The Assistant Commissioner of Income Tax-1, BHILAI(CG) V. Shri Sandeep Surendaran Nair, BHILAI(CG)

ITA 174/BIL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2437 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BARWADCIT
• Assessee Lawyers: M JOSHI
• Section: 43B

Judgement Text

, RA IPUR IN THE INCOME TA X A PPELLA TE TRIBUNA L, RA IPUR BEFORE S/SHRI MUKUL SHRAW AT (JM) SHAMIM YAHYA (AM) , , ./ I.T.A. NO.174/BPR/2012 ( / ASSESSMENT YEAR :2009 - 2010 ) THE ASST. COMMISSIONER OF INCOME TAX - 1, 32/32, BUNGLOWS, BHILAI. / VS. SANDEEP SURENDARAN NAIR, PROP. VASAVA ENGINEERING CONSTRUCTION, SUYPELA, BHILAI ./ ./PAN/GIR NO. : ACZPN 2865M ( /A PPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.K.BARWA,DCIT / RESPONDENT BY : SHRI M.JOSHI / DATE OF HEARING : 09 - 02 - 2016 / DATE OF PRONOUNCEMENT : 12 - 02 - 2016 / O R D E R PER MUKUL SHRAWAT, JM THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM AN ORDER OF THE LD CIT(A), RAIPUR DATED.24.7.2012 PERTAINING TO ASSESSMENT YEAR 2009 - 2010. 2. THE SOLITARY GROUND RAISED IS REPRODUCED BELOW: W HETHER IN LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.56,80,797/ - MADE BY THE AO ON ACCOUNT OF NONPAYMENT OF LIABILITY OF SERVICE TAX U/S.43B OF THE I.T.ACT, 196 1. 2 . I.T.A. NO.174/BPR/2012 ASSESSMENT YEAR :2009 - 2010 3. WH ILE PASSING THE ORDER U/S.143(3) OF THE ACT DATED 20.12.2011, THE ASSESSING OFFICER HAS NOTICED THAT THE ASSESSEE IS A MECHANICAL CONTRACTOR AND HAS SHOWN PROFIT IN INDIVIDUAL CAPACITY. H OWEVER, THE AMOUNT COLLECTED AS SERVICE TAX AMOUNTING TO RS.56,80,797/ - WAS NOT PAID/DEPOSITED IN GOVERNMENT ACCOUNT WITHIN THE TIME PROVIDED AS P ER THE PROVISIONS OF SECTION 43B OF THE ACT. B Y INVOKING THE PROVISIONS OF SECTION 43B, THE AMOUNT WAS TAXED. B EING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FI RST APPELLATE AUTHORITY. 4. THE STATEMENT BEFORE THE LD CIT(A) WAS THAT ALTHOUGH IT IS CORRECT THAT THE ASSESSEE IS A MECHANICAL CONTRACTOR AND OFFERS SERVICES TO VARIOUS CLIENTS AND, THEREFORE, COLLECTING SERVICE TAX FR OM THEM BUT THE AMOUNT COLLECTED A S SERVICE TAX WAS NOT CHARGED TO THE PROFIT AND LOSS ACCOUNT. H ENCE, IT WAS PLEADED THAT THE AMOUNT IN QUESTION WAS OUT OF AMBIT OF THE PROVISIONS OF SECTION 43B. L D CIT(A) HAS MENTIONED FEW CASE LAWS ON THIS ISSUE AND ALLOWED THE CLAIM. 5. WI TH THIS BR IEF BACKGROUND, WE HAVE HEARD BOTH THE SIDES. A T THE OUTSET, IT IS WORTH TO MENTION THAT THIS ISSUE HAD ALREADY BEEN CONSIDERED BY US IN THE CASE OF ITO VS. SRI TAPAN DAS, PROP. M/. AMKEY CONSTRUCTION IN ITA NO.150/BLPR/2012 ORDER DATED 4.12.2015, WHEREIN , W E HAVE DISCUSSED THE LAW PRONOUNCED ON IT AND THEREAFTER HELD AS UNDER: 4. HENCE, AFTER REFERRING TO THE CASE LAWS NAMELY S. B. FOUNDRY (1990) 185 ITR 555 (ALL.) AND INDIA CARBON LTD. VS IAC & ANR. (1993) 200 ITR 759 (GAU) IT WAS HELD THAT THE ADMITTED FACTUAL POSITION WAS THAT THE ASSESSEE HAD NOT CLAIMED ANY AMOUNT BY WAY OF SERVICE TAX AS A DEDUCTION, THEREFORE, THERE WAS NO QUESTION OF DISALLOWANCE OF ANY TAX OR DUES U/S 43B OF THE IT ACT. AGAINST THE RELIEF, AS GRANTED BY THE LEARNED CIT (A), NOW, THE REVENUE IS IN APPEAL BEFORE US. 3 . I.T.A. NO.174/BPR/2012 ASSESSMENT YEAR :2009 - 2010 5. ON THE DATE OF HEARING, NO ONE WAS PRESENT FROM THE SIDE OF THE RESPONDENT ASSESSEE. FROM THE SIDE OF THE REVENUE, LEARNED DR SMT. SHITAL S. VERMA APPEARED AND SUPPORTED THE ORDER OF THE AO . 6. AFTER CONSIDERING TH E SUBMISSIONS OF THE LEARNED DR, WE ARE OF THE CONSIDERED OPINION THAT NO INTERFERENCE IS REQUIRED IN THE DECISION GIVEN BY THE LEARNED CIT (A). THE ISSUE OF DISALLOWANCE OF UNPAID STATUTORY LIABILITY AS PRESCRIBED U/S 43B OF THE IT ACT NOW STOOD RESOLVED BY SEVERAL DECISIONS. THE IMPACT OF CIRCULAR NO.372 DATED 8 TH DECEMBER, 1981 HAS ALSO BEEN CONSIDERED. AS PER THE SAID CIRCULAR IT IS SPECIFICALLY MENTIONED THAT SEVERAL CASES HAVE COME TO THE NOTICE WHERE TAX PAYERS DID NOT DISCHARGE THEIR LIABILITY IN RESPECT OF EXCISE DUTIES OR OTHER TAXES ALTHOUGH CLAIMED, THE SAID LIABILITY AS DEDUCTION ON THE GROUND THAT THE ACCOUNTS HAVE BEEN MAINTAINED ON MERCANTILE BASIS. THE CBDT HAS OBSERVED THAT ON ONE HAND THE TAX PAYERS HAVE CLAIMED THE DEDUCTION MERELY ON THE BASIS OF ACCRUAL OF LIABILITY BUT ON THE OTHER HAND, DISPUT ED THE LIABILITY AND DID NOT DISCHARGE THE OBLIGATION OF PAYMENT OF THE TAX. FOR SOME REASONS OR THE OTHER, THE LIABILITY IS DISPUTED AND NOT PAID. THIS ASPECT HAS BEEN CONSIDERED BY SEVERAL COURTS AND CAME TO THE CONCLUSION THAT IN A SITUATION WHEN DEDUCT ION HAS NOT BEEN CLAIMED AND A SEPARATE ACCOUNT HAS BEEN MAINTAINED, THEN D ISALLOWANCE U/S 43B OF THE IT ACT SHOULD NOT BE MADE. IN THE CASE OF CIT VS NOBLE & HEWITT (INDIA) (P) LTD. (2008) 305 ITR 324 (DEL.), THE CASE OF CHOWRINGHEE SALES BUREAU P. LTD. VS CIT (1977) 110 ITR 385 (CAL.) HAS BEEN DISTINGUISHED AND IT WAS HELD THAT WHEN THE AMOUNT OF TAX HAS NOT BEEN DEBITED TO PROFIT & LOSS ACCOUNT AS AN EXPENDITURE NOR CLAIMED ANY DEDUCTION IN RESPECT OF THE SAID AMOUNT THEN, THE QUESTION OF DISALLOWANCE U /S 43B OF THE IT ACT DOES NOT ARISE. RESPECTFULLY, FOLLOWING THIS DECISION, WE HEREBY HOLD THAT THERE WAS NO FALLACY IN THE VIEW TAKEN BY THE LEARNED CIT (A). THE SAME IS HEREBY CONFIRMED AND GROUND NO.1 OF THE APPEAL OF THE REVENUE IS, THEREFORE, DISMISSE D. 6. IN THE LIGHT OF ABOVE PRECEDENT, THE ISSUE AS RAKED UP BY THE REVENUE DEPARTMENT NOW STOOD COVERED IN FAVOUR OF THE ASSESSEE. H ENCE, WE FIND NO FORCE IN THIS GROUND OF THE REVENUE. ACCORDINGLY, WE REJECT THE SAME. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED., ORDER PRONOUNCED IN THE OPEN COURT ON 12 / 02/2016 . SD/ - SD/ - ( , ) ( , ) SHAMIM YAHYA, ACCOUNTANT MEMBER MUKUL SHRAW AT ,JUDICIAL MEMBER 4 . I.T.A. NO.174/BPR/2012 ASSESSMENT YEAR :2009 - 2010 RAIPUR, DATED 12 / 02/2016 . . ./ PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : THE ASST. COMMISSIONER OF INCOME TAX - 1, 32/32, BUNGLOWS, BHILAI 2. / THE RESPONDENT: SANDEEP SURENDARAN NAIR, PROP. VASAVA ENGINEERING CONSTRUCTION, SUYPELA, BHILAI 3. ( ) / THE CIT(A) - RAIPUR 4. / CIT , RAIPUR 5. , , / DR, ITAT, RAIPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PS, ITAT, CAMP, RAIPUR