.413/CTK/2015 Assessment Year :2011-12

DCIT, Circle-1(1), Cuttack Vs. Sri Dipendra Bahadur Singh, Hidisahi, Joda, Keonjhar PAN/GIR No.ADJPS 5869 D (Appellant) .. ( Respondent)

ITA No.419/CTK/2015 C.O.No.52/CTK/2015 (in ITA No.413/CTK/2015) Assessment Year :2011-12

Sri Dipendra Bahadur Singh, Vs. DCIT, Circle-1(1), Cuttack Hidisahi, Joda, Keonjhar PAN/GIR No.ADJPS 5869 D (Appellant)/cross objector .. ( Respondent)

Assessee by : Shri S.K.Agarwal, AR Revenue by : Shri D.K.Pradhan, DR

Date of Hearing : 12/07/ 2017 Date of Pronouncement : 13 /07/ 2017

O R D E R Per N.S.Saini, AM These are cross appeals filed by the revenue and the assessee and

cross objection filed by the assessee against the order of CIT(A)-Cuttack,

dated 20.7.2015, for the assessment year 2010-2011 .

justified in deleting the addition of Rs.1,20,30,933/- made under section

43B in respect of unpaid service tax liability.

assessee has shown service tax payable in the balance sheet amounting to

Rs.1,20,30,933/-. The assessee filed details of payment challans of service

tax amounting to Rs.78,26,412/- on different dates in the month of January

and February, 2013. The Assessing Officer observed that the assessee

raised his bills for the financial year 2010-2011 in which service tax

amounts were included. It was contingent on the part of the assessee to

pay service tax on or before the due date of filing of return i.e. 30.9.2011,

whereas the assessee has paid the same in the beginning of 2013.

Therefore, he disallowed deduction for Rs.1,20,30,933/- under section 43B

of the Act.

of balance sheet, the assessee has shown a sum of Rs.1,20,30,933/-as

liability to be discharged towards service tax which was disallowed by the

Assessing Officer as the same was not paid before the due date of filing of

return of income. It was submitted that section 43B of the Act specifies

that certain deductions to be allowed only on actual payment. That means

if an assessee claims any expenditure in his profit and loss account and

that expenditure has not been paid as per the provisions of the Act, then,

that expenditure will be disallowed. But where a person does not claim any

expenditure/deduction in his profit and loss account, then no such addition

or disallowance can be made. In the instant case, the assessee has not

claimed any expenditure or deduction towards service tax in his profit and

loss account, therefore no such expenditure could be disallowed.

from a perusal of the Profit and loss account and the balance sheet of the

assessee, it is evident that the assessee has not claimed any deduction

regarding payment of service tax. Since no deduction has been claimed by

the assessee on this account and the assessee had only shown the amount

as liabilities in its balance sheet, there is no requirement of disallowing of

the same u/s.43B of the Act.

appeal before us.

of the assessee supported the order of the CIT(A) and relied on the decision

of Hon’ble Delhi High Court in the case of Jet Lite (India) Ltd vs CIT, 128

DTR (Del) 91, wherein, it was held that section 43B is only attracted when

the assessee claims deduction of any sum payable by way of tax or duty

under any law for the time being in force and, where, as in the case of the

assessee, no charge is claimed or made to the profit and loss account, there

was no question of disallowing the amount taken to the balance sheet on

the liability side.

record, we find that the undisputed facts of the case are that the Assessing

Officer from the balance sheet of the assessee found that the assessee has

shown outstanding liability for service tax at Rs.1,20,30,933/-. According

to the Assessing Officer, since this amount was not paid by the assessee

before the due date of filing of return of income u/s.139(1) of the Act, which

was 30.9.2011, he disallowed the same u/s.43B of the Act and added to

the income of the assessee.

amount of Rs.1,20,30,933/- was not claimed as deduction in the profit and

loss account by the assessee and, therefore, no disallowance u/s.43B of

the Act of the said amount can be made by the Assessing Officer. The

CIT(A) after verifying the P&L account and balance sheet of the assessee

arrived at the conclusion that the assessee has not claimed any deduction

on account of service tax for Rs.1,20,30,933/- in its profit and loss account

and, accordingly, held that there was no question of disallowing

Rs.1,20,30,933/- and making addition of the said amount under section

43B of the Act.

of Hon’ble Delhi High Court in the case of Jet Lite (India) Ltd(supra).

was claimed in the profit and loss account by the assessee, therefore, the

question of disallowance of the same u/s.43B of the Act does not arise. The

order of the CIT(A) is in consonance with the order of the Hon’ble Delhi

High Court in the case of Jet Lite (India) ltd (supra). Hence, we confirm

the order of the CIT(A) and dismiss the ground of appeal of the revenue.

grievance of the assessee is that the CIT(A) was not justified in confirming

the disallowance of interest expenditure of Rs.15,47,511/- u/s.14A of the

Act.

crores in the equity share capital of a company, in which, he is Managing

Director. The Assessing Officer found that the assessee has incurred

finance charges of Rs.79,10,139/-, which are mostly interest expenditure.

Therefore, the Assessing officer by invoking the provisions of section 14A

of the Act made disallowance of Rs.15,47,511/-.

Court in the case of Cheminvest Limited vs CIT (2015) 378 ITR 33 (Del),

wherein, it has been held that the expression 'does not form part of the

total income' in Section 14A of the Act envisages that there should be an

actual receipt of income, which was not includible in the total income,

during the relevant previous year for the purpose of disallowing any

expenditure incurred in relation to the said income. In other words, Section

14A will not apply if no exempt income is received or receivable during the

relevant previous year. He also relied on the decision of Hon’ble Gujarat

High Court in the case of CIT vs. Corrtech Energy Pvt Ltd., (2014) 272 CTR

0252 (Guj), wherein, it was held that sub-section (1) of section 14A

provides that for the purpose of computing total income under Chapter IV

of the Act, no deduction shall be allowed in respect of expenditure incurred

by the assessee in relation to income which does not form part of the total

income under the Act. In the present case, admittedly, the assessee did

not make any claim for exemption. In such a situation section 14A could

have no application. Further, he relied on the decision of Hon’ble Allahabad

High Court in the case of CIT vs. Shivam Motors (P) Ltd., (2014) 89 CCH

0059 (All), wherein, it was held that in absence of any tax free income,

corresponding expenditure could not be worked out for disallowance

u/s.14A.

available on record, we find that the undisputed facts in the present appeal

of the assessee are that the assessee has not claimed any tax free income

during the year. Therefore, no disallowance of corresponding expenditure

could be worked out for disallowance u/s.14A of the Act in view of the

decision of Hon’ble High Court of Delhi, Gujarat and Allahabad quoted

above. Hence, respectfully following the same, we set aside the orders of

lower authorities and delete the addition of Rs.15,47,511/- made by the

Assessing Officer and allow the ground of appeal of the assessee.

the CIT(A) was not justified in treating Rs.2,07,861/- as unexplained

investment.

during the year, the assessee has purchased one apartment from one

Vasudha Homes in Ranchi. The assessee, as per audit report, has shown

an advance of Rs.14,66,000/- to Vasudha Homes as on 31.3.2010. The

land transaction document was obtained from the Sub-Registrar, Ranchi

from which it is revealed that the assessee has purchased the flat on

31.3.2010 as a price of Rs.16,73,861/-. Therefore, the Assessing Officer

treated the difference of Rs.2,07,861/- as unexplained investment and

added the same to the income of the assessee.

24.12.2010 the assessee paid an amount of Rs. 1,75,000/- to the company

from its current account maintained in State Bank of India. Such amount

was wrongly debited to the drawings account of the assessee. The total

amount of Rs. 1,75,000/- paid from the account of M/s. Braj Mining

Corporation Pvt. Ltd as an advance to the company. He filed copy of the

balance sheet in support of the same. It was submitted that such entry

was rectified in the books of account by transferring such advance account

to the assessee in the financial year 2012-13. In this manner, the assessee

had paid Rs.18,16,000/- in total to the said company.

convincing since the amount paid by the assessee himself was to be

Rs.14,66,000/- and the value of the asset as per the Sub-Registrar was

Rs.16,73,861/-. Hence, he confirmed the addition of Rs.2,07,861/- made

by the assessee as unexplained investment.

authorities and ld D.R. supported the orders of lower authorities.

authorities and materials available on record. The undisputed facts of the

case are that the Assessing Officer found that the assessee has purchased

a flat from Vasudha Homes, Ranchi and has shown the amount paid as

advance to Vasudha Homes as on 31.3.2010 at Rs.14,66,000/-. The

Assessing Officer from the documents obtained from the Sub-Registrar,

Ranchi observed that the assessee has purchased the flat for

Rs.16,73,861/-. Therefore, he made addition of differential amount of

Rs.2,07,861/- as unexplained investment in flat by the assessee.

24.12.2010, an amount of Rs.1,75,000/- was paid for the purchase of flat

from the current account maintained with SBI, which was wrongly debited

to the drawing account of the assessee. It was submitted that this amount

of Rs.1,75,000/- was paid from the account of M/s. Braj Mining Corporation

Pvt Ltd., as advance to the company and such entry was rectified in the

books of account in the financial year 2012-13. The CIT(A) found the

explanation of the assessee as not convincing and hence, confirmed the

addition made by the Assessing Officer.

Rs.2,07,861/- and the assessee’s explanation is for Rs.1,75,000/- only,

how the balance amount of Rs.32,861/- was paid, ld A.R. of the assessee

could not give any explanation for the same. Hence, we find that the CIT(A)

has rightly confirmed the addition as unexplained investment in flat of

Rs.2,07,861/-. Accordingly, we confirm the addition and dismiss this

ground of appeal of the assessee.

CIT(A) in deleting the addition of Rs.1,20,30,933/- u/s.43B of the Act.

addition of Rs.1,20,30,933/- u/s.43B, the cross objection filed by the

assessee has become infructuous and hence dismissed.

filed by the assessee is partly allowed and cross objection filed by the

assessee is dismissed as infructuous.

Order pronounced in the open court on 13 /07/2017 in the presence of parties. Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 13 /07/2017 B.K.Parida, SPS

Copy of the Order forwarded to : 1. The Appellant : DCIT, Circle 1(1), Cuttack 2. The Respondent/Assessee: Dipendra Bahadur Singh, Joda, Keonjhar. 3. The CIT(A) Cuttack 4. Pr.CIT, Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack