M/S WISDOM CORPORATES, RAIPUR V. C.I.T-2, RAIPUR

ITA 68/BIL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0197 (ITAT-RAIPUR)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MISHRA
• Assessee Lawyers: R B DOSHI
• Section: 43B; 143(3); 263

Judgement Text

1 ITA NO. 68/RPR/2015. IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER, AND SHRI C.M. GARG, JUDICIAL MEMBER.. I.T.A. NO.68/RPR/2015 ASSESSMENT YEAR :2010 - 11.. M/S WISDOM CORPORAT ES , COMMISSIONER OF INCOME TAX - 2, RAIPU - (C.G.) - 492001., VS. RAIPUR. PAN AA AFW8467B APPELLANT. RESPONDENT. APPELLANT BY : SHRI R.B. DOSHI. RESPONDENT BY :SHRI P .K. MISHRA. DATE OF HEARING : 21 - 10 - 2016 DATE OF PRONOUNCEMENT : 27 TH DECEMBER, 2016. O R D E R. PER SHAMIM YAHYA, A.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED U/S 263 OF THE I.T. ACT BY THE LEARNED COMMISSIONER OF INCOM E TAX - 2, RAIPUR DATED 18 - 03 - 2015 AND PERTAINS TO ASSESSMENT YEAR 2010 - 11. THE GROUNDS OF APPEAL READ AS UNDER : 1. THE ORDER U/S 263 IS ILLEGAL, BAD - IN - LAW AND VOID AB - INITIO. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, COMMISSIONER OF INCOME - TAX ERRED IN MAKING REVISION, BY INVOKING PROVISION OF SECTION 263, IN ORIGINAL ASSESSMENT ORDER PASSED U/S 143(3) ON 21.01.2013 FOR THE A.Y. 2010 - 11 AS ORIGINAL ASSESSMENT ORDER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON THE POINT RAISED B Y HIM. 2. IN THIS CASE THE LEARNED CIT NOTED THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS FOUND TO BE ERRONEOUS IN SO FAR AS IT WAS PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY , A DETAILED NOTICE U / S 263 OF THE I T ACT W AS ISSUED TO 2 ITA NO. 68/RPR/2015. THE ASSESSEE ON 23.02.2015 CITING THE BELOW - MENTIONED REASONS FOR PROPOSED REVISION : ' O N VERIFICATION OF RECORD FOR A. Y 2010 - 11, IT IS FOUND THAT YOU HAD SHOWN LIABILITY OF RS . 9 , 22,923 1 - (901116+14521 + 7 286) TOWARDS SERVICE TAX PAYABL E INCLUDING C ESS IN THE SCHEDULE 'C' 'PROVISIONS' OF B I S AS ON 21 MARCH 2010 . FURTHER IN CLAUSE . 2(I)(B) OF 3CD REPORT REGARDING PAYMENT OF GOVERNMENT DUES ON OR BEFORE DUE DATE , THE CHARTERED ACCOUNTANT HAD MENTIONED AS NIL . SINCE YOU HAD SHOWN JOB WORK RECEIPTS NET OF TAXES I . E . EX C LUDING SERVI CE TAX, APPLICABILIT Y OF PROVISION OF SECTION 43B ARE C LEARL Y WARRANT E D . A S YOU HAD NOT PAID THE PAYABLE AMOUNT OF SERVICE TAX WITHIN THE DUE DATE OF FILING OF RETURN HENCE , AS PER ABOVE PROVISION THE AMOUNT OF RS. 9,22 , 923 1 - WAS LIABLE TO BE ADDED TO YOUR TOTAL INCOME , WHI C H THE A O HAD FAILED TO ADD .. ' 3. IN RESPONSE THE ASSESSEE SUBMITTED AS UNDER . . . . . . . . THAT YOUR HONOUR SECTION 43B STARTS WITH AN NON - OBSTANTE CLAUSE AND SPECIFIES THAT THE DEDUCTION 'OTHERWISE ALLOWABLE ' UNDER THIS ACT SHALL NOT ALLOWED UNLESS IT IS ACTUALLY PAID. THAT MEANS THAT THE CLAIM SHOULD BE FIRST PREFERRED BY THE ASSESSEE AND THE SAME COULD BE DISALLOWED UNDER SECTION 43B ONLY FOR THE REASON OF FAILURE TO MAKE AC TUAL PAYMENT . THAT IN OUR CASE ASSESSEE HAD NOT PREFERRED ANY CLAIM TOWARD SERVICE TAX , THERE WA S NO QUESTION OF DISALLOWING TH E SAME. THAT AS PER SECTION 145A ALSO CLEARLY PROVIDES THAT FOR THE PURPOS E O F DETERMINING INCOME UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION, THE AMOUNT OF PURCHASE AND SALES I . E. TURNOVER WOULD IN C LUD E AN Y DUTY , TAX, CASE OR FEES. THEREFORE THE RIGOUR OF SECTION 43B MA Y B E APPLICABLE IN CASE OF SALES TAX OF EXCISE DUT Y BUT THE SAME CANNOT B E SAID TO BE THE POSITION IN CASE OF SERVICE TAX BECAUSE SERVICE PROVIDER IS MEREL Y ACTING AS AN AGENT OF THE GOVERNMENT , ASSESSEE COLLECTS S ER VI C E TA X ON BEHAL F OF GOVERNMENT AND PA Y THE SAME TO G OVERNMENT . TH E R E FOR E ON THI S ACCOUNT ALSO ADDITION UNDER SECTION 43B COULD NOT B E M A D E .' 3. LEARNED CIT WAS NOT SATISFIED. HE OBSERVED THAT THE SERVICE TAX OUTSTANDING WAS ATTRACTING SECTION 43B INSPITE OF THE FACT THAT SERVICE TAX IS DIRECTLY SHOWN IN THE BALANCE SHEET AND IS NOT CLAIMED IN THE PROFIT & LOSS ACCOUNT. HE HELD THAT EVEN IN THAT CASE SERVICE T A X IS PART OF THE TURNOVER AND IS LIABLE TO BE ADDED TO INCOME , HENCE HE HELD THAT THE ASSESSEE WAS NOT ENTITLED TO CLAIM BENEFIT OF SERVICE TAX IN THE BALANCE SHEET AND THE AO HAS FAILED TO EXAMINE THIS ISSUE AT THE TIME OF ASSESSMENT PROCEEDINGS . THE ASSESSMENT ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF 3 ITA NO. 68/RPR/2015. REVENUE. THUS LEARNED CIT DIRECTED TO REFRAME THE ASSESSMENT AFTER CONSIDERING THE ABOVE SAID ISSUES. 4. AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE SERVICE TAX IS NOT AT ALL THE PART OF THE TURNOVER. THAT T HE ASSESSEE COLLECTED SERVICE TAX ON BEHALF OF THE GOVERNMENT AND PA ID THE SAME TO THE GOVE RNMENT . THAT I T IS SETTLED LAW THAT THE TURNOVER WOULD NOT INCLUDE SERVICE TAX. THAT F OLLOWING CAS E LAWS SUPPORT THIS PROPOSITION: HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. NOBLE AND HEWITT (I) P. LTD. 305 ITR 324. IN THIS CASE IT WAS HELD THAT SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE PROFIT AND LOSS ACCOUNT EITHER AS AN EXPENDITURE NOR DID THE ASSESSEE CLAIM ANY DEDUCTION IN RESPECT OF THE AMOUNT AND CONSIDERING THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THE QUESTION OF DISALLOWING THE DEDUCTION U/S 43B NOT CLAIMED WOULD NOT ARISE. 6. UPON CAREFUL CONSIDERATION WE FIND THAT S INCE IT HAS BEEN LEGALLY HELD BY HONBLE HIGH COURTS THAT SERVICE TAX LIABILITY WHICH HAVE NOT BEEN ROUTED THROUGH PROFIT AND LOSS A CCOUNT DO NOT COME UNDER THE AMBIT OF SECTION 43B, THE REVISIONARY POWERS EXERCISED BY THE LEARNED CIT ON THIS ISSUE IS NOT SUSTAINABLE. ACCORDINGLY WE SET ASIDE THE ORDER OF LEARNED CIT AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7 . IN THE RESULT THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON THIS 27 TH DAY OF DECEMBER , 2016. SD/ - SD/ - ( C.M. GARG) ( SHAMIM YAHYA ) JUDICIAL MEMBER. ACCOUNTANT MEMBER. DATED : 27 TH DECEMBER, 2016. 4 ITA NO. 68/RPR/2015. COPY F ORWARDED TO : 1. M/S WISDOM CORPORATES. PRABHA YASHODA SADAN, SADAR BAZAR, RAIPUR (C.G.) - 492001. 2. I.T.O. - 2(1) , RAIPUR. 3. C.I.T. - 2 , RAIPUR. 4. D.R., ITAT, RAIPUR. 5. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGIS TRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.