DCIT, Jaipur V. APOORVA INSUANCE BROKERS PVT. LTD., Jaipur

ITA 774/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5309 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 19-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUROSHOTTAM KASHYAP
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Opportunity of being heard
• Section: 43B; 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, 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.774/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2010-11 . DY. COMMISSIONER OF INCOME-TAX, CIRCLE-2, JAIPUR. CUKE VS. M/S.APOORVA INSURANCE BROKERS PVT. LTD, 305, ANUKAMPA-I, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAECA 6838 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI PUROSHOTTAM KASHYAP (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY S BY : SHRI P.C. PARWAL (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 11.04.2016. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 13/05/2016. VKNS'K@ ORDER PER SHRI T.R. MEENA, A.M. THE APPEAL FILED BY REVENUE IS EMANATING FROM THE ORDER DATED 16.09.2014 PASSED BY THE LEARNED CIT (A)-I, JAIPUR FOR THE A.Y . 2010-11. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE DISAL LOWANCE OF SERVICE TAX AMOUNTING TO RS. 17,34,459/- MADE U/S 43B OF TH E INCOME TAX ACT, 1961. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE ADDIT ION MADE BY AO ON ACCOUNT OF COMMISSION OF RS. 20,81,006/- SHORT D ECLARED BY ASSESSEE. 2 ITA NO. 774/JP/2014 DCIT VS. APPORVA INSURANCE BROKERS P. LTD. 2. THE ASSESSEE IS A INSURANCE BROKER. HE FILED HIS RETURN OF INCOME FOR A.Y. 2010-11 ON 21.09.2010 AT RS. 3,60,07,316/-. THE CA SE WAS SCRUTINIZED UNDER SECTION 143(3) OF THE IT ACT. THE AO OBSERVED THAT THE ASSESSEE HAS TAKEN THE PLEA THAT GROSS INCOME REFLECTED IN THE FORM NO. 26AS IN CLUDES SERVICE TAX OF RS. 83,20,144/- WHICH WAS ACTUALLY NOT INCOME AND, THER EFORE, HAS NOT BEEN BOOKED IN THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE. THEREFO RE, THE AO HAS GIVEN REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE ON THIS ISSUE. AFTER CONSIDERING THE ASSESSEES REPLY, HE HELD THAT IN THE FORM OF SERVI CE TAX RETURNS OF 2 YEARS, THE ASSESSEE HAD DEPOSITED RS. 65,85,685/- AS SERVICE T AX. NO PROOF OF PAYMENT OF BALANCE SERVICE TAX OF RS. 17,34,459/- WAS GIVEN BY THE ASSESSEE. THEREFORE, HE DISALLOWED THE SAME UNDER SECTION 43B OF THE IT ACT . IN APPEAL, THE LD. CIT (A) ALLOWED THE APPEAL BY OBSERVING THAT AS PER THE PRO VISIONS OF RULE 6(1) OF SERVICE TAX RULES, 1994, THE APPELLANT WAS REQUIRED TO PAY THE SERVICE TAX TO THE CENTRAL GOVERNMENT IMMEDIATELY FOLLOWING THE CALENDAR MON TH IN WHICH THE PAYMENTS ARE RECEIVED TOWARDS THE VALUE OF TAXABLE SERVICES. T HUS THE LIABILITY TO PAY THE SERVICE TAX WAS FASTENED ON THE ASSESSEE ONLY AFTER THE PAY MENTS ON WHICH SERVICE TAX WAS DUE, WERE RECEIVED. THIS SITUATION HAS BEEN CHANGE D WITH EFFECT FROM 01.04.2011 WHEN THE WORDS SERVICE IS DEEMED TO BE PROVIDED A S PER THE RULES FRAMED IN THIS REGARD WERE SUBSTITUTED FOR THE WORDS MENTIONED I N RULE 6(1). THIS FACT CLEARLY INDICATES THAT BEFORE 01.04.2011, THE LIABILITY TO PAY SERVICE TAX ARISE ONLY WHEN THE PAYMENTS WERE RECEIVED TOWARDS THE VALUE OF TAXABLE SERVICES AND THIS LIABILITY WAS TO BE DISCHARGED IMMEDIATELY FOLLOWING THE CALENDAR MONTH IN WHICH THE PAYMENT WAS RECEIVED. IN THE PRESENT CASE, THE AMOUNT OF S ERVICE TAX WAS STILL OUTSTANDING 3 ITA NO. 774/JP/2014 DCIT VS. APPORVA INSURANCE BROKERS P. LTD. AS HAD BEEN REFLECTED IN THE BALANCE SHEET. SINCE THE PROVISIONS OF SECTION 43B ARE NOT ATTRACTED, THEREFORE, HE ALLOWED THE APPEAL. 3. NOW THE REVENUE IS IN APPEAL BEFORE US. 3.1. THE LD. D/R VEHEMENTLY SUPPORTED THE ORDER OF THE AO. 3.2. ON THE OTHER HAND, THE LD. A/R FOR THE ASSESSE E HAS REITERATED THE SUBMISSIONS AS MADE BEFORE LD. CIT (A). HE HAS DRA WN OUR ATTENTION TO SECTION 43B(A) AND REFERRED THE EXPRESSION ANY SUM PAYABLE . THE WORD PAYABLE WOULD MEAN THAT THERE IS AN OBLIGATION ON THE PART OF THE PAYEE TO MAKE THE PAYMENT WHICH IS ALREADY DUE. SERVICE TAX IS PAYABLE ON RE CEIPT BASIS. THEREFORE, UNLESS THE AMOUNT OF SERVICE TAX CHARGED IS NOT RECEIVED FROM THE SERVICE RECIPIENT, THERE IS NO LIABILITY OF THE SERVICE PROVIDER TO MAKE THE PAYME NT OF SERVICE TAX TO THE CENTRAL GOVERNMENT. THE ASSESSEE HAS NOT RECEIVED SERVICE T AX OF RS. 17,34,459/- DURING THE YEAR, THEREFORE, SECTION 43B IS NOT APPLICABLE. HE RELIED UPON JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOB LE AND HEWITT (I) PVT. LTD., (2008) 305 ITR 324 (DELHI) AND IN THE CASE OF ACIT VS. REA L IMAGE MEDIA TECHNOLOGIES (P) LTD., 306 ITR (AT) 106 AND ARGUED THAT BOTH THE CAS ES ARE SQUARELY APPLICABLE ON THE FACTS OF THE CASE. THEREFORE, HE REQUESTED TO UPHELD THE ORDER OF LD. CIT (A). 3.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. IT IS UNDISPUTED FACT THAT ASSESSEE HAS NOT RECEIVED SERVICE TAX OF RS.17,34,459/- FROM THE SERVICE RECIPIENT. THE RUL E 6(1) OF SERVICE TAX RULES, 1994 IN SPECIFIC WAS AMENDED WITH EFFECT FROM 01.04.2011 WHICH SHOWS THAT UPTO 01.04.2011 THE SERVICE TAX LIABILITY WAS LIABLE TO BE PAID ON THE BASIS OF SERVICE TAX RECEIVED OR PAYABLE AND DEPOSITED TO THE GOVERNMENT EXCHEQUER. THE CASE LAWS REFERRED BY THE ASSESSEE ARE SQUARELY APPLICABLE AS ASSESSEE HAS NOT DEBITED SERVICE 4 ITA NO. 774/JP/2014 DCIT VS. APPORVA INSURANCE BROKERS P. LTD. TAX AS EXPENSES IN THE PROFIT & LOSS ACCOUNT AND AS SESSEE WAS ALSO ACTING AS AGENT ON BEHALF OF THE SERVICE RECIPIENT. ACCORDINGLY, W E UPHELD THE ORDER OF LD. CIT (A). 4. GROUND NO. 2 IS AGAINST DELETING THE ADDITION OF COMMISSION OF RS. 20,81,006/-. THE AO OBSERVED THAT AS PER THE ANNEXU RE-02 FURNISHED BY THE COMPANY ALONG WITH THE RETURN, IT HAS BEEN CLAIMED THAT ASSESSEE HAS SHORT RECEIVED INCOME FROM THE INSURANCE COMPANY RS. 20,81,006/-. THE AO GAVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE ON THIS ISSUE. THE ASSESSEE HAS FILED THE REPLY WHICH HAS BEEN CONSIDERED. THE ASSESSEE HAS NOT PROVED THAT INCOME OF RS. 8,95,326/- HAS BEEN CONSIDERED FOR A.Y. 2009-10 AS NO DOCUMENTARY EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE. THE REMAINING DIFFER ENCE OF RS. 11,77,885/- WAS DUE TO REVERSAL OF INCOME ON WHICH TDS HAD ALREADY BEEN DEDUCTED BY M/S. KOTAK MAHINDRA OLD MUTUALLIFE INSURANCE LTD. THE ASSESSE E HAS FURNISHED LETTER FROM M/S. KOTAK MAHINDRA OLD MUTUALLIFE INSURANCE LTD. ABOUT THE REVERSAL OF THE INCOME, BUT THE AO HAS NOT CONVINCED WITH THE SUBMISSION OF THE ASSESSEE BY HOLDING THAT FIRST OF ALL AMOUNT OF BROKERAGE RECOVERY AND THE INCOME SHOWN SHORT IN ASSESSEES REPLY DID NOT MATCH. FURTHER, NO EVIDENCE HAS BEEN PLACED ON RECORD TO SUBSTANTIATE THAT THE RECOVERY OF BROKERAGE WAS STILL FORMING A PART OF FORM NO. 26AS. THE DEDUCTOR COMPANY HAD NOT CLARIFIED THAT THE TDS HAS BEEN DED UCTED ON THE ABOVE AMOUNT OF BROKERAGE RECOVERY AND THAT THIS AMOUNT WAS STILL B EING REFLECTED IN FORM NO. 26AS. THEREFORE, HE MADE THE ADDITION OF RS. 20,81,006/- IN THE INCOME OF THE ASSESSEE. 5. BEING AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT (A), WHO HAD ALLOWED THE APPEAL BY OBSERVIN G THAT RS. 8,95,326/- WAS DUE TO BE ACCRUED INCOME FOR WHICH PROVISION HAS BEEN MADE IN THE BOOKS OF ACCOUNT FOR A.Y. 2009-10. IT WAS NOTED FROM THE SCHEDULE-9 OF T HE BALANCE SHEET THAT THIS 5 ITA NO. 774/JP/2014 DCIT VS. APPORVA INSURANCE BROKERS P. LTD. AMOUNT HAS BEEN SHOWN AS COMMISSION ACCRUED BUT N OT DUE UNDER THE HEAD OTHER CURRENT ASSETS. IN VIEW OF THE CLEAR ACCOU NTING OF THIS AMOUNT IN THE BALANCE SHEET AS ON 31.03.2009, THE SAME CANNOT BE ADDED AGAIN IN THE ASSESSMENT YEAR UNDER CONSIDERATION. 6.1. ADDITION OF OTHER DIFFERENCE OF RS. 11,77,885/ - HAD BEEN MADE ON THE GROUND THAT NO EVIDENCE HAS BEEN PLACED TO SUBSTANTIATE TH AT RECOVERY OF BROKERAGE WAS STILL FORMING PART OF FORM NO. 26AS. THE ASSESSEE HAS FI LED A LETTER FROM M/S. KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD. DATED 8.3.2 013 WHICH SHOWS THAT GROSS BROKERAGE HAD BEEN REDUCED BY RS. 12,19,079/-. THI S AMOUNT WAS MORE THAN RS. 11,77,885/-, HENCE ADDITION OF RS. 11,77,885/- WAS DELETED. 7. NOW THE REVENUE IS BEFORE US. 7.1. THE LD. D/R SUPPORTED THE ORDER OF THE AO. 7.2. AT THE OUTSET, THE LD. A/R FOR THE ASSESSEE SU BMITTED THAT ASSESSEE HAS BEEN MAINTAINING DAY TO DAY BOOKS OF ACCOUNT. ALL THE RE CEIPTS ARE DULY ACCOUNTED FOR. THE AO HAD NOT POINTED OUT ANY RECEIPTS WHICH ARE NOT A CCOUNTED FOR. THE RECEIPTS REFLECTED IN FORM 26AS MAY VARY WITH RECEIPTS DECLA RED IN THE PROFIT & LOSS ACCOUNT FOR VARIOUS REASONS, WHICH DOES NOT EMPOWER THE AO TO MAKE ADDITION. RS. 8,95,326/- HAS BEEN SHOWN IN THE A.Y. 2009-10 ON AC CRUAL BASIS. THE RECIPIENT OF THE SERVICE DEDUCTED THE TAX IN THIS YEAR AND, THER EFORE, THIS AMOUNT WAS REFLECTED IN FORM NO. 26AS IN THE YEAR UNDER CONSIDERATION THOUG H SUCH INCOME WAS ACCOUNTED FOR BY THE ASSESSEE IN THE LAST YEAR. IT IS EVIDEN T FROM SCHEDULE-09 OF BALANCE SHEET AS ON 31.03.2009 WHERE THIS AMOUNT WAS APPEARING AS COMMISSION ACCRUED BUT NOT DUE. REMAINING DIFFERENCE OF RS. 11,77,885/- WAS DU E TO M/S. KOTAK MAHINDRA OLD MUTUAL LIFE INSURANCE LTD. DEDUCTED THE TDS ON THE GROSS AMOUNT OF COMMISSION 6 ITA NO. 774/JP/2014 DCIT VS. APPORVA INSURANCE BROKERS P. LTD. CREDITED TO THE ACCOUNT OF THE ASSESSEE. SUBSEQUENT LY, CERTAIN POLICIES WERE CANCELLED AND, THEREFORE, THE AMOUNT OF COMMISSION CREDITED BY THE COMPANY WAS REVERSED. THEREFORE, THIS WAS THE DIFFERENCE ON THE BASIS OF FORM NO. 26AS. IN SUPPORT OF THIS CLAIM, THE ASSESSEE HAS FILED A LET TER FROM THE CONCERNED COMPANY WHO HAS CLARIFIED THAT THIS AMOUNT HAS BEEN RECOVER ED FROM THE ASSESSEE. THEREFORE, HE REQUESTED TO CONFIRM THE ORDER OF LD. CIT (A). 7.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE HAS SHOWN THE INCOME OF RS. 8 ,95,326/- IN A.Y. 2009-10 AND THE REMAINING DIFFERENCE OF RS. 11,77,885/- WAS DUE TO REVERSAL OF THE AMOUNT TO M/S. KOTAK MAHINDRA OLD MUTUALLIFE INSURANCE LTD. F OR WHICH NECESSARY EVIDENCE HAS BEEN FILED BEFORE THE LOWER AUTHORITIES. THE LD. D/ R HAS NOT CONTROVERTED THE FINDING GIVEN BY THE LD. CIT (A). THEREFORE, WE UPHOLD THE ORDER OF LD. CIT (A). 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 13/05/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13/05/2016 DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT-M/S. APPORVA INSURANCE BROKERS PVT. LTD. 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. 774/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 7 ITA NO. 774/JP/2014 DCIT VS. APPORVA INSURANCE BROKERS P. LTD. SL. NO. DATE INITIAL 1 DATE OF DICTATION 2 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER OTHER MEMBER 3 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S 4 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. 6 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER 9 DATE OF DISPATCH OF THE ORDER 8 ITA NO. 774/JP/2014 DCIT VS. APPORVA INSURANCE BROKERS P. LTD.