M/S AVACEND SOLUTION PVT. LTD, MUMBAI V. I.T.O. - 9(1)(4), MUMBAI

ITA 3124/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4558 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 10-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Section: 43B; 143(3); 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA (AM) & SHRI PAVAN KUMAR G ADALE (JM) I.T.A. NO. 3124/MUM/2019 (ASSESSMENT YEAR 2015-16) AVACEND SOLUTIONS PVT.LTD. 302/A, SAGAR TECH PLAZA ANDHERI KURLA ROAD SAKI NAKA JUNCTION ANDHERI(E) MUMBAI-400 072 PAN : AAECA3188Q VS. ITO - 9(1)(4) ROOM NO.205, 2 ND FLOOR AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY NONE DEPARTMENT BY SHRI BRAJENDRA KUMAR DATE OF HEARING 1 2 .07 .2021 DATE OF PRONOUNCEMENT 28 .0 9 .2021 O R D E R PER SHAMIM YAHYA (AM) :- THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-16 DATED 28.03.2019 AND PERTAINS TO ASSESSMENT YEAR 20 15-16. 2. THE GROUNDS OF APPEAL READ AS UNDER : 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS)-16 COMMITTED AN ERROR OF LAW AND FACT IN REJECTING THE APPELLANT'S SUBMISSIO NS IN STATEMENT OF FACTS MADE ALONG WITH THE GROUNDS OF THE APPEAL WHILE FILING THE APP EAL. 2. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN ARRIVING TO THE CONCLUSION THAT THE UNPAID SERVICE TAX AMOUNT OF RS . 1,00,95,312/- WHICH IS NOT ROUTED THROUGH PROFIT & LOSS A/C AND SHOWN AS A LIA BILITY IN THE BALANCE SHEET IS CORRECTLY DISALLOWED BY THE ITO. U/S. 43B. 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) IS NOT JUSTIFY IN CONFIRMING THE ADDITION ON ACCOUNT OF SERVICE TAX A MOUNTING TO RS. 1,00,95,312/- U/S. 43B OF THE INCOME TAX ACT. ITA NO.3124/MUM/2019 2 3. BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS E-FILED FOR THE AY 2015-16 ON 27.11.2015 DECLARING TOTAL INCOME AT RS. 28,20,560/-. THE CASE WAS SELECTED FOR SCRUTINY AND AN ASSESSMENT ORDER U/S. 143(3) WAS PASSED ON 29.12.2017 DETERMINING THE TOTAL INCOME OF THE APPELLANT OF RS . 1,47,26,330/- BY MAKING AN ADDITION OF RS.18,10,455/- ON ACCOUNT OF DISALLOWAN CE ON ACCOUNT OF NON-PAYMENT OF CONTRIBUTIONS RECEIVED FROM EMPLOYEES FOR VARIOUS F UNDS U/S. 36(1)(VA) AND RS.1,00,95,312/- ON ACCOUNT OF NON-PAYMENT OF SERVI CE TAX U/S. 43B OF THE ACT. 4. UPON ASSESSEES APPEAL LD.CIT(A) DELETED THE AD DITION QUA ISSUE OF 36(1)(VA). HOWEVER, QUA THE ISSUE OF DISALLOWANCE U/S. 43B, HE NOTED INTER ALIA ASSESSEES RELIANCE OF HONBLE JURISDICATIONAL HIGH COURT AS U NDER:- CIT VS. OVIRA LOGISTICS PRIVATE LIMITED, IT APPEAL NO: 1023 OF 2013. IN THIS CASE FINDINGS OF THE ITAT WERE UPHELD BY T HE MUMBAI HIGH COURT AND OBSERVED THAT SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE PROFIT & LOSS ACCOUNT AS AN EXPENDITURE NOR DID THE ASSESSEE CLAI M ANY DEDUCTION IN RESPECT OF THE AMOUNT SINCE THE ASSESSEE WAS FOLLOWING THE MERCANT ILE SYSTEM OF ACCOUNTING, THE QUESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED D OES NOT ARISE. 5. HOWEVER, LD.CIT(A) CONFIRMED THE ADDITION CHOOS ING NOT TO FOLLOW HONBLE JURISDICTIONAL HIGH COURT, BUT REFERRED TO HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF SRIKAKOLLU SUBBA RAO & CO & ORS V. UNION O F INDIA & ORS (1988) 71 CTR (AP) 34 : (1988) 173 ITR 708 (AP). 6. AGAINST THIS ORDER, ASSESSEE IS IN APPEAL BEFO RE US. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE RECORD . WE FIND THAT LD.CIT(A) WITHOUT MENTIONING ANY REASON HAS CHOSEN NOT TO FO LLOW HONBLE BOMBAY HIGH COURT ON THE ISSUE. IN THE SAID HONBLE BOMBAY HIG H COURT DECISION IT WAS HELD THAT HAVING PERUSED THE AFORESAID DECISIONS, WE ARE CLE ARLY OF THE VIEW THAT SECTION 43B ITA NO.3124/MUM/2019 3 DOES NOT CONTEMPLATE LIABILITY TO PAY THE SERVICE T AX BEFORE ACTUAL RECEIPT OF THE FUNDS IN THE ACCOUNT OF THE ASSESSEE. IN OUR VIEW, LIABIL ITY TO PAY SERVICE TAX INTO THE TREASURY WILL ARISE ONLY UPON THE ASSESSEE RECEIVING THE FUN DS AND NOT OTHERWISE. ACCORDINGLY, WHEN SERVICE ARE RENDERED, THE LIABILITY TO PAY THE SERVICE TAX IN RESPECT OF THE CONSIDERATION PAYABLE WILL ARISE ONLY UPON THE RECE IPT OF SUCH CONSIDERATION AND NOT OTHERWISE. ACCORDINGLY, WE REMIT THE ISSUE TO TH E FILE OF AO. THE AO SHALL EXAMINE THE ISSUE AND IF AMOUNT HAS NOT BEEN RECEIVED BY TH E ASSESSEE, NO DISALLOWANCE CAN BE DONE ON THE RATIO OF ABOVE HONBLE BOMBAY HIGH COUR T DECISION. 8. IN THE RESULT, THIS APPEAL BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 28.09.2021. SD/- SD/- (PAVAN KUMAR GADALE) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 28/09/2021 THIRUMALESH, SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR) ITAT, MUMBAI