M/.s Rudranee Infrastructure Ltd., Aurangabad V. Commissioner of Income-tax ,

ITA 799/PUN/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2351 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-10-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DIVYA BAJPAYEE
• Keywords: Non-deduction of tax
• Section: 43B; 194C; 263; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 799/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2009-10 M/S. RUDRANEE INFRASTRUCTURE LTD., A-9, INDUSTRIAL CO-OPERATIVE SOCIETY, MIDC AREA, RAILWAY STATION, AURANGABAD PAN : AADCR4568A ....... / APPELLANT ' / V/S. COMMISSIONER OF INCOME TAX, AURANGABAD / RESPONDENT ASSESSEE BY : SHRI RAKESH JOSHI REVENUE BY : MS. DIVYA BAJPAYEE / DATE OF HEARING : 26-10-2015 / DATE OF PRONOUNCEMENT : 23-12-2015 * / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX, AURANGABAD DATED 25-02-2014 PASSED U/S. 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR THE ASSESSMENT YEAR 2009-10. IN APPEAL, THE ASSESSEE HAS ASSAILED THE JURISDICTION ASSUMED BY THE COMMISSIONER OF IN COME TAX U/S. 263, AS WELL AS THE ADDITIONS MADE ON MERITS. 2 ITA NO. 799/PN/2014, A.Y. 2009-10 2. THE FACTS OF THE CASE AS EMANATING FROM THE RECORD ARE: THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF CONST RUCTION, DEVELOPMENT AND PROMOTION OF REAL ESTATE. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 ON 31-03-201 0 DECLARING TOTAL INCOME OF RS.5,43,88,630/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY, ACCORDINGLY NOTICE U/S. 143(2) WAS ISS UED TO THE ASSESSEE ON 18-08-2010. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE ASSESSING OFFICER MADE AD HOC ADDITIONS ON ACCOUNT OF LABOUR CHARGES RS.10,00,000/- AND UNDER THE HEAD SITE EXPENSES RS.5,00,000/-. THE ASSESSING OFFICER ASSESSED THE TOTAL INCO ME OF ASSESSEE AS RS.5,58,88,630/- VIDE ASSESSMENT ORDER DATED 19-12- 2011. THE COMMISSIONER OF INCOME TAX AFTER VERIFICATION OF THE REC ORDS FOR THE ASSESSMENT YEAR 2009-10, OPINED THAT THE ASSES SMENT ORDER IS ERRONEOUS, IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE FOLLOWING REASONS: I. THE ASSESSEE HAS DEDUCTED TDS ON ACCOUNT OF SUB-CONT RACT WORK BILLS AMOUNTING TO RS.47,78,994/- DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2009-10 BUT DEPOSITED THE SAME IN THE GOVERNMENT ACCOUNT ON 31-03-2010 I.E. BEYOND THE TIME LIM IT. THE ASSESSEE HAS CLAIMED ENTIRE EXPENDITURE IN RESPECT OF SUB- CONTRACTORS IN THE P & L ACCOUNT, WHICH HAS BEEN ERRO NEOUSLY ALLOWED BY THE ASSESSING OFFICER, WHILE FINALIZING THE ASSESSMEN T. THE COMMISSIONER OF INCOME TAX DIRECTED THE ASSESSING OFFIC ER TO DISALLOW RS.42,18,00,000/- ON ACCOUNT OF SUB-CONTRACTOR S BILLS U/S. 40(A)(IA) R.W.S. 194C OF THE ACT IN RESPECT OF WHICH TDS AMOUNT WAS DEPOSITED ON 31-03-2010 I.E. DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR 2010-11. 3 ITA NO. 799/PN/2014, A.Y. 2009-10 II. THE ASSESSEE MADE PROVISION OF SERVICE TAX AT RS.30,90,000 /- IN THE BOOKS OF ACCOUNT. THE SAID SERVICE TAX WAS PAID BY THE ASSESSEE ON 31-03-2010. THE COMMISSIONER OF INCOME TAX DIRECTED THE ASSESSING OFFICER TO MAKE ADDITION OF THE SAID AMOUNT U/S. 43B OF THE ACT. III. THE ASSESSEE PAID INTEREST TO THE TATA MOTORS AND ASH OK LEYLAND ON ACCOUNT LOANS RAISED FOR PURCHASE OF VEHICLES. THE SAID INTEREST WAS PAID BY THE ASSESSEE WITHOUT DEDUCTING TA X AT SOURCE. THE COMMISSIONER OF INCOME TAX HELD THAT THE IN TEREST PAID TO THESE CONCERNS ARE LIABLE TO BE DISALLOWED U/S. 194 A R.W.S. 40(A)(IA) OF THE ACT. THE COMMISSIONER OF INCOME TAX ISSUED SHOW CAUSE NOTICE U/S. 263 OF THE ACT TO THE ASSESSEE ON 21-01-2013. AFTER C ONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE COMMISSIONER OF INCOME TA X GAVE MINOR RELIEF IN RESPECT OF INTEREST PAID WITHOUT DEDUCTING TA X TO ASHOK LEYLAND FINANCE, AS THE SAID NBFC HAD MERGED WITH INDUS IND BANK. AGGRIEVED BY THE ORDER PASSED U/S. 263, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. SHRI RAKESH JOSHI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD DEDUCTED TOTAL TDS AMOUNTING TO RS.1,02,73,191/- OUT OF WHICH TDS AMOUNTING TO RS.87,65,645/ - WAS IN RESPECT OF PAYMENTS MADE TO SUB-CONTRACTORS. THE A SSESSEE HAD DEPOSITED RS.22,36,736/- BEFORE 31-03-2009 AND RS.32,57,46 1/- BEFORE FURNISHING OF RETURN OF INCOME U/S. 139(1) OF THE ACT. DURING THE PERIOD RELEVANT TO THE IMPUGNED ASSESSMENT YEAR THE AS SESSEE HAD MADE PAYMENT OF RS.42,18,00,000/- TO M/S. SUPREME INFRAST RUCTURE INDIA LTD. ON WHICH TAX AT SOURCE OF RS.47,78,994/- WAS DEDUCTED. DUE 4 ITA NO. 799/PN/2014, A.Y. 2009-10 TO FINANCIAL CONSTRAINTS THE ASSESSEE COULD NOT DEPOSIT T DS ON THE SAID PAYMENT BEFORE THE DATE OF FILING RETURN U/S. 139(1). THE AS SESSEE DEPOSITED THE AFORESAID TDS IN GOVERNMENT ACCOUNT ON 31 -03-2010. UNDISPUTEDLY, THE ENTIRE TAX DEDUCTED AT SOURCE HAS BE EN DEPOSITED BY THE ASSESSEE BEFORE THE COMPLETION OF ASSESSMENT. M/S. S UPREME INFRASTRUCTURE INDIA LTD. HAS FILED CONFIRMATION LETTER WHICH IS PLACED AT PAGE 112 OF THE PAPER BOOK STATING THAT THE AMOUNT OF RS.42,18,00,000/- RECEIVED FROM THE ASSESSEE DURING THE FINA NCIAL YEAR 2008-09 ON ACCOUNT OF CONTRACT CHARGES HAS BEEN BOOK ED IN THE BOOKS OF ACCOUNT AND HAS BEEN DECLARED IN THE RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2009-10 AND TAX HAS BEEN PAID THEREON. 4. THE LD. AR SUBMITTED THAT THE COMMISSIONER OF INCOME T AX HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO MAKE DISALLOWANCE U/S. 43B. THE SERVICE TAX IS NOT A TRADING RECEIPT AND HENCE, DOES NOT COME UNDER THE PURVIEW OF SECTION 28 OF THE ACT. THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION ON ACCOUNT OF SERVICE TAX AND HAS NOT DEBITED THE AMOUNT AS EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT. MOREOVER, IT IS NOT DISPUTED BY THE REVENUE THAT THE ASSESSEE HAS PAID SERVICE TAX IN THE GOVERNMENT ACCOUNT ON 31-03-2010. THE COMMISSIONER OF INCOME TAX HAS WRONGLY HELD THAT LIABILITY TO DEPOSIT SALES TAX AND SE RVICE TAX HAS TO BE TREATED AT PAR. THE HON'BLE DELHI HIGH COURT IN T HE CASE OF COMMISSIONER OF INCOME-TAX VS. NOBLE & HEWITT (I) (P.) LTD. REP ORTED AS 305 ITR 324 (DELHI) HAS HELD THAT LIABILITY TO PAY SALES TAX A ND SERVICE TAX ARE ON DIFFERENT FOOTING. THE LD. AR FURTHER SUBMITTED THAT NO DISALLOWANCE U/S. 40( A)(IA) CAN BE MADE ON THE AMOUNTS ALREADY PAID. THE PROVISIONS OF SECTION 40(A)(IA) APPLY ONLY TO THE AMOUNTS PAYABLE. TO SUPPORT HIS 5 ITA NO. 799/PN/2014, A.Y. 2009-10 SUBMISSIONS, THE LD. AR DRAWS STRENGTH FROM THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MERILYN SHIPPING AND T RANSPORTS 136 ITD 23 (SB) (VISKHA) AND THE DECISION OF HON'BLE ALLAHAB AD HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. VEC TOR SHIPPING SERVICES (P.) LTD. REPORTED AS 38 TAXMANN.COM 77 (ALLAHABAD). THE LD. AR SUBMITTED THAT THE HON'BLE SUPREME COURT OF INDIA HA S DISMISSED THE SLP OF DEPARTMENT IN THE CASE OF VECTOR SHIPPING SER VICES (P.) LTD. THUS, THE DECISION OF HON'BLE ALLAHABAD HIGH COURT IN THE SAID CASE HAS ATTAINED FINALITY. HOWEVER, THE ISSUE RELATING TO PAID OR PAYABLE FOR MAKING DISALLOWANCE U/S. 40(A)(IA) IS DEBATABLE AS THERE ARE CO NTRARY DECISIONS. THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSS IBLE VIEWS WHICH FIND SUPPORT FROM THE DECISION RENDERED IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. VECTOR SHIPPING SERVICES (P.) LTD. (SUPRA). THEREFORE, THE COMMISSIONER OF INCOME TAX HAS ERR ED IN INVOKING THE JURISDICTION U/S. 263 ON BOTH THE COUNTS. T HE LD. AR PRAYED FOR DISMISSING THE IMPUGNED ORDER. 5. THE LD. AR SUBMITTED THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS ALL THE ISSUES RAISED BY THE COMMISSIONER OF I NCOME TAX IN REVISION PROCEEDINGS WERE DISCUSSED BY THE ASSESSING OFFIC ER. THE ASSESSING OFFICER HAD GIVEN QUESTIONNAIRE WHICH IS PLACED AT PAGES 43 TO 45 OF THE PAPER BOOK. THE ISSUE REGARDING TDS DEDUC TED ON SUB- CONTRACT WORK CHARGE WAS RAISED AS Q. NO. 14 AND THE IS SUE REGARDING SERVICE TAX PAYABLE RS.30,90,000/- WAS RAISED AS Q. NO. 30 IN THE QUESTIONNAIRE. THE ASSESSEE GAVE DETAILED REPLY ALONG WIT H THE EVIDENCE REFLECTING THE PAYMENT OF AFORESAID AMOUNTS TO THE GOVERN MENT EXCHEQUER. THE LD. AR ALSO REFERRED TO THE REPLY GIVEN B Y ASSESSEE TO THE QUERIES RAISED BY THE ASSESSING OFFICER DURING THE ASS ESSMENT 6 ITA NO. 799/PN/2014, A.Y. 2009-10 PROCEEDINGS. THE REPLY OF THE ASSESSEE ALONG WITH ANNEX URE IS PLACED AT PAGES 50 TO 111 OF THE PAPER BOOK. 6. ON THE OTHER HAND MS. DIVYA BAJPAYEE REPRESENTING T HE DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF COMMISSIO NER OF INCOME TAX AND THE ACTION OF THE COMMISSIONER OF INCOME TAX IN INVOKING THE REVISIONAL JURISDICTION. THE LD. DR SUBMITTED THA T EVEN IF THE ASSESSEE HAS DISCLOSED THE FACTS BEFORE THE ASSESS ING OFFICER, THE ASSESSING OFFICER HAS ERRED IN NOT APPLYING THE CORRECT P ROVISIONS OF LAW. THE COMMISSIONER OF INCOME TAX WAS WELL WITHIN HIS POW ERS TO INVOKE JURISDICTION U/S. 263 OF THE ACT. IN SUPPORT OF HER SUBMISSIONS THE LD. DR PLACED RELIANCE ON THE DECISION OF HON'BLE RAJAST HAN HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. EMERY STONE MANUFACTURING COMPANY REPORTED AS 213 ITR 843 (RAJ.). TH E LD. DR FURTHER SUBMITTED THAT IF THE ASSESSING OFFICER HAS FAILED TO CONDUCT ENQUIRY AFTER COLLECTING THE RELEVANT MATERIAL AND HAS NOT APPLIED HIS MIND ON THE MATERIAL AVAILABLE BEFORE HIM AT THE TIME OF MAKIN G ASSESSMENT, THE ASSESSMENT WOULD BE ERRONEOUS AND IN S UCH CIRCUMSTANCES INVOKING THE REVISIONAL JURISDICTION BECOME ES SENTIAL. TO BUTTRESS HER ARGUMENT THE LD. DR PLACED RELIANCE ON THE FULL BENCH DECISION OF HON'BLE GAUHATI HIGH COURT IN THE CASE OF COMMIS SIONER OF INCOME TAX VS. JAWAHAR BHATTACHARJEE REPORTED AS 341 ITR 434 (GAUHATI)(FB). 7. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. WE HAVE ALSO EXAMINED THE MATERIAL PLACED ON RECORD BY THE ASSESSEE IN THE FORM OF PAPER BOOK AND THE JUDGMENTS ON WHICH THE RIVAL SIDES HAVE PLACED RELIANCE. THE COMMISSIONER OF INCOME TAX HAS INVOKE D 7 ITA NO. 799/PN/2014, A.Y. 2009-10 REVISIONAL JURISDICTION AFTER EXAMINING THE ASSESSMENT ORDER . THE FIRST REASON GIVEN BY COMMISSIONER OF INCOME TAX FOR INVOKING TH E PROVISIONS OF SECTION 263 IS, NON-DEPOSIT OF TAX DEDUCTED A T SOURCE RS.47,78,994/- BEFORE THE DUE DATE OF FILING OF RETURN U/S. 13 9(1) OF THE ACT. THE COMMISSIONER OF INCOME TAX DIRECTED THE ASSESS ING OFFICER TO MAKE DISALLOWANCE OF RS.42,18,00,000/- U/S. 40(A)(IA) R.W.S. 194C O F THE ACT. 8. DURING THE RELEVANT PERIOD ASSESSEE HAD DEDUCTED RS.87,65,645/- AS TAX AT SOURCE ON THE PAYMENTS MADE T O SUB- CONTRACTORS. THE ASSESSEE DEPOSITED ENTIRE AMOUNT OF TDS IN THE GOVERNMENT EXCHEQUER EXCEPT RS.47,78,994/- BEFORE FURNISH ING OF RETURN U/S. 139(1) OF THE ACT. THE SAID AMOUNT WAS DEPOS ITED BY THE ASSESSEE ON 31-03-2010. THIS FACT HAS NOT BEEN DISPUTE D BY THE REVENUE. THE ASSESSEE HAS SHOWN FROM THE RECORDS THA T THE ISSUE REGARDING TDS ON SUB-CONTRACT PAYMENTS WAS EXAMINED B Y THE ASSESSING OFFICER DURING THE SCRUTINY ASSESSMENT PROCEEDIN GS. THE ASSESSEE HAS PLACED ON RECORD A CONFIRMATION LETTER FROM M/S. SUPREME INFRASTRUCTURE INDIA LTD. TO WHOM PAYMENT OF RS.42,18,00,00 0/- WAS MADE DURING THE FINANCIAL YEAR 2008-09 AT PAGE 112 OF THE PAPER BOOK. IT IS IN RESPECT OF THE AFORESAID PAYMENT THE DELAY IN DEP OSIT OF TDS AMOUNT IS SUBJECT MATTER OF REVISION PROCEEDINGS. A PERU SAL OF THE CONFIRMATION LETTER SHOWS THAT THE SUB-CONTRACTOR HAD D ISCLOSED THE GROSS RECEIPT OF RS.42,18,00,000/- IN ITS BOOKS OF ACCOUNT, A S WELL AS RETURN OF INCOME AND HAD PAID TAXES THEREON. THUS IN V IEW OF THE FACT THAT THE RECIPIENT OF THE AMOUNT HAS DISCLOSED THE GROSS CONTRACTUAL RECEIPT IN ITS BOOKS OF ACCOUNT AND THE RETURN OF INCOME AND HAS PAID TAX THEREON IN THE ASSESSMENT YEAR 2009-10, NO PREJUD ICE HAS BEEN CAUSED TO THE INTEREST OF REVENUE. THEREFORE, TWIN COND ITIONS AS LAID 8 ITA NO. 799/PN/2014, A.Y. 2009-10 DOWN U/S. 263 FOR INVOKING REVISIONAL JURISDICTION IN THE PRE SENT CASE ARE NOT SATISFIED. 9. THE ASSESSEE HAS ALSO DRAWN SUPPORT FROM THE DECISION OF HON'B LE ALLAHABAD HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME- TAX VS. VECTOR SHIPPING SERVICES (P.) LTD. (SUPRA) TO SUBSTANTIATE H IS SUBMISSIONS THAT NO DISALLOWANCE CAN BE MADE ON AMOUNTS PAID AND THAT THE PROVISIONS OF SECTION 40(A)(IA) APPLY TO AMOUNTS PAYABLE ONLY. THE HON'BLE ALLAHABAD HIGH COURT IN THE SAID CASE HAS APP ROVED THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF MER ILYN SHIPPING AND TRANSPORTS (SUPRA). ON THE ISSUE OF DISALLOWA NCE OF EXPENSES U/S. 40(A)(IA) FOR NON-DEDUCTION OF TAX AT SOURCE THERE ARE JUDGMENTS CONTRARY TO THE VIEW TAKEN BY HON'BLE ALLAHAB AD HIGH COURT. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SIK ANDARKHAN N TUNVAR, 220 TAXMAN 256 (GUJ.) AND HON'BLE CALCUTTA HIGH CO URT IN THE CASE OF CIT VS. CRESCENT EXPORT SYNDICATE 216 TAXMAN 258 (CAL.) HAS REJECTED THE RATIO LAID DOWN BY THE SPECIAL BENCH IN TH E CASE OF MERILYN SHIPPING AND TRANSPORTS (SUPRA). THERE IS NO DIRECT DECIS ION OF HON'BLE JURISDICTIONAL HIGH COURT ON THIS ISSUE. THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS WHILE ALLOWING THE CLAIM OF THE ASSESSEE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RANKA JEWE LLERS VS. ADDL. CIT & ANOTHER REPORTED AS 328 ITR 148 (BOM) HAS H ELD THAT REVISIONAL JURISDICTION U/S. 263 CANNOT BE EXERCISED WHERE POSSIBLE VIEW HAS BEEN TAKEN BY THE ASSESSING OFFICER WHILE APPLYING THE PROVISIONS OF THE ACT. THUS, IN VIEW OF THE FACTS OF THE CASE, WE FIND THA T THE FIRST REASON FOR INVOKING REVISIONAL JURISDICTION BY COMMISSIONER OF INCOME TAX FAILS. 9 ITA NO. 799/PN/2014, A.Y. 2009-10 10. THE SECOND REASON FOR INVOKING REVISIONAL JURISDICTION B Y COMMISSIONER OF INCOME TAX IS UNPAID SERVICE TAX OF RS.30,9 0,000/-. THE ASSESSEE HAS SUBMITTED THAT THE SERVICE TAX HAS B EEN DEPOSITED IN GOVERNMENT EXCHEQUER ON 31-03-2010. UNDISPUTEDLY, TH ERE HAS BEEN DELAY IN DEPOSIT OF THE SAID AMOUNT. THE ASSESSEE IS FOLLOW ING MERCANTILE SYSTEM OF ACCOUNTING. THE CONTENTIONS OF THE A SSESSEE IS THAT THE AMOUNT OF SERVICE TAX HAS NOT BEEN CLAIMED AS EXPENDITU RE IN P & L ACCOUNT. THE COMMISSIONER OF INCOME TAX HAS DIREC TED THE ASSESSING OFFICER TO DISALLOW THE SAID AMOUNT U/S. 43B BY FOL LOWING THE JUDGMENT OF HON'BLE CALCUTTA HIGH COURT IN THE CASE OF CH OWRINGHEE SALES BUREAU PVT. LIMITED VS. COMMISSIONER OF INCOME TAX, 11 0 ITR 385 (CAL.). THE LD. AR HAS PLACED RELIANCE ON THE DECISION OF H ON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. NOBLE & HEWITT (I) (P.) LTD. (SUPRA) WHEREIN THE DECISION OF HON'BLE CALCUTTA HIGH COURT HAS BEEN CONSIDERED. IN THE SAID CASE THE H ON'BLE DELHI HIGH COURT HELD THAT AMOUNT NOT DEBITED TO ACCOUNTS NO R CLAIMED AS DEDUCTION, CANNOT BE DISALLOWED. THE RELEVANT EXTRACT OF T HE FINDINGS OF HON'BLE HIGH COURT ARE AS UNDER: 4. IN APPEAL, THE TRIBUNAL WAS OF THE OPINION THAT IN VIEW OF THE PROVISIONS OF SECTION 43B OF THE INCOME-TAX ACT, 19 61 (THE ACT), SINCE THE ASSESSEE HAD NOT CLAIMED A DEDUCTION THERE WAS NO QUESTION OF DISALLOWING THE DEDUCTION WHICH WAS NOT EVEN CLAIME D. THE RELEVANT EXTRACT OF SECTION 43B OF THE ACT READS AS FOLLOWS : CERTAIN DEDUCTIONS TO BE ONLY ON ACTUAL PAYMENT.-NO TWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS A CT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RESPECT OF- (A) ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX, DUTY , CESS OR FEE, BY WHATEVER NAME CALLED, UNDER ANY LAW FOR THE TIME BEING IN FORCE, SHALL BE ALLOWED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) ONLY IN COMPU TING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS 10 ITA NO. 799/PN/2014, A.Y. 2009-10 ACTUALLY PAID BY HIM. 5. LEARNED COUNSEL FOR THE REVENUE URGES THAT THE D ECISION 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 SALES TAX AROSE THE MOMENT A SALE OR PURCHASE WAS EFFECTED AND IF AN ASSESSEE WAS MAINTA INING ACCOUNTS ON THE MERCANTILE SYSTEM IT WOULD BE ENTITLED TO DEDUC TION OF THE ESTIMATED LIABILITY OF SALES TAX, EVEN THOUGH SUCH SALES TAX HAD NOT BEEN PAID TO THE SALES TAX AUTHORITIES. THE QUESTION THERE CONCERNED WAS THE ENTITLEMENT OF THE ASSESSEE TO DEDUCTION UNDER SECTION 10(1) AN D 10(2)(XV) OF THE INDIAN INCOME-TAX ACT, 1922. THE DECISION IS CLEARL Y DISTINGUISHABLE IN ITS APPLICATION TO THE PRESENT CASE. HERE WE ARE CONCER NED WITH AN ASSESSEE WHO HAS NOT EVEN CLAIMED ANY DEDUCTION ON THE GROUN D 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 CONTE XT 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 CONSIDERING THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THE QUESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED WOULD NOT ARI SE. THUS, IN VIEW OF FACTS OF THE CASE AND DECISION RENDERED IN THE CASE OF COMMISSIONER OF INCOME-TAX VS. NOBLE & HEWITT (I) (P.) LTD. (SUPRA) WE ARE OF THE CONSIDERED VIEW THAT THE COMMISSIONE R OF INCOME TAX HAS ERRED IN INVOKING REVISIONAL JURISDICTION IN RESPECT OF DELAYED PAYMENT OF SERVICE TAX AND DIRECTING THE ASSESSING OFFICER TO DISALLOW THE PAYMENT OF RS.30,90,000/- U/S. 43B. 11. THE THIRD REASON FOR INVOKING THE REVISIONAL JURISDICTION IS NON- DEDUCTION OF TAX AT SOURCE ON THE PAYMENT OF INTEREST T O TATA MOTORS ON ACCOUNT OF LOANS RAISED FOR PURCHASE OF VEHICLES. AS PE R THE PROVISIONS OF SECTION 194A OF THE ACT, THE ASSESSEE WAS REQUIRED T O DEDUCT TAX AT 11 ITA NO. 799/PN/2014, A.Y. 2009-10 SOURCE ON PAYMENT OF INTEREST TO TATA MOTORS. THE ASS ESSEE HAS NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT TAX WAS DEDUCTED AT SOURCE ON PAYMENT OF INTEREST EITHER BEFORE COMMISSIONER OF INCOME TAX OR BEFORE THE TRIBUNAL. WE FURTHER OBSERVE FROM THE RECORDS, THAT THIS ISSUE HAS NOT BEEN EXAMINED BY THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDING. THEREFORE, WE UPHOLD THE FINDINGS OF COMMISSIONER OF INCOME TAX ON THIS COUNT ALONE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THE 23 RD DAY OF DECEMBER, 2015. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 23 RD DECEMBER, 2015 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' / THE CIT, AURANGABAD 4. !() %%*+ , *+ , , ,-. , / DR, ITAT, B BENCH, PUNE. 5. ) / 01 / GUARD FILE. // ! % // TRUE COPY// #2 / BY ORDER, %3 *. / PRIVATE SECRETARY, *+ , / ITAT, PUNE