FOUR SEASONS (INDIA)TOURS, Jaipur V. DCIT, Jaipur

ITA 570/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5461 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH JCIT DHK
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 570/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 . M/S. FOUR SEASONS (INDIA) TOURS, D-42, WHISPERING PALMS, SUBHASH MARG, C-SCHEME, JAIPUR. CUKE VS. THE DCIT, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAAFF 6848 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (C.A) JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08.02.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 12/02/2016. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THE PRESENT APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A)-II, JAIPUR DATED 14.03.2013. THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT (A) HAS GROSSLY ERRED IN SUSTAINING THE ADDITION OF RS. 7,33,467/- MADE ON ACCOUNT OF UNPAID SERVICE TA X TILL THE FILING OF INCOME-TAX RETURN. 2 ITA NO. 570/JP/2013 A.Y. 2008-09. M/S. FOUR SEASONS (INDIA) TOURS VS. DCIT, CIRCLE-6 , JAIPUR. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF TOUR OPERATION AND TAXI & BUSES PLYING ON HIRE AND TRADING OF SHARES. THE ASSESSEE HAS FILED ITS RETUR N OF INCOME ON 29.09.2008 DECLARING TOTAL INCOME OF RS. 31,71,310/-. DURING T HE ASSESSMENT PROCEEDINGS, DISALLOWANCE OF RS. 7,33,467/- ON ACCOUNT OF SERVICE TAX WAS MADE UNDER SECTION 43B OF THE IT ACT. THE APPELLANT BEFORE US WAS AGGRIE VED BY THE ORDER PASSED BY THE AO, THEREFORE, HAS ASSAILED THE ORDER BEFORE LD. CIT (A). HOWEVER, THE LD. CIT (A) CONFIRMED THE ORDER PASSED BY THE AO. 3. THE PRIMARY GROUND FOR CHALLENGE BEFORE US OF THE LD. A/R FOR THE ASSESSEE IS THAT THE SERVICE TAX IS REQUIRED TO BE DEPOSITED AFTER REALIZATION FROM THE CUSTOMERS HENCE WAS NOT PAYABLE AS PER LAW. IN THIS REGARD IT HAS BEEN SUBMITTED THAT AS ON 31.03.2008 AN OUTSTANDING AMOU NT OF RS. 12,90,173/- TOWARDS THE SERVICE TAX WAS THERE AND OUT OF THE SAID AMOUNT, THE ASSESSEE HAS PAID A SUM OF RS. 6,14,627/- AS ON 02.07.2008. HOWE VER, THE BALANCE AMOUNT WAS NOT RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS AGAINST THE BILLS RAISED FOR SERVICES. THE SAID AMOUNT WAS NOT OFFERED IN P & L A CCOUNT OF THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE MAINTAINED T HE BOOKS OF ACCOUNT ON ACCRUAL BASIS AND SHOWS THAT THE TAX PAYABLE ON THE GROSS AMOUNT BILLED AND NOT THE AMOUNT PAYABLE BY THE ASSESSEE COMPANY. SINCE THE SERVICE TAX IS TO BE 3 ITA NO. 570/JP/2013 A.Y. 2008-09. M/S. FOUR SEASONS (INDIA) TOURS VS. DCIT, CIRCLE-6 , JAIPUR. 3 PAID ON THE AMOUNT REALIZED, HENCE NO DISALLOWANCE C AN BE MADE. IN THIS REGARD, THE LD. A/R FOR THE ASSESSEE RELIED UPON RU LE 6 AS PREVAILING DURING THE ASSESSMENT YEAR 2008-09. IN THIS REGARD, THE LD. A /R FURTHER RELIED ON THE JUDGMENT OF HONBLE MUMBAI HIGH COURT IN THE MATTER OF CIT VS. OVIRA LOGISTICS PVT. LTD. (2015) 377 ITR 0129 (BOM.) AND HONBLE DEL HI HIGH COURT IN THE MATTER OF CIT VS. NOBLE AND HEWITT (I) PVT. LTD. (2008) 305 ITR 324 (DELHI). IT WAS FURTHER SUBMITTED THAT SINCE THE SERVICE TAX WAS NOT DEBITED TO THE P & L ACCOUNT, HENCE NOT CLAIMED AS DEDUCTION FROM THE IN COME BUT THE SERVICE TAX AMOUNT WAS KEPT AS A LIABILITY. SINCE NO DEDUCTION ON THIS AMOUNT WAS CLAIMED BY THE ASSESSEE FROM THE INCOME, THEREFORE, NO DISA LLOWANCE CAN BE MADE ON THIS ACCOUNT. 3.1. ON THE OTHER HAND, THE LD. D/R FOR THE REVENUE RELIED UPON THE ORDER PASSED BY THE AUTHORITIES BELOW. 3.2. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD .IN THE PRESENT CASE, SINCE SERVICE TAX WAS NOT PAYABLE BY T HE ASSESSEE, THE RIGOR OF SECTION 43B OF THE ACT COULD NOT BE APPLIED TO ITS CASE. APART FROM THE ABOVE, WE FIND THE DELHI HIGH COURT IN THE CASE OF CIT V. NOBLE AND HEWITT (I) (P.) LTD. [2008] 305 ITR 324 / 166 TAXMAN 48 (DELHI) HAS ON IDENTICAL ISSUE TAKEN THE VIEW THAT PROVISIONS OF SEC.43B CANNOT BE INVOKED UN LESS THE ASSESSEE HAS CLAIMED BY WAY DEDUCTION THE AMOUNTS SPECIFIED U/S.4 3B WITHOUT MAKING ACTUAL 4 ITA NO. 570/JP/2013 A.Y. 2008-09. M/S. FOUR SEASONS (INDIA) TOURS VS. DCIT, CIRCLE-6 , JAIPUR. 4 PAYMENT. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE COURT IN THIS REGARD: '5. LEARNED COUNSEL FOR THE REVENUE URGES THAT THE DECISION OF THE CALCUTTA HIGH COURT IN CHOWRINGHEE SALES BUREAU P. LTD. [1977] 110 ITR 385 , COVERS THE POINT IN ITS FAVOUR. WE ARE UNABLE TO AGREE. IN THAT CASE, IT WAS HELD THAT THE LIABILITY TO PAY SAL ES TAX AROSE THE MOMENT A SALE OR PURCHASE WAS EFFECTED AND IF AN ASS ESSEE WAS MAINTAINING ACCOUNTS ON THE MERCANTILE SYSTEM IT WOU LD BE ENTITLED TO DEDUCTION OF THE ESTIMATED LIABILITY OF SALES TA X, EVEN THOUGH SUCH SALES TAX HAD NOT BEEN PAID TO THE SALES TAX AUTHOR ITIES. THE QUESTION THERE CONCERNED WAS THE ENTITLEMENT OF THE ASSESSEE TO DEDUCTION UNDER SECTION 10(1) AND 10(2)(XV) OF THE INDIAN INCOME- TAX ACT, 1922. THE DECISION IS CLEARLY DISTINGUISHAB LE IN ITS APPLICATION TO THE PRESENT CASE. HERE WE ARE CONCERNED WITH AN AS SESSEE WHO HAS NOT EVEN CLAIMED ANY DEDUCTION ON THE GROUND OF SERVICE TAX AND HAS NOT DEBITED THE AMOUNT TO ITS PROFIT AND LO SS ACCOUNT. MOREOVER, THE PROVISIONS OF SECTION 43B OF THE ACT ARE QUITE CLEAR IN THIS REGARD. THE DECISION OF THE CALCUTTA HIGH COURT IN CHOWRINGHEE SALES BUREAU P. LTD'S CASE [1977] 110 ITR 385 WAS NOT IN THE CONTEXT OF THE APPLICABILITY OF SECTION 43B OF THE ACT. 6. IN OUR OPINION, SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE PROFIT AND LOSS ACCOUNT AS AN EXPENDITURE NOR DID T HE ASSESSEE CLAIM ANY DEDUCTION IN RESPECT OF THE AMOUNT AND CONSIDER ING THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOU NTING, THE QUESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED WOU LD NOT ARISE. 7. LEARNED COUNSEL FOR THE REVENUE SUBMITS THAT THE ASSESSEE HAS SOUGHT TO EVADE TAX UNDER THE MERCANTILE SYSTEM OF ACCOUNTING. WE ARE OF THE VIEW THAT IT IS NOT FOR THE REVENUE AUTHO RITIES TO TELL THE ASSESSEE HOW TO MAINTAIN ITS ACCOUNTS.' FURTHER AS FAR AS SERVICE TAX IS CONCERNED, AS PER THE LAW PREVAILING DURING THE PREVIOUS YEAR, THE LIABILITY TO PAY THE SAME ARISES ONLY ON RECEIPT BY THE ASSESSEE. SINCE THE LIABILITY TO PAY SERVICE TAX DO ES NOT EXIST IN THE PRESENT CASE, 5 ITA NO. 570/JP/2013 A.Y. 2008-09. M/S. FOUR SEASONS (INDIA) TOURS VS. DCIT, CIRCLE-6 , JAIPUR. 5 THE SERVICE TAX CANNOT BE SAID TO BE 'PAYABLE' AND THEREFORE PROVISIONS OF SEC.43-B OF THE ACT COULD NOT ALSO BE INVOKED. 3.3. THEREFORE, WE HAVE NO HESITATION TO SET ASIDE TH E ORDER PASSED BY THE AUTHORITIES BELOW. ACCORDINGLY, THE APPEAL OF THE AS SESSEE IS ALLOWED. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 12/02/2016. SD/- SD/- VH-VKJ-EHUK ( YFYR DQEKJ ) (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 12/02/ 2016. DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1 . VIHYKFKHZ @ THE APPELLANT- M/S. FOUR SEASONS (INDIA) TOURS, JAIPU R. 2. IZR;FKHZ @ THE RESPONDENT- THE DCIT, CIRCLE-6, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 570/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR