Origin to Future Consultancy Services Private Limited , Hyderabad V. Income Tax Officer, Ward-16(1), Hyderabad

ITA 116/Hyd/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 7799 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2014-2015
• Appeal Filed On: 31-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NOS. 16/HYD/17 & 116/HYD/19 ASSESSMENT YEARS: 2013-14 & 2014-15 M/S.ORIGIN TO FUTURE CONSULTANCY SERVICES PRIVATE LIMITED, HYDERABAD [PAN: AAACO8802F] VS INCOME TAX OFFICER, WARD-16(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C.DEVDAS, AR FOR REVENUE : SHRI ROHIT MUJUMDAR, DR DATE OF HEARING : 07-01-2021 DATE OF PRONOUNCEMENT : 19-01-2021 O R D E R PER BENCH : THESE TWO ASSESSEES APPEALS FOR AYS.2013-14 & 2014 -15 ARISE FROM THE CIT(A)-4, HYDERABADS ORDERS DATED 24- 10-2016 & 30-11-2018 PASSED IN CASE NOS.0043/ITO, W-16(1)/1 6-17 / CIT(A)-4/HYD/2016-17 & 10381/16-17/ITO,WD.16(1)/CI T(A)- 4/HYD/18-19 RESPECTIVELY IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NOS. 16/HYD/2017 & 116/HYD/2019 :- 2 -: 2. LEARNED COUNSEL IS VERY FAIR AT THE OUTSET IN NOT PRE SSING FOR ASSESSEES FIRST SUBSTANTIVE GRIEVANCE IN FORMER APPEAL ITA NO.16/HYD/2017 FOR AY.2013-14 CHALLENGING CORRECTNE SS OF BOTH THE LOWER AUTHORITIES ACTION DISALLOWING 10% OF I TS EXPENSES CLAIMED OF RS.21.73 LAKHS COMING TO RS.2.17 LAKHS KEEPING IN MIND THE SMALLNESS OF THE FIGURE ONLY. TH IS FIRST SUBSTANTIVE GROUND IS REJECTED THEREFORE. 3. COMING TO THE SERVICE TAX DISALLOWANCE OF RS. 40,98,971/-, WE FIND FROM A PERUSAL OF THE ASSESSMEN T ORDER DT.18-03-2016 THAT THE ASSESSING OFFICER HAD APPLIED S ECTION 43B OF THE ACT HOLDING THAT IT IS AN INSTANCE OF LACK OF ACTUAL PAYMENT WHEREAS THE CIT(A) HAS INVOKED SECTION 28(III) OF THE ACT AS UNDER: 7.3 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND SUBMISSIONS OF THE APPELLANT. THE ASSESSING OFFICER MAINLY ADDED AN AMOUNT OF RS. 40,98,971/- WHICH WAS THE SERVICE TAX COLLECTION. DURING THIS YEAR IN BALANCE SHEET THE SERVICE TAX P AYABLE WAS OF RS. 1 CRORE AND THE BALANCE AMOUNT OF RS. 59.05 LAKHS P ERTAINS TO EARLIER YEARS SERVICE TAX COLLECTIONS. THE ASSESSING OFFICE R 'ADDED DURING THIS YEAR AMOUNT OF RS, 40,98,971/- U/S 43B WHICH W AS CONTENDED BY THE APPELLANT THAT THIS IS NOT A 43B ADDITION SI NCE THE APPELLANT HAS NOT CLAIMED THIS AMOUNT IN THE P & L ACCOUNT AS EXPENDITURE. ON VERIFICATION OF THE DETAILS OF SERVICE TAX AND PROF IT AND LOSS ACCOUNT, I TOO FOUND THAT THE APPELLANT HAS NOT DEBITED THIS E XPENDITURE TO SERVICE TAX. THE APPELLANT HAS COLLECTED SERVICE TA X LAST YEAR AND ALSO DURING THIS YEAR. AS PER SECTION 28(III), INCOME DE RIVED BY A TRADE, PROFESSIONAL OR SIMILAR ASSOCIATION FROM SPECIFIC S ERVICES PERFORMED FOR ITS MEMBERS, COLLECTION BY A TRADER IN THE NATU RE OF SERVICE TAX AND EXCISE DUTY, SALES TAX ARE TO BE TREATED AS TRADING AND THEY ARE CHARGEABLE TO TAX. HOWEVER, THE TRADERS SHALL BE EN TITLED TO CLAIM DEDUCTION IN RESPECT OF SUCH REALIZATION OR IN PART THEREOF AS AND WHEN HE PAYS TO THE GOVERNMENT. THEREFORE, IN THIS CASE, THE APPELLANT HAS COLLECTED SERVICE RAX AMOUNT OF RS. 4 0,98,971/- DURING THIS YEAR AND NOT PAID TO THE GOVERNMENT ACCOUNT. T HEREFORE, THIS AMOUNT TO BE TREATED AS TRADING RECEIPTS IN THE HAN DS OF THE APPELLANT ITA NOS. 16/HYD/2017 & 116/HYD/2019 :- 3 -: AS PER SECTION 28. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER CONFIRMED U/S 28 INSTEAD U/S 438. 4. AFTER GIVING OUR THOUGHTFUL CONSIDERATION TO RIVAL PLEADINGS AGAINST AND IN SUPPORT OF THE IMPUGNED SERVI CE TAX DISALLOWANCE, WE FIND NO REASON TO SUSTAIN THE SAME. WE MAKE IT CLEAR THAT SECTION 28(III) OF THE ACT IS APPLICABLE O NLY IN CASE OF INCOME DERIVED BY A TRADE, PROFESSION OR SIMILAR ASSOCIATION FROM SPECIFIC SERVICES PERFORMED FOR ITS MEMBERS WH EREAS THE ASSESSEE IS A COMPANY ENGAGED IN CONSULTANCY SERVICE S ONLY. WE THUS DELETE THE IMPUGNED SERVICE TAX DISALLOWANCE ON THIS COUNT ALONE. THE ASSESSEES FORMER APPEAL IN ITA NO.16/HYD/2017 IS PARTLY ACCEPTED IN ABOVE TERMS. 5. COMING TO ASSESSEES LATTER APPEAL ITA NO.116/HYD/2019, IT TRANSPIRES AT THE OUTSET THAT THE CIT (A) ORDER HAS BEEN PASSED EX-PARTE. LEARNED COUNSEL HAS INVITED OUR ATTENTION TO A DETAILED AFFIDAVIT/PETITION EXPLAINING THE REASON(S) OF THE ASSESSEES NON-APPEARANCE IN THE LOW ER APPELLATE PROCEEDINGS. THE SAME SUFFICIENTLY INDICATE S THAT THE SAID NON-APPEARANCE WAS NEITHER INTENTIONAL NOR DELIBE RATE BUT ON ACCOUNT OF CIRCUMSTANCES BEYOND ASSESSEES CONTR OL. THE FACT ALSO REMAINS THAT THE CIT(A) HAS NOT ADJUDICATE D UPON MERITS OF THE TWIN ISSUES IN HIS ORDER UNDER CHALLENG E. WE THUS RESTORE ASSESSEES LATTER APPEAL IN ITA NO.116/HYD/201 9 AND GROUNDS RAISED THEREIN BACK TO THE CIT(A) FOR HIS AFR ESH APPROPRIATE ADJUDICATION AS PER LAW. ORDERED ACCORDI NGLY. 6. THE ASSESSEES FORMER APPEAL ITA NO.16/HYD/2017 IS PARTLY ALLOWED AND ITS LATTER APPEAL IN ITA NO.116/HYD/ 2019 IS ITA NOS. 16/HYD/2017 & 116/HYD/2019 :- 4 -: TREATED AS ALLOWED FOR STATISTICAL PURPOSE IN ABOVE TERMS . A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JANUARY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 19-01-2021 TNMM ITA NOS. 16/HYD/2017 & 116/HYD/2019 :- 5 -: COPY TO : 1.M/S.ORIGIN TO FUTURE CONSULTANCY SERVICES PVT. LT D., HYDERABAD. C/O. SRI S.RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYAS ELEGANCE, 3-6-643, STREET NO.9, HIMAYAT NA GAR, HYDERABAD. 2.THE INCOME TAX OFFICER, WARD-16(1), HYDERABAD. 3.CIT(APPEALS)-4, HYDERABAD. 4.PR.CIT-4, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.