DCIT 9(3)(1), MUMBAI V. F.A.C.E. ENTERTAINMENT P.LTD, MUMBAI

ITA 5016/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0518 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 09-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT AND SHRI D.T. GARASIA, JUDICIAL MEMBER ITA NO.5016 /MUM/2015 (ASSESSMENT YEAR: 2010-11) THE DY. CIT - 9(3)(1) VS. M/S. FACE ENTERTAINMENT P. LTD . ROOM NO. 418, 4TH FLOOR AAYAKAR BHAVAN, M.K. MARG MUMBAI 400020 402, 4TH FLOOR, SNEH SADAN MAIN AVENUE, OFF LINKING ROAD SANTACRUZ (W), MUMBAI 400064 PAN AAACF8703C APPELLANT RESPONDENT APPELLANT BY: SHRI T.A. KHAN RESPONDENT BY: NONE DATE OF HEARING: 05.07.2017 DATE OF PRONOUNCEMENT: 08.08.2017 O R D E R PER D.T. GARASIA, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE CIT(A)-16, MUMBAI DATED 30.07.2015 FOR A.Y. 2010-11 . 2. THE SHORT FACTS OF THE CASE ARE THAT DURING THE ASS ESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS SH OWN STATUTORY LIABILITY TO THE TUNE OF ` 1,34,50,162/-. THE AO FURTHER OBSERVED THAT IN THE OBSERVATIONS MADE BY THE TAX AUDITORS REPORT IT WA S CERTIFIED BY THE AUDITOR THAT THE STATUTORY LIABILITY INCLUDES SERVI CE TAX LIABILITY OF ` 1,27,59,359/- AS ON 31 ST MARCH, 2010. A SHOW CAUSE NOTICE WAS ISSUED BY THE AO ASKING WHY THE UNPAID SERVICE TAX SHOULD NOT BE DISALLOWED AS DONE IN THE EARLIER ASSESSMENT YEARS. THE AO, RELYI NG UPON THE EARLIER ASSESSMENT ORDER FOR A.Y. 2008-09 FINALLY DISALLOWE D THE QUANTUM OF UNPAID SERVICE TAX LIABILITY CLAIMED BY THE ASSESSE E. THE MATTER WAS CARRIED TO THE CIT(A) AND THE CIT(A) ALLOWED THE CLAIM BY R ELYING UPON THE ASSESSEES OWN CASE FOR A.Y. 2008-09 WHEREIN THE TR IBUNAL OBSERVED AS UNDER: - ITA NO. 5016/MUM/2015 M/S. FACE ENTERTAINMENT P. LTD. 2 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDER OF THE REVENUE AUTHORITIES. WE OBSERVE THAT AO MADE DISALL OWANCE OF RS.87,31,663/- UNDER SECTION 43B OF THE ACT IN RESP ECT OF OUTSTANDING SERVICE TAX LIABILITY. WE OBSERVE THAT LD CIT (A) D ELETED SAID DISALLOWANCE BY CONSIDERING THE SUBMISSIONS OF ASSE SSEE AND THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. BOBLE & HEWITT (I) PVT. LTD., 305 ITR 324/166 TAXMAN 48 AND ALSO CONSIDERING THE DECISION OF ITAT CHENNAI BENCH IN THE CASE OF A CIT VS. REAL IMAGE MEDIA TECHNOLOGIES (P) LTD., 306 ITR (AT) 106 (CHEN NAI). THESE ARE RELEVANT FOR THE PROPOSITION THAT THE AMOUNT OF SER VICE TAX COLLECTION BY THE ASSESSEE NEITHER DEBITED TO THE ACCOUNTS NOR CL AIMED BY THE ASSESSEE AS DEDUCTION COULD NOT BE DISALLOWED. HEAD -NOTE OF THE SAID DELHI HIGH COURT JUDGMENT IS REPRODUCED AS UNDER: SECTION 43B OF THE INCOME TAX ACT, 1961 BUSINESS DISALLOWANCES CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYMENT A SSESSMENT YEAR 1999- 2000 ASSESSEE WAS FOLLOWING MERCANTILE SYST EM OF ACCOUNTING ASSESSEE DID NOT DEPOSIT PART OF SERVI CE TAX COLLECTIONS WITH CONCERNED AUTHORITIES ASSESSEE NEITHER CLAIM ED ANY DEDUCTION IN THIS REGARD NOR DID IT DEBIT SAID AMOUNT AS AN E XPENDITURE IN PROFIT AND LOSS ACCOUNT ASSESSING OFFICER AFTER DISALLOW ING SAID AMOUNT, MADE ADDITION TO ASSESSEES INCOME WHETHER IN VIE W OF FACTS ANY QUESTION OF DISALLOWING DEDUCTION NOT CLAIMED WOULD ARISE HELD, NO. 5. WE AGREE WITH LD CIT (A) THAT THE QUESTION OF DI SALLOWANCE WILL ARISE UNDER SECTION 43B OF THE ACT ONLY IF THE ASSE SSEE HAS CLAIMED ANY DEDUCTION IN THE PROFIT & LOSS ACCOUNT. THEREFO RE, WE AGREE WITH LD CIT (A) THAT DISALLOWANCE MADE BY AO BY MAKING T HE ADDITION OF OUTSTANDING SERVICE TAX LIABILITY AT THE END OF THE YEAR IS NOT JUSTIFIED. ACCORDINGLY, WE UPHOLD THE ORDER OF CIT (A) AND REJ ECT GROUND OF APPEAL TAKEN BY THE DEPARTMENT. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. 3. DURING THE COURSE OF HEARING THE LEARNED D.R. DID NOT BRING ANY CONTRARY DECISION AGAINST THE FINDINGS OF THE CIT(A ). THEREFORE, WE HAVE NO OPTION EXCEPT TO ENDORSE THE ACTION OF THE CIT(A). 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH AUGUST, 2017. SD/ - SD/ - (P.K. BANSAL) (D.T. GARASIA) VICE PRESIDENT JUDICIAL MEMBER MUMBAI, DATED: 8 TH AUGUST, 2017 ITA NO. 5016/MUM/2015 M/S. FACE ENTERTAINMENT P. LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -16, MUMBAI 4. THE PR. CIT - 9, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.