N R Kumaraswamy, Bangalore V. Assistant Commissioner of Income Tax, Ward-7(2)(1), Bangalore

ITA 1778/BANG/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 4756 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 04-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR SANDEEP GOEL
• Assessee Lawyers: R CHANDRASHEKAR
• Keywords: Question of law
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE S HRI N.V. VASUDEVAN , JUDICIAL MEMBER AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER I.T . A. NO. 1778 /BANG/20 17 (ASSESSMENT YEAR : 20 13 - 14 ) SHRI N. R. KUMARASWAMY, NO.15, NEW D SOUZA LAYOU T, HOSAKEREHALLI, BSK 3 RD STAGE, B ANGALORE - 560 085 . . APPELLANT. VS. ASST. COMMISSIONER OF INCOME TAX, WARD 7(2)(1), BANGALORE. .. RESPONDENT. APPELLANT BY : SHRI R. CHANDRASHEKAR, ADVOCATE. R E SPONDENT BY : DR.SANDEEP GOEL, ADDL. CIT (D.R) DATE OF H EARING : 24.5.2018. DATE OF P RONOUNCEMENT : 31 .05 .201 8 . O R D E R PER SHRI INTURI RAMA RAO , A .M . : THIS IS AN APPEAL FILED BY THE ASSESSEE COMPANY DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 7, BANGALORE D T.21.07.2017 FOR THE ASSESSMENT YEAR 2013 - 14. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 2 IT A NO. 1778 /BANG/201 7 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME UNDER THE HEAD BUSINESS. THE RE TURN OF INCOME FOR THE ASSESSMENT YEAR 2013 - 14 WAS FILED DECLARING AN INCOME OF RS.23,93,160. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT W A S COMPLETED VIDE ORDER DT.18.3.2016 BY THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SH ORT 'THE ACT') AT A TOTAL INCOME OF RS.51,75,242. THE DISPARITY BETWEEN THE RETURNED INCOME AND ASSESSED INCOME IS ON ACCOUNT OF ADDITION OF RS.27,82,082 ON ACCOUNT OF SERVICE 3 IT A NO. 1778 /BANG/201 7 TAX CALCULATED BUT NOT PAID TO THE GOVERNMENT ACCOUNT INVOKING THE PROVISIONS OF SECTION 43B OF THE ACT. IN SUM AND SUBSTANCE, THE CASE OF ASSESSING OFFICER IS THAT THE SERVICE TAX CALCULATED FORMS PART OF THE TRADING RECEIPT OF THE ASSESSEE SHOULD BE TREATED ON PAR WITH THE TRADING RECEIPT , THE FACT THAT THE AMOUNT COLLECTED BUT NOT PAID TO THE GOVERNMENT ACCOUNT , ATTRACTS DISALLOWANCE UNDER SECTION 43B OF THE ACT. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED CIT (APPEALS) WHO VIDE IMPUGNED ORDER CONFIRMED THE ADDITION PLACING RELIANCE ON THE DECISION OF H ON'BLE SUPREME COURT IN THE CASE OF CHOWRANGHEE SALES BUREAU PVT. LTD. VS. CIT 87 IT R 542 (SC) . BEING AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE SERVICE TAX CALCULATED I S NOT CREDITED TO P & L ACCOUNT. SIMILARLY, THE SERVICE TAX PAID OR PAYABLE IS NOT DEBITED TO P&L ACCOUNT , AS IT IS ROUTED THROUGH SUSPENSE ACCOUNT AND THEREFORE THE QUESTION OF DISALLOWANCE UNDER SECTION 43B DOES NOT ARISE. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 4 IT A NO. 1778 /BANG/201 7 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, WHERE THE SERVICE TAX CALCULATED BUT HAD NOT PAID TO THE CEN TRAL GOVERNMENT ACCOUNT CAN BE DISALLOWED UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. ADMITTEDLY, THE SERVICE TAX ACCOUNT IS NOT ROUTED THROUGH THE PROFIT AND LOSS ACCOUNT BUT THROUGH SUSPENSE ACCOUNT WHICH MEANS THAT THERE WAS NO DEBIT TO THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF LIABILITY OF SERVICE TAX ACCOUNT OR THERE IS NO CLAIM BY THE ASSESSEE FOR DEDU CTION OF SERVICE TAX PAYABLE. T HIS ISSUE WAS CONSIDERED BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. KNIGHT FRANK (INDIA) PVT. LTD. I N ITA NO.247 OF 2014 & ITA NO.255 OF 2014 DT.16.8.2016 (BOM) IN PARA 7 HELD AS FOLLOWS : 7. REGARDING QUESTION (II) : - (A) IT IS AN ADMITTED POSITION BEFORE US THAT THE RESPONDENT ASSESSEE HAD NOT CLAIMED ANY DEDUCTION ON ACCOUNT OF THE SERVICE TAX PAYABLE IN ORDER TO DETERMINE IT TAXABLE INCOME. IN THE ABOVE VIEW, THERE CAN BE NO OCCASION TO INVOKE SECTION 43B OF THE ACT. (B) MR. SURESH KUMAR, LEARNED COUNSEL FOR THE REVENUE FAIRLY STATES THAT THE ISSUE STANDS CONCLUDED AGAINST THE REVENUE BY THE DECISION OF THIS COURT IN CIT VS. OVIRA LOGISTICS P. LTD. 377 ITR 129 AND CIT V. CALIBRE PERSONNEL SERVICES PVT. LTD. (INCOME TAX APPEAL NO.158 OF 2013) RENDERED ON 2 ND FEBRUARY, 2015. 5 IT A NO. 1778 /BANG/201 7 (C) IN VIEW OF THE ABOVE, THE QUESTION (II) AS PROPOSED IS COVERED BY THE DECISION OF THIS COURT. THEREFORE, IT DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT (SUPRA), WE ALLOW THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 31ST DAY OF MAY, 201 8 . SD/ - (N.V. VASUDEVAN) JUDICIAL MEMBER SD/ - ( INTURI RAMA RAO ) ACCOUNTANT MEMBER BANGALORE, DT. 31 .05.20 18. *REDDY GP COPY TO : 1 APPELLANT 4 CIT(A) 2 RESPONDENT 5 DR. ITAT, BANGALORE 3 CIT 6 GUARD FILE SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL BANGALORE.