Amrish I. Jain, Jalgaon V. Deputy Commissioner of Income-tax, Circle - 1, Jalgaon

ITA 1179/PUN/2019

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The case revolves around the disallowance of a service tax payment claimed by the assessee, Amrish I. Jain, in his income tax return for the Assessment Year 2014-15. The payment of Rs.16,56,889/- was initially disallowed by the Assessing Officer (AO) as a prior period expense. The Commissioner of Income Tax (Appeals) upheld this disallowance, citing that the payment was not claimed in the relevant financial years and was made under the Service Tax Amnesty Scheme. However, the Tribunal overturned this decision, referencing a similar case (Shirode Automobiles Pvt. Ltd. vs. ACTI) where it was held that such payments are deductible in the year they are made, under Section 43B of the Income Tax Act, 1961.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134145 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-10-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 04-08-2019
• Other Referred Cases: Shirode Automobiles Pvt. Ltd. Vs. ACTI
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 43B; 143(3)

Judgement Text

आयकर अपीलीय अिधकरण “ए” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “A” :: PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.1179/PUN/2019 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 Amrish I. Jain, 169, Balaji Peth, Jalgaon – 425001. PAN: AADPL 1004 A V s The Dy.CIT, Circle-1, Jalgaon. Appellant/ Assessee Respondent / Revenue Assessee by Shri Nikhil S Pathak - AR Revenue by Shri Ramnath P Murkunde – DR Date of hearing 20/10/2022 Date of pronouncement 13/01/2023 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals)-2, Nashik dated 20.05.2019 emanating from assessment order of Assessing officer dated 06.12.2016 under section 143(3) of the I.T.Act, 1961 for the A.Y.2014-15. The Assessee has raised the following grounds of appeal: “ The Grounds of Appeal stated below are WITHOUT PREJUDICE of each other. 1. The learned CIT(A)-II Nashik erred in confirming disallowance of Service Tax of Rs.11,24,472 out of Rs.16,56,889. ITA No.1179/PUN/2019 Amrish I. Jain [A] 2 On the facts and in the circumstances of the case, the disallowance to the extent of Rs.11,24,472 sustained by the learned CIT(A) be cancelled. 2. The learned CIT(A)-II failed to appreciate that claim for deduction of tax/duty if disallowed in earlier year on the ground of non-payment, the appellant is entitled to claim the same in the year of actual payment in terms of Sec. 43B of the Act. 3. The learned CIT(A)ought to have appreciated that the liability to pay arrears of Service Tax crystallized during the y.e. 31.03.2014 only and as such could not be considered to be prior period expenditure and as such could not be considered to be prior period expenditure and consequently deduction was allowable in terms of Sec. 43B only. 4. The learned CIT(A) failed to appreciate that Sec. 43B overrides other provisions and the appellant had made the claim through valid revised return. 5. General 5.1 The appellant craves leave to add, amend, alter or delete any one or more of the grounds of appeals as may be required in the nature and circumstances of the case. 5.2 The appellant prays leave to adduce such further evidence to substantiate his case as the occasion may demand.” 2. Brief facts: The Assessing Officer(AO) disallowed the assessee’s claim of payment of Rs.16,56,889/- treating it as prior period expenses. Though assessee had claimed it as service tax payment allowable under section 43B of the Act. 2.1 Aggrieved by the assessment order, the assessee filed appeal before the ld.CIT(A). The ld.CIT(A) in para 5.3 has held as under: “5.3 I have carefully considered the facts of the case & rival contentions. On perusal of the above charts and the circular "The service tax Amnesty scheme, it is seen that, the said scheme was ITA No.1179/PUN/2019 Amrish I. Jain [A] 3 applicable to defaulters during the period October 2007 to December 2012 and said dues can be paid in two equal instalments i,e. 50% of dues by 31 ,J Dec 2013 and balance 50% by 30"' June The appellant however paid all the dues by 30”' June, 2014, but this is the matter of service tax return not filed in the particular assessment year. The benefit in the said scheme was given to defaulters of service tax. In this case, the appellant had not claimed the same in its books of account in the concerned F.Ys., however, claim as deduction in the A,Y.2013-14 and the AO disallowed the earlier years expenses on the ground that prior period expenses cannot be allowed in the year under appeal. Therefore, 1 am of the considered view that, the AO is justified in disallowing prior years expenses, claimed in the year under consideration on the following grounds a) the claim of aforesaid deduction was made in AY 2013- 14 or period expenses & the AO has disallowed the same. The appellant has not aim the aforesaid deduction u/s.43B and the appellant has not disputed the disallowance of prior period expenses claimed by the appellant in AY 2013-14. B) the appellant has made the payment voluntarily because he has come forward to make the payment due the announcement of "The Service Tax Amnesty Scheme" for the defaultment during the period October 2007 to December 2012, therefore, the appellant cannot claim deduction u/s.43B c) Section 43B does not provide any payments to be allowed for deduction, if the appellant pays the dues in the Amnesty Scheme, d) the appellant was also not sure whether he is entitle to claim deduction u/s.43B while filing the original return of income, therefore, such claim was made in the revised return, but correctly rejected by the AO in the assessment proceedings. In view of the above stated facts, I am of the considered view that, the AO has correctly not allowed the claim of deduction u/s.43B of the Act and accordingly, the appeal of the appellant on these grounds are dismissed.” ITA No.1179/PUN/2019 Amrish I. Jain [A] 4 3. Aggrieved by the order of the ld.CIT(A), assessee filed appeal before this Tribunal. 4. The ld.Authorised Representative(ld.AR) of the assessee filed paper book containing pages 108, the ld.AR submitted that assessee had paid its service tax liability during the A.Y. 2014-15. The ld.AR also submitted that the details of service tax paid have been reproduced by the ld.CIT(A) in his order. In A.Y 2014-15 assessee has paid service tax of Rs,.20,15,285/-. The said service tax has been paid under the Services Tax Voluntary Compliance Scheme. Assessee filed copies of challans showing payment of service tax. The ld.AR submitted that payment of service tax is allowable deduction under section 43B of the Act. 5. The ld.Departmental Representative (ld.DR) for the Revenue relied on the orders of the Lower Authorities. 6. We have heard both the parties and perused the records. It is an admitted fact by the AO in the assessment order that assessee has paid the service tax of Rs.16,56,889/- during the A.Y. 2014-15. The assessee had claimed the said amount as deduction in A.Y.2013-14. In the assessment order the said amount was disallowed on the ground that assessee has not actually paid the said amount of Rs.16,56,889/-, therefore, in A.Y.2014-15 after payment of service ITA No.1179/PUN/2019 Amrish I. Jain [A] 5 tax the assessee claimed the said deduction under section 43B of the Act. The ld.CIT(A) has observed that said amount was paid under Services Tax Voluntary Compliance Scheme. As per section 43B, certain deductions are allowed only on actual payments. As per section 43B any sum payable by the assessee by way of tax duty, cess or fee by whatever name called under any law for the time being in force shall be allowed in the previous year in which the same is actually paid. In this case, it is an admitted position that Rs.16,56,889/- was paid during A.Y. 2014-15. The identical issue was decided by ITAT, in the case of Shirode Automobiles Pvt. Ltd., Vs. ACTI in ITA No.501/PUN/2020 vide order dated 18.11.2021. In the case of Shirode Automobile Pvt. Ltd., the payment of service tax were made under Amnesty Scheme the ITAT held as under: “17. In view of the foregoing discussion, I hold that the sum of Rs.12.25 lakh paid by the assessee during the year as service tax relatable to earlier years should be allowed as deduction in the year under consideration. The impugned order is, therefore, overturned on this score.” 7. In the case of Shirode Automobiles Pvt. Ltd., the AO had held payment of Rs.12,25,998/- as prior period expenses and disallowed the same. 8. The facts in the case of Shirode Automobile Pvt. Ltd., and the present assessee are identical. The assessee before us has paid ITA No.1179/PUN/2019 Amrish I. Jain [A] 6 Rs.16,56,889/- during A.Y.2014-15 which was his service tax liability pertaining to earlier years. The deduction under section 43B is allowable on actual payment basis. Therefore, respectfully following the ITAT decision(supra) in the case of Shirode Automobile Pvt. Ltd., it is held that payment of Rs.16,56,889/- of service tax liability paid during A.Y. 2014-15 is allowable deduction under section 43B of the Act. Accordingly, grounds of appeal raised by the assessee are allowed. 9. In the result, appeal of the Assessee is Allowed. Order pronounced in the open Court on 13 th January, 2023. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 13 th Jan, 2023/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.