M/s Wyzmindz Solutions Private Limited , Bangalore V. Income Tax Officer Ward-7(1)(4), Bangalore

ITA 3417/BANG/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7171 (ITAT-BANGALORE)
• Duration Of Justice: 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 27-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A RAMESH KUMAR
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-C BENCH : BANGALORE BEFORESHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO . 3417 / BANG/201 8 ASSESSMENT YEAR : 20 1 4 - 1 5 M/S. WYZMINDZ SOLUTIONS PVT. LTD., NO. 19/3, SRINIVASA INDUSTRIAL ESTATE, KANAKAPURA MAIN ROAD, KONANAKUNTE POST, BANGALORE 560 062. PAN: AABCW0126B VS. THE INCOME TAX OFFICER, WARD 7 (1) (4), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI A. RAMESH KUMAR, JCIT (DR) DATE OF HEARING : 1 6 .01.2019 DATE OF PRONOUNCEMENT : 18 . 01 .201 9 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE WHICH IS DIREC TED AGAINST THE ORDER OF LD. CIT (A)-7, BANGALORE DATED 25.10.2018 FOR ASSESSMEN T YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISS IONER OF INCOME-TAX [APPEALS] AND THAT OF THE LEARNED ASSESS ING OFFICER PASSED UNDER SECTION 143[3] OF THE ACT TO THE EXTENT WHICH IS AGAINST THE APPELLANT IS OPPOSED TO LAW, WEIGHT OF EVIDENCE, PR OBABILITIES, FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE. 2. THE APPELLANT DENIES ITSELF LIABLE TO BE ASSESSE D ON A TOTAL INCOME DETERMINED BY THE LEARNED ASSESSING OFFICER AMOUNTI NG TO RS. 58,17,228/- AND CONFIRMED BY THE LEARNED COMMISSION ER OF INCOME- TAX [APPEALS], AS AGAINST THE INCOME REPORTED BY TH E APPELLANT OF RS NIL ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE PROVISIONS OF SECTION 145A APPLIES ONLY IN R ESPECT OF VALUATION OF PURCHASE AND SALE OF GOODS AND INVENTORY AND NOT TO SERVICE CONTRACTS FOR ALL TRANSACTION PRIOR TO 01/04/2017 ( FA 2018) 4. THE PROVISIONS OF SECTION 145A CANNOT BE INVOKED FOR ADDING ITA NO. 3417/BANG/2018 PAGE 2 OF 4 SERVICE TAX TO GROSS RECEIPTS (I.E., SERVICE TAX CA NNOT BE INCLUDED AS PART OF TRADING RECEIPTS UNDER SECTION 145A OF THE INCOME TAX ACT, 1961) FOR AY 201415. 5. THE UNPAID SERVICE TAX LIABILITY CANNOT BE DISAL LOWED UNDER SECTION 43B OF THE INCOME TAX ACT, 1961, WHEN THE SAME IS N OT CLAIMED AS EXPENSE IN P&L ACCOUNT? 6. THE LEARNED OFFICER HAS FAILED TO APPRECIATE THE FACT THAT THE SERVICE TAX AMOUNT HAS NOT BEEN PASSED THROUGH THE PROFIT 8 6 LOSS ACCOUNT AND THE SAME HAS NOT BEEN EXPENSED (I.E., NOT CLAIM ED AS EXPENDITURE), THEREFORE, THE QUESTION OF INVOKING THE PROVISIONS OF SECTION 43B DOES NOT ARISE AND DISALLOWANCE OF SERVICE TAX AMOUNT OF RS. 48,82,245/- IS NOT JUSTIFIABLE. 7. THE DISALLOWANCE OF B/F LOSS OF RS. 9,34,983/- A RISES DUE TO ADDITIONS MADE U/S 43B 86 36 (1)(VA), FOR FY 2012-1 3 86 2013-14, WHICH IS OPPOSED BY APPELLANT IN FILED APPEAL DATED 30.03.2016, WHICH IS STILL UNDER APPEAL PROCEEDING, HENCE ADDITION OF THIS AMOUNT IS NOT JUSTIFIABLE. 8. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] WAS NOT JUSTIFIED IN NOT PROVIDING ONE MORE OPPORTUNITY AND CONSIDERING THE FACT AND CIRCUMSTANCE UNDER WHICH THE ERSTWHILE AUT HORIZED REPRESENTATIVE OF ASSESSEE WAS PREVENTED FROM ATTEN DING THE HEARING BEFORE HIM AND TO PRODUCE THE SUFFICIENT EXPLANATIO N. 9. THE LEARNED ASSESSING OFFICER ALSO ERRED IN LEVY ING THE INTEREST U/ S. 234BOF THE ACT AND THE SAME ARE NOT IN ACCORDANCE W ITH LAW ON THE FACTS AND CIRCUMSTANCES OF THE CASE. FURTHER, THE Q UANTUM, PERIOD AND RATE ARE NOT DISCERNIBLE FROM THE ASSESSMENT ORDER. 10. THE APPELLANT CRAVES LEAVE OF THIS HON'BLE TRIB UNAL TO ADD, ALTER, MODIFY, DELETE OR SUBSTITUTE ANY OR ALL OF THE ABOV E GROUNDS OF APPEAL AS MAY BE NECESSARY AT THE TIME OF HEARING OF THE A PPEAL. 11. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING OF APPEAL, THE APPELLANT PRAYS THAT THE APP EAL MAY BE ALLOWED FOR THE ADVANCEMENT OF SUBSTANTIAL CAUSE OF JUSTICE AND EQUITY. 3. THIS APPEAL IS FILED BY THE ASSESSEE ON 27.12.20 18 AND ON THE SAME DATE, THE NOTICE OF HEARING WAS ISSUED BY THE REGISTRY UN DER RPAD ALONGWITH THE DEFECT MEMO. THIS NOTICE ISSUED BY THE REGISTRY HA S NOT COME BACK UNSERVED AND THEREFORE, SERVICE OF NOTICE IS PRESUM ED. IN SPITE OF THIS, TILL DATE, THE ASSESSEE HAS NOT REMOVED THE DEFECTS POIN TED OUT BY THE REGISTRY AND THERE IS NO APPEARANCE ON THE APPOINTED DATE OF HEARING AND THERE IS NO REQUEST FOR ADJOURNMENT. HENCE THE APPEAL OF TH E ASSESSEE WAS HEARD ITA NO. 3417/BANG/2018 PAGE 3 OF 4 EX-PARTE QUA THE ASSESSEE. THE LD. DR OF REVENUE S UPPORTED THE ORDER OF CIT(A). FIRST ISSUE IN DISPUTE BEFORE THE TRIBUNAL IS THIS AS TO WHETHER THE SERVICE TAX AMOUNT WHICH IS NOT DEBITED TO P&L ACCO UNT CAN BE ADDED BACK U/S. 43B. THIS ISSUE WAS DECIDED BY CIT (A) AS PER PARA 4 OF HIS ORDER AND HENCE, THE SAME IS REPRODUCED HEREINBELOW FOR READY REFERENCE. 4. GROUNDS OF APPEAL 1 & 2 ARE GENERAL IN NATURE AN D HENCE ARE NOT REQUIRED TO BE ADJUDICATED. IN GROUND OF APPEAL 3. THE APPELLANT HAS CONTENDED THAT THE AO HAS FAILED TO APPRECIATE THE FACT THAT THE SERVICE TAX AMOUNT HAS NOT BEEN PASSED THROUGH THE PROFIT & LOSS ACCOUNT AS AN EXPENDITURE, THEREFORE, THE QUESTION OF INVOKING THE PROVISIONS OF SECTION 43B DOES NOT ARISE DISALLOWAN CE OF SERVICE TAX AMOUNT OF RS. 48,82,245/- IS NOT JUSTIFIABLE. THE A O FOUND THAT THE ASSESSEE HAS SHOWN AMOUNT OF RS. 48,82,245/- AS SER VICE TAX PAYABLE. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE 'T HE AO HELD THAT AS PER THE PROVISIONS OF SEC 145A THE ASSESSEE SHOULD HAVE INCLUDED THE SERVICE TAX AMOUNT IN THE RECEIPT IN THE P&L ACCOUN T. THE AO HAS FURTHER NOTED THAT THE PROVISIONS OF SERVICE TAX HA S UNDERGONE CHANGE IN FY 2012-13 TO THE EFFECT THAT THE LIABILITY OF P AYMENT OF SERVICE TAX ARISES THE MOMENT THE ASSESSEE PROVIDES SERVICE OR DEEMED TO HAVE PROVIDED THE SERVICE UNLIKE IN THE EARLIER YEARS WH EN THE SERVICE TAX LIABILITY AROSE ONLY WHEN THE SAME WAS RECEIVED BY THE ASSESSEE. THE ARGUMENT OF THE ASSESSEE THAT THE SERVICE TAX AMOUN T CANNOT BE INCLUDED IN THE RECEIPT AS THE SAME IS NOT TAKEN IN TO P&L ACCOUNT, WAS REJECTED BY THE AO FOR WHICH HE RELIED ON THE DECIS ION OF THE HON'BLE SC IN THE CASE OF CHOWRINGHEE SALES CORPORATION LTD . 4. AS PER ABOVE PARA REPRODUCED FROM THE ORDER OF C IT (A), IT IS SEEN THAT THE ISSUE WAS DECIDED BY CIT (A) BY FOLLOWING THE JUDGE MENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CHOWRINGHEE SALES BUR EAU P. LTD. VS. CIT (1973) 87 ITR 542 IN WHICH IT WAS HELD THAT SALES T AX COLLECTED BY THE ASSESSEE IS REVENUE RECEIPT EVEN IF IT IS SHOWN BY THE ASSESSEE UNDER NON- REVENUE HEAD AND SUCH TREATMENT BY THE ASSESSEE IS NOT DECISIVE. RESPECTFULLY FOLLOWING THIS JUDGEMENT OF HONBLE AP EX COURT, I FIND NO REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. 5. THE SECOND ISSUE INVOLVED IS REGARDING DISALLOWA NCE OF B/F LOSS OF RS. 9,34,983/- DUE TO ADDITIONS MADE U/S. 43B AND 36(1) (VA) FOR FINANCIAL YEARS 2012-13 AND 2013-14 AS PER GROUND NO. 7 RAISED BEFO RE THE TRIBUNAL. THIS ISSUE WAS DECIDED BY CIT (A) IN PARA 6 OF HIS ORDER WHICH IS REPRODUCED HEREINBELOW FOR READY REFERENCE. 6. THE NEXT ISSUE IS THE CONTENTION OF THE APPELLAN T AS REGARDS DISALLOWANCE OF BROUGHT FORWARD LOSS OF RS. 9,34,98 3 WHICH IS ASCRIBED BY THE APPELLANT TO ADDITIONS MADE BY THE AO TO THE RETURNED ITA NO. 3417/BANG/2018 PAGE 4 OF 4 INCOME FOR AY 2013-14 AND AY 2014-15. THUS, IT IS O BSERVED THAT THE APPELLANT UNDERSTANDS THAT THIS ISSUE IS CONSEQUENT IAL AND THE INCOME OF THE APPELLANT FOR THOSE YEARS HAS TO BE COMPUTED AFTER GIVING EFFECT TO THE APPEAL ORDERS FOR THE RESPECTIVE YEARS. THER EFORE. THE AO IS DIRECTED TO VERIFY THE CLAIM OF THE APPELLANT AS RE GARDS BROUGHT FORWARD OF LOSS AND CONSIDER THE SAME AS PER LAW. 6. FROM THE ABOVE PARA, IT IS SEEN THAT LD. CIT(A) HAS DIRECTED THE AO TO VERIFY THE CLAIM OF THE ASSESSEE AS REGARDS BROUGHT FORWAR D OF LOSS AND CONSIDER THE SAME AS PER LAW. IT IS ALSO NOTED BY CIT(A) IN SAME PARA THAT THE ISSUE IN THOSE YEARS I.E. ASSESSMENT YEARS 2013-14 AND 20 14-15, THE INCOME OF THE ASSESSEE HAS TO BE COMPUTED AFTER GIVING EFFECT TO THE APPEAL ORDERS FOR THE RESPECTIVE YEARS. CONSIDERING THE FACTS OF PRE SENT CASE ON THIS ISSUE ALSO, I FIND NO INFIRMITY IN THE ORDER OF CIT(A). 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- (ARUN KUMAR GARODIA) ACCOUNTANT MEMBER BANGALORE, DATED, THE 18 TH JANUARY, 2019. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.