M/s Ritco Logistics Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1130/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77621 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 06-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SMT. DIVA SINGH , JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1130/DEL/2013 ASSESSMENT YEAR : 20099-10 M/S RITCO LOGISTIC PVT. LTD., ITO, 31-TRANSPORT CENTRE, WARD-15 (2), NEW ROHTAK ROAD, NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AACCR AACCR AACCR AACCR- -- -0305 0305 0305 0305- -- -G GG G APPELLANT BY : SHRI K.V.S.R. KRISHNA, C.A. RESPONDENT BY : MS. MEENAKSHI VOHRA, SR. DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) DATED 3.12.2012. THE ASSESSEE HAS TAKEN FIVE GROU NDS OF APPEALS, OUT OF WHICH GROUND NO.1,4 & 5 ARE GENERAL IN NATURE WHICH REQUIRE NO ADJUDICATION. 2. AT THE TIME OF HEARING, THE LD AR WITHDREW GROUN D NO.3. THEREFORE, THE ONLY GROUND OF APPEAL LEFT FOR ADJUD ICATION IS REGARDING ACTION OF LD CIT(A) BY WHICH HE CONFIRMED THE ADDIT ION OF ` ..13,98,408/- ON ACCOUNT OF SERVICE TAX PAYABLE. 3. THE LD AR ARGUED THAT THE ASSESSEE HAD NOT DEBITED T HE AMOUNT OF SERVICE TAX IN ITS P&L ACCOUNT AND THEREFORE THE L D CIT(A)S ACTION IN CONFIRMING THE ADDITION WAS NOT JUSTIFIED. THE LD A R INVITED OUR ITA NO1130/DEL/2013 2 ATTENTION TO THE AUDITED ACCOUNTS PLACED AT PAPER BO OK PAGE 1 TO 9 AND FURTHER INVITED OUR ATTENTION TO VARIOUS SCHEDULE OF EXPENSES AND SUBMITTED THAT NO SERVICE TAX WAS DEBITED TO THE P&L ACCOUNT. INVITING OUR ATTENTION TO SCHEDULE 9 CONTAINING OTHER LIABILI TIES, IT WAS SUBMITTED THAT THE ITEM OTHER LIABILITIES INCLUDED SERVICE TAX PAYABLE. IT WAS SUBMITTED THAT ASSESSEE USED TO COLLECT SERVICE TAX AND W HICH WAS DIRECTLY DEPOSITED IN THE TREASURY AND UN-PAID SERVICE TAX AT THE TIME OF CLOSING OF YEAR WAS REFLECTED AS PART OF OTHER LIABILI TIES. THE LD AR TOOK US TO PAPER BOOK PAGE 7 TO 28 WHEREIN GIST OF CASE LAW S PRONOUNCED BY VARIOUS JUDICIAL AUTHORITIES WERE PLACED WHEREIN IT W AS HELD THAT WHEN THE ASSESSEE DID NOT DEBIT SERVICE TAX AMOUNT TO THE P&L ACCOUNT AS AN EXPENDITURE THERE WAS NO QUESTION OF DISALLOWING DE DUCTION U/S 43B. THE CASE LAWS RELIED UPON BY LD AR ARE REPRODUCED BEL OW:- 1. SHRI RAJEEV KANT CHADHA V. DEPTT. OF INCOME TAX IN I.T.A. NO.516/LUCKNOW/2011. 2. BIOTECH CONSORTIUM INDIA LTD. V. DEPTT. OF INCOME TA X IN I.T.A. NO.2841/DEL/2012. 3. ACIT V. REAL IMAGE MEDIA TECHNOLOGIES PVT. LTD. 306 ITR 106 (CHENNAI). 4. CIT V. NOBLE & HEWITT (I) PVT. LTD. 305 ITR 324. 4. RELYING HEAVILY UPON THE CASE LAW DECIDED BY THE HON'BLE DELHI HIGH COURT PLACED AT PAPER BOOK PAGE 26 TO 28 IN TH E CASE OF NOBLE & HEWITT (I) PVT. LTD. (SUPRA) IT WAS ARGUED THAT FACTS AND CIRCUMSTANCES OF THE PRESENT APPEAL BEING SAME, THEREFORE, THE ADDI TION CONFIRMED BY LD CIT(A) DESERVES TO BE DELETED. 5. THE LD DR, ON THE OTHER HAND, RELIED UPON THE OR DER OF LD CIT(A). ITA NO1130/DEL/2013 3 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT ASSESSEE HAS BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTIN G AND SERVICE TAX COLLECTED BY IT IS DIRECTLY CREDITED TO T HE SERVICE TAX ACCOUNT FROM WHERE THE PAYMENTS ARE DEPOSITED WITH TR EASURY FROM TIME TO TIME. NO PART OF RECEIPT OF SERVICE TAX HAS B EEN TAKEN TO THE P&L A/C NEITHER ANY EXPENSE ON ACCOUNT OF DEPOSIT OF SERVICE TAX HAD BEEN DEBITED IN THE P&L A/C. THE ASSESSING OFFICER AND LD CIT(A) HAD RELIED UPON THE PROVISIONS OF SECTION 43B FOR MAKING A DDITION. THE HON'BLE DELHI HIGH COURT IN THE CASE OF NOBLE & HEWI TT (I) PVT. LTD. (SUPRA) UNDER SIMILAR FACTS AND CIRCUMSTANCES HAS DISMISSE D THE APPEAL OF REVENUE. THE FINDINGS OF THE HON'BLE DELHI COURT ARE SUMMARIZED AS UNDER:- THE ASSESSEE MAINTAINED ITS ACCOUNTS ON THE MERCANTILE SY STEM OF ACCOUNTING. IT HAD COLLECTED SERVICE TAX DURING T HE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1999-2000. OUT OF THE SERVICE TAX SO COLLECTED, IT HAD DEPOSITED PART OF THE AMOUNT BUT AN AMOUNT OF ` .14.40 LAKHS WAS NOT DEPOSITED BY IT WITH THE CONCERNED AUTHORITIES. THE ASSESSEE DID NOT CLAIM ANY DE DUCTION IN THIS REGARD NOR DID IT DEBIT THE AMOUNT AS AN EXPE NDITURE IN THE P&L A/C. THE ASSESSING OFFICER AS WELL AS THE COMMISSIO NER (APPEALS) NEVERTHELESS DISALLOWED THE AMOUNT AND ADDED IT BACK TO THE INCOME OF THE ASSESSEE. THE TRIBUNAL SET ASIDE THE ORDER. ON APPEAL TO THE HIGH COURT: HELD DISMISSING THE APPEAL, THAT SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE P&L A/C AS AN EXPENDITURE NOR CLAI M ANY DEDUCTION IN RESPECT OF THE AMOUNT AND CONSIDERING TH AT THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING , THE ITA NO1130/DEL/2013 4 QUESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED WOU LD NOT ARISE. 7. WE FIND THAT FACTS OF THE PRESENT APPEAL ARE SAME. THEREFORE, WE ARE IN AGREEMENT THAT LD AR AND THEREFORE GROUND NO .2 IS ALLOWED. OTHER GROUNDS OF APPEALS BEING NOT PRESSED ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH DAY O F APRIL, 2014. SD/- SD/- (DIVA SINGH) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.17.04.2014. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 6.2.2014 DATE OF DICTATION 9.2.2014 DATE OF TYPING 9.2.2014 DATE OF ORDER SIGNED BY 17.4.2014 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED. ITA NO1130/DEL/2013 5