RAJVIRAJ ENGINEERS AND CONTRACTORS PRIVATE LIMITED,AHMEDABAD vs. ITO, WARD 3(1)(2), AHMEDABAD

The assessee has raised the following grounds of appeal :-

The Assessing Officer, CPC, passed an order u/s 154 of the Act dated 25.09.2019 in the assessee’s case thereby income under the head “Profit & Gains from Business & Profession”, amounting to Rs.8,39,871/-, being the Service Tax payable was disallowed u/s 43B of the Act.

Being aggrieved by the said order dated 25.09.2019 passed by the Assessing Officer-CPC, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.

The ld. AR submitted that the CIT(A) has not taken into account that the assessee is a private limited company and has shown service tax liability for the current year amounting to Rs.8,39,871/- on 31.03.2017. The assessee-company collected the service tax from the customers on behalf of the Government and the same was paid subsequently to the Government Exchequer. Accordingly, the assessee-company, on the separate collection of such service tax amount, has shown liability in its books of accounts which was subsequently paid to the Government. The assessee-company has not claimed any deduction on account of such service tax amount in its audited Profit and Loss Account in the year under consideration. The ld. AR submitted that the Assessing Officer as well as CIT(A) has not taken into that the assessee has not claimed deduction and the same was not debited in the Profit & Loss Account; therefore, the same should not have been disallowed by the Assessing Officer as well as should not have been confirmed by the CIT(A).

Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee, through its Authorized Representative, has clarified that the assessee has not claimed or debited service tax amount in its Profit & Loss Account during the Assessment Year 2017-18, and since the records were destroyed as it was more than 6 years, it is confirming on the letter dated 05.08.2024 that no amount of service tax is outstanding at all and, therefore, there is no demand of any service tax for any year from the Service Tax Department. Since the assessee has not claimed any deduction u/s 43B of the Act in its Profit & Loss Account for the relevant assessment year, the disallowance u/s 43B of the Act cannot prima facie arise and, in fact, the component of service tax was subsequently paid; therefore, the disallowance in respect of the same made by the Assessing Officer does not sustain.

In the result, appeal of the assessee is allowed.