MEETA KHANNA DAVE, MUMBAI V. ACIT, CIRCLE 16(1), MUMBAI

ITA 1996/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1744 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 02-04-2018
• Court: TRIBUNAL

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI , . , , BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER, ITA NO.1996/MUM/2018 ASSESSMENT YEAR: 2013-14 MRS. MEETA KHANNA DAVE, B/21, SUNSET HEIGHTS, 59 PALI HILL ROAD, BANDRA (WEST), MUMBAI-400020 / VS. ACIT, CIRCLE-16(1), ROOM NO.439, AAYAKAR BHAVAN, NEW MARINE LINES, MUMBAI-400020 ( !' /ASSESSEE) ( !# / REVENUE) P.A. NO.AALPD5417D $ #%'! / DATE OF HEARING : 30/04/2019 %'! / DATE OF ORDER: 24/05/2019 / O R D E R PER G. MANJUNATHA (ACCOUNTANT MEMBER) THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST ORDER OF THE LD. CIT(A)-4, MUMBAI, DATED 16/01/2018 AND IT PERTAINS TO AY. 201 3-14. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING: !' !' / ASSESSEE BY SHRI VIJAY MEHTA !# !' / REVENUE BY SHRI D.G. PANSARI 2 ITA NO.1996/MUM/2018 MEETA KHANNA DAVE 1.THE ADDITION OF AN AMOUNT OF RS.48,31,822/- U/S 4 3B OF THE INCOME TAX ACT. THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THE SAID AMOUN T REPRESENTS EQUIVALENT AMOUNT OF CENVAT CREDIT BEING SERVICE TAX ON THE INPUT SERVIC E AVAILED BY THE APPELLANT. 2. THE BRIEF, FACTS OF THE CASE ARE THAT THE ASSESS EE IS A PROPRIETOR OF IBIS PRODUCTION, ENGAGED IN THE BUSINESS OF PRODUCTION O F ADVERTISING/COMMERCIAL FILMS, FILED HER RETURN OF INCOME FOR AY 2013-14 ON 23/09/2013, DECLARING TOTAL INCOME AT RS.1,41,14,170/-. THE CASE WAS SELECTED FOR SCRUTIN Y AND NOTICE U/S 143(2) AND 142(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) AL ONG WITH QUESTIONNAIRE WERE ISSUED. IN RESPONSE TO NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED VARIOUS DETAILS, AS CALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED UPON THE ASSESSEE TO FUR NISH THE DETAILS OF SERVICE TAX COLLECTED AND SERVICE TAX PAID. IN RESPONSE, THE AS SESSEE HAS FILED DETAILS OF SERVICE TAX COLLECTION ALONG WITH SERVICE TAX RETURNS FILED WIT H CENTRAL EXCISE DEPARTMENT, AS PER WHICH, THE ASSESSEE HAS COLLECTED SERVICE TAX AMOUN T OF RS.1,30,12,947/- ON SERVICE CHARGES RECEIVED FOR THE YEAR AS AGAINST WHICH CLAI MED CREDIT FOR CENVAT PAID ON INPUT SERVICE AMOUNTING TO RS.48 LAKHS AND THE NET AMOUNT OF RS.81.82 LAKHS HAS BEEN PAID TO THE DEPARTMENT. THE AO AFTER CONSIDERING RELEVANT S UBMISSIONS HELD THAT ALTHOUGH THE ASSESSEE CLAIMED TO HAVE AVAILED CENVAT CREDIT AMOU NTING TO RS.48 LAKHS BUT FAILED TO FILE ANY EVIDENCE REGARDING INPUT SERVICES, THEREFO RE, DISALLOWED SERVICE TAX AMOUNTING TO RS.48,31,822/- U/S 43B OF THE ACT. SIMILARLY, THE A O HAS MADE DISALLOWANCES TOWARDS EXPENSES INCURRED IN RELATION TO EXEMPT INCOME U/S 14A, DISALLOWANCE OF RENT EXPENSES AND DISALLOWANCE AT OUT OF BUSINESS EXPENSES. 3 ITA NO.1996/MUM/2018 MEETA KHANNA DAVE 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ASSESSEE HAS CHALLENGED THE ADDITIONS MADE BY THE AO TOWARDS DISALLOWANCE OF SERVICE TAX U/S 4 3B, DISALLOWANCE OF BUSINESS EXPENSES, DISALLOWANCE OF RENT EXPENSES AND DISALLO WANCE OF EXPENSES INCURRED IN RELATION TO EXEMPT INCOME. THE LD. CIT(A), AFTER C ONSIDERING THE SUBMISSIONS, PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE WHERE HE H AD PARTLY SUSTAINED DISALLOWANCE OF OUT OF BUSINESS EXPENSES, HOWEVER, CONFIRMED ADDITI ONS MADE BY THE AO TOWARDS DISALLOWANCE OF SERVICE TAX LIABILITY U/S 43B OF TH E ACT. AGGRIEVED BY THE LD. CIT(A)S ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D. CIT(A) WAS ERRED IN SUSTAINING DISALLOWANCE OF SERVICE TAX U/S 43B OF THE ACT, WIT HOUT APPRECIATING THE FACT THAT THERE IS NO DISCREPANCIES IN SERVICE TAX COLLECTION ON SERVI CE CHARGES RECEIVED BY THE ASSESSEE, CENVAT CREDIT CLAIMED ON INPUT SERVICES AND NET SERVICE TAX PAYMENT TO CENTRAL EXCISE DEPARTMENT. THE AO HAS WRONGLY APPRECIATED THE FACT WITHOUT UNDERSTANDING THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE TO ACCOUNT I NPUT SERVICE WHERE THE ASSESSEE HAS CLAIMED CREDIT FOR CENVAT AVAILABLE ON INPUT SERVIC ES. THE ASSESSEE HAS FILED COMPLETE DETAILS INCLUDING SERVICE TAX RETURNS FILED WITH TH E DEPARTMENT AS PER WHICH THERE IS NO DISCREPANCY IN SERVICE TAX COLLECTION AS WELL AS PA YMENTS. IN SO FAR AS, THE CENVAT CREDIT, THE ASSESSEE HAS AVAILED INPUT SERVICES ON WHICH SERVICE TAX HAS BEEN PAID TO SERVICE PROVIDER AND THE SERVICE PROVIDERS HAD PAID SERVICE TAX TO DEPARTMENT FOR WHICH 4 ITA NO.1996/MUM/2018 MEETA KHANNA DAVE THE CREDIT IS AVAILABLE TO THE ASSESSEE AGAINST SER VICE TAX PAYABLE TO THE DEPARTMENT. THEREFORE, THE LOWER AUTHORITIES WERE INCORRECT I N APPRISING THE FACTS OF MAKE ADDITIONS AND HENCE THE ADDITIONS MADE BY THE AO TOWARDS SERV ICE TAX LIABILITY U/S 43B SHOULD BE DELETED. 5. THE LD. DR ON THE OTHER HAND, STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIALS AVAILABLE ON RECORD. THE AO HAS DISALLOWED CENVAT CREDIT AVAILED BY THE ASSESSEE AGAINST SERVICE TAX PAYMENT ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FILE ANY EVIDENCES TO PROVE THAT CENVAT CREDIT IS RIGHTLY AVAILED AGAINST SERVICED T AX PAYABLE TO THE GOVERNMENT. THE ASSESSEE HAS FILED VARIOUS DETAILS INCLUDING SERVIC E TAX RETURNS FILED FOR THE YEAR WITH CENTRAL EXCISE DEPARTMENT, AS PER WHICH THE ASSESSE E HAS COLLECTED SERVICE TAX AMOUNTING TO RS.1,30,12,947/- . THE ASSESSEE HAS AV AILED INPUT SERVICE ON WHICH SHE HAD PAID CENVAT AMOUNTING TO RS.45,57,224/-. THE D IFFERENCE AMOUNT OF RS.84, 04,223/- HAS BEEN PAID TO THE CENTRAL EXCISE DEPART MENT. THESE ARE UNDISPUTED FACTS. THE AO AS WELL AS THE LD. CIT(A) HAVE ACCEPTED THAT THERE IS NO DIFFERENCE IN SERVICE TAX COLLECTED FOR THE YEAR AND SERVICE TAX PAYMENT TO T HE DEPARTMENT. THE ONLY DISPUTE IS WITH REGARD TO CENVAT CREDIT AVAILED BY THE ASSESSE E. THE LD. CIT(A) HAS CONFIRMED THE ADDITIONS MADE BY THE AO TOWARDS SERVICE TAX LI ABILITY U/S 43B ON WRONG UNDERSTANDING OF LAW THAT CENVAT CREDIT AVAILED AGA INST SERVICE TAX PAYMENT IS REQUIRED TO BE PAID TO THE CENTRAL EXCISE DEPARTMENT WITHOU T APPRECIATING THE CORRECT POSITION OF 5 ITA NO.1996/MUM/2018 MEETA KHANNA DAVE LAW THAT THE ASSESSEE IS NOT REQUIRED TO PAY CENVAT CREDIT AVAILED BECAUSE SUCH CENVAT CREDIT HAS BEEN DIRECTLY PAID BY THE SERVICE PROVIDERS TO THE GOVERNMENT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE A O HAS MADE ADDITION TOWARDS SERVICE TAX LIABILITY U/S 43B WITHOUT UNDERSTANDING CONCEPT OF ACCOUNTING TREATMENT OF SERVICE TAX ON CENVAT CREDIT. THE LD. CIT(A) SIMPLY CONFIRMED T HE ADDITIONS MADE BY THE AO EVEN THOUGH THE ASSESSEE HAS EXPLAINED THE CONCEPT OF AC COUNTING TREATMENT FOR CENVAT CREDIT. THEREFORE, WE DIRECT THE AO TO DELETE THE A DDITIONS MADE TOWARDS SERVICE TAX (CENVAT) U/S 43B OF THE ACT. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/05/2019. SD/- SD/- ( SANDEEP GOSAIN ) (G. MANJUNATHA) #'$ /JUDICIAL MEMBER %'$ / ACCOUNTANT MEMBER $ /MUMBAI; ' DATED : 24/05/2019 F{X~{T? F{X~{T? F{X~{T? F{X~{T? P.S / /. . . &#'()*)+' / COPY OF THE ORDER FORWARDED TO : 1. ( )* / THE APPELLANT (RESPECTIVE ASSESSEE) 2. +,)* / THE RESPONDENT. 3. -!- $ .' ( ( ) / THE CIT, MUMBAI. 4. -!- $ .' / CIT(A)- , MUMBAI, 5. 0#1 +'2 , -!((2!3 , $ / DR, ITAT, MUMBAI 6. 4 / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI