FAREED ANWAR, Jaipur V. ITO, Jaipur

ITA 825/JPR/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2087 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY MALIK CIT DHK
• Keywords: Non-deduction of tax
• Section: 43B; 194C; 12

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 DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 825/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI FAREED ANWAR L - 14, KRISHNA MARG, C-SCHEME, JAIPUR. CUKE VS. THE ITO, WARD 6(3), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: ADBPA1318F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI AJAY MALIK (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/05/2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 24/05/2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- II, JAIPUR DATED 30.08.2013 WHEREIN THE ASSESSEE HA S TAKEN FOLLOWING TWO GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN DIS ALLOWING U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 THE FOLLOWING AMOUNTS: PARTICULARS AMOUNT HIRE CHARGES 10,95,012/- LABOUR AND JOB CHARGES 10,36,155/- ADVERTISEMENT 44,500/- ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 2 FREIGHT 33,600/- TOTAL 22,09,267/- THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIE D, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTE D BY QUASHING THE SAID DISALLOWANCES OF RS. 22,09,267/- U/S 40(A)(IA) . 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. AO IN DIS ALLOWING A SUM OF RS. 7,67,899/- U/S 43B OF THE INCOME TAX ACT, 1961. THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAIN ST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE SAID D ISALLOWANCE OF RS. 7,67,899/- U/S 43B. 2. REGARDING GROUND NO. 1, BRIEFLY THE FACTS OF THE CASE ARE THAT THE AO DISALLOWED EXPENSES INCURRED BY THE ASSESSEE UNDER VARIOUS HEADS U/S 40(A)(IA)OF THE ACT AMOUNTING TO RS. 22,09,267/- ON ACCOUNT OF NON DEDUCTION OF TDS. DURING THE APPELLATE PROCEEDING, THE ASSESS EE TOOK THE PLEA THAT THE PROVISIONS OF SECTION40(A)(IA)ARE APPLICABLE ONLY T O THE EXPENDITURE WHICH IS PAYABLE AS ON THE BALANCE SHEET AND HENCE CANNOT BE APPLIED ON THE EXPENDITURE WHICH HAS ALREADY BEEN PAID DURING THE YEAR. HOWEVER, THE CONTENTION OF THE ASSESSEE WERE NOT ACCEPTED AND HE NCE, THE PRESENT APPEAL BEFORE US. 3. THE SUBJECT MATTER IS NO MORE REST INTERGRA. THE HONBLE SUPREME COURT DECISION IN ITS RECENT DECISION IN CASE OF M/ S PALAM GAS SERVICE (CIVIL APPEAL NO. 5512 OF 2017) DATED 03.05.2017 HAS HELD THAT SECTION 40(A)(IA) COVERS NOT ONLY THOSE CASES WHERE THE AMOUNT IS PA YABLE BUT ALSO THOSE CASES WHERE THE AMOUNT HAS BEEN PAID DURING THE FIN ANCIAL YEAR WITHOUT ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 3 DEDUCTION OF TDS. THE RELEVANT FINDING ARE CONTAIN ED IN PARA 15 OF ITS ORDER WHICH ARE REPRODUCED AS UNDER:- WE APPROVE THE AFORESAID VIEW AS WELL. AS A FORTIO RARI, IT FOLLOWS THAT SECTION 40(A)(IA) COVERS NOT ONLY THOSE CASES WHERE THE AMOUNT IS PAYABLE BUT ALSO WHEN IT IS PAID. IN THIS BEHALF, ONE HAS T O KEEP IN MIND THE PURPOSE WITH WHICH SECTION 40 WAS ENACTED AND THAT HAS ALRE ADY BEEN NOTED ABOVE. WE HAVE ALSO TO KEEP IN MIND THE PROVISIONS OF SECT IONS 194C AND 200. ONCE IT IS FOUND THAT THE AFORESAID SECTION MANDATE A PERSON TO DEDUCT TAX AT SOURCE NOT ONLY ON THE AMOUNTS PAYABLE BUT ALSO WHEN THE SUMS ARE ACTUALLY PAID TO THE CONTRACTOR, ANY PERSON WHO DOE S NOT ADHERE TO THIS STATUTORY OBLIGATION HAS TO SUFFER THE CONSEQUENCES WHICH ARE STIPULATED IN THE ACT ITSELF. CERTAIN CONSEQUENCES OF FAILURE TO DEDUCT TAX AT SOURCE FROM THE PAYMENTS MADE, WHERE TAX WAS TO BE DEDUCTED AT SOURCE OR FAILURE TO PAY THE SAME TO THE CREDIT OF THE CENTRAL GOVERNMEN T, ARE STIPULATED IN SECTION 201OF THE ACT. THIS SECTION PROVIDES THAT IN THAT CONTINGENCY, SUCH A PERSON WOULD BE DEEMED TO BE AN ASSESSEE IN DEFAU LT IN RESPECT OF SUCH TAX. WHILE STIPULATING THIS CONSEQUENCE, SECTION 20 1 CATEGORICALLY STATES THAT THE AFORESAID SECTIONS WOULD BE WITHOUT PREJUDICE T O ANY OTHER CONSEQUENCES WHICH THAT DEFAULTER MAY INCUR. OTHER CONSEQUENCES ARE PROVIDED UNDER SECTION 40(A)(IA) OF THE ACT, NAMELY PAYMENTS MADE BY SUCH A PERSON TO A CONTRACTOR SHALL NOT BE TREATED AS DE DUCTIBLE EXPENDITURE. WHEN READ IN THIS CONTEXT, IT IS CLEAR THAT SECTION 40(A)(IA) DEALS WITH THE NATURE OF DEFAULT AND THE CONSEQUENCES THEREOF. DEF AULT IS RELATABLE TO CHAPTER XVIIB ( IN THE INSTANT CASE SECTIONS 194C A ND 200, WHICH PROVISIONS ARE IN THE AFORESAID CHAPTER). WHEN THE ENTIRE SCHE ME OF OBLIGATION TO DEDUCT THE TAX AT SOURCE AND PAYING IT OVER TO THE CENTRAL GOVERNMENT IS READ HOLISTICALLY, IT CANNOT BE HELD THAT THE WORD PAYABLE OCCURRING IN SECTION 40(A)(IA) REFERS TO ONLY THOSE CASES WHERE THE AMOUNT IS YET TO BE PAID AND DOES NOT COVER THE CASES WHERE THE AMOUNT IS ACTUALLY PAID. IF THE PROVISIONS IS INTERPRETED IN THE MANNER SUGGESTED B Y THE APPELLANT HEREIN, THEN EVEN WHEN IT IS FOUND THAT A PERSON, LIKE THE APPELLANT, HAS VIOLATED THE PROVISIONS OF CHAPTER XVIIB (OR SPECIFICALLY SECTIO N 194C AND 200 IN THE INSTANT CASE), HE WOULD STILL GO SCOT FREE, WITHOUT SUFFERING THE CONSEQUENCES OF SUCH MONETARY DEFAULT IN SPITE OF S PECIFIC PROVISIONS LAYING DOWN THESE CONSEQUENCES. ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 4 4. NOW COMING TO ANOTHER CONTENTION RAISED BY THE A R THAT THE AMENDMENT BROUGHT-IN IN SECTION 40(A)(IA) BY THE F INANCE ACT 2014 WHERE IT IS PROVIDED THAT 30 PERCENT OF ANY SUM PAYABLE TO A RESIDENT SHALL BE DISALLOWED AS AGAINST 100% DISALLOWANCE MADE EARLIE R SHOULD BE APPLIED IN THE INSTANT CASE AND DISALLOWANCE RESTRICTED TO 30% OF THE TOTAL AMOUNT. ON PERUSAL OF THE FINANCE ACT, 2014, IT IS NOTED THAT THE SAID AMENDMENT HAS BEEN BROUGHT IN AND MADE EFFECTIVE FROM 01.04.2015 AND THERE IS NOTHING WHICH SUGGEST SUCH AMENDMENT IS MADE EFFECTIVE OR T O BE READ AS RETROSPECTIVE IN NATURE. IN VIEW OF THE CLEAR WORD INGS AS ENACTED BY THE LEGISLATURE, THE SAME CANNOT BE HELD APPLICABLE TO THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. REGARDING THE RELIANCE BY THE LD. AR OF THE DECISIONS PASSED BY THE COORDINATE BENCHES IN CASE OF RAJENDR A PRASAD (ITA 895/JP/2012) AND SUBSEQUENT DECISION IN CASE OF SMT . SONU KHANDELWAL (ITA NO. 597/JP/2013), ON PERUSAL OF THESE TWO DECISIONS , IT IS NOTED THAT THOUGH THE COORDINATE BENCHES HAVE ACKNOWLEDGED THE FACT T HAT THE SAID AMENDMENT HAS BEEN BROUGHT ONLY W.E.F. 01.04.2015 BUT AT THE SAME TIME, IT WAS HELD TO BE APPLICABLE RETROSPECTIVE IN THOSE CASES WITHOUT PROVIDING ANY RATIONALE OR REASONING TO SUPPORT THE RETROSPECTIVE APPLICABILIT Y OF THE SAID AMENDMENT. THERE IS NO DISCUSSIONS OR JUSTIFICATION THAT WE FI ND IN THE DECISIONS OF THE COORDINATE BENCHES SO AS TO RECONCILE THE POSITION AS STATED BY THE FINANCE ACT TO BE APPLICABLE FROM 1.4.2015 AND AS HELD BY T HE COORDINATE BENCHES. IN LIGHT OF THE SAME, WE ARE UNABLE TO FOLLOW THE SAID DECISIONS OF THE COORDINATE BENCHES AS CANVASSED BY THE LD AR. IN THE RESULT, GROUND NO. 1 OF THE ASSESSEE IS DISMISSED. 5. REGARDING GROUND NO. 2, THE FACT AND FINDING OF THE LD. CIT (A) ARE AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE; ASSESSMEN T ORDER AND APPELLANTS WRITTEN SUBMISSION. ASSESSING OFFICER D ISALLOWED UNPAID SERVICE TAX AND VAT UNDER SECTION 43B. IT IS NOT IN DISPUTE THAT ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 5 APPELLANT DID NOT PAY SERVICE TAX AND VAT TILL THE DUE DATE OF FILING RETURN OF INCOME. APPELLANT ARGUED THAT HE HAS NOT CLAIMED SERVICE TAX AND VAT IN THE P&L ACCOUNT AND THEREFORE THESE ARE NOT CLAI MED AS EXPENSES AND ACCORDINGLY THE PROVISIONS OF SECTION 43B ARE N OT APPLICABLE IN THE APPELLANTS CASE. THE ARGUMENT MADE BY THE APPELLAN T IS NOT CORRECT IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN TH E CASE OF CHOWRANGEE SALES BUREAU THAT SALES TAX IS PART OF T HE TURNOVER OF THE ASSESSEE. EVEN IF ACCOUNTS ARE MADE ON EXCLUSION ME THOD, SALES TAX WILL BE TREATED AS PART OF TURNOVER AND EVEN IF SALES TA X IS NOT DEBITED IN THE P&L ACCOUNT, IT IS DEEMED TO HAVE BEEN CLAIMED IN E XCLUSION METHOD. CONSIDERING THIS, EVEN IF APPELLANT HAS NOT INCLUDE D SERVICE TAX AND VAT AS PART OF REVENUE AND NOT CLAIMED THESE TAXES IN P &L ACCOUNT, THESE ARE DEEMED TO BE INCLUDED IN REVENUE AND DEEMED TO HAVE BEEN CLAIMED IN P&L ACCOUNT. ACCORDINGLY, IF STATUTORY L IABILITY IS NOT PAID TILL THE DUE DATE OF FILING RETURN OF INCOME, THE PROVIS IONS OF SECTION 43B IS CLEARLY APPLICABLE. THE DECISIONS RELIED UPON BY TH E APPELLANT FOR SERVICE TAX ARE RELATING TO THE SITUATION WHERE SERVICE TAX LIABILITY WAS NOT DUE. IN THE CASE OF APPELLANT IT IS NOT SO. BOTH THE TAX ES WERE DUE HOWEVER NOT PAID TILL THE DUE DATE OF FILING RETURN. THEREF ORE THE DECISIONS RELIED UPON BY THE APPELLANT ARE NOT APPLICABLE PARTICULAR LY IN VIEW OF THE DECISION OF APEX COURT REFERRED EARLIER. ACCORDINGL Y THE DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SECTION 43B IS CONFIRMED. 6. IN THIS REGARD THE LD. AR SUBMITTED AS UNDER:- 3.1 IT IS UNDISPUTED THAT ASSESSEE DID NOT CLAIM S ERVICE TAX AND VAT PAYABLE AS EXPENDITURE IN HIS PROFIT AND LOSS ACCOUNT. 3.2 SINCE NO DEDUCTION IS CLAIMED OF THE VAT PAYABL E AND SERVICE TAX BY THE ASSESSEE FOR THE RELEVANT PREVIOUS YEAR, PROVISIONS OF SECTION 43B ARE NOT APPLICABLE. 3.3 UNDER SIMILAR SET OF FACTS, NOBLE & HEWITT (I)( P.) LTD. [2008] TAXMAN 48 (DELHI-HC) (CASE LAW PAGE-39-40) COLLECTED SERVICE TAX DURING THE RELEVANT PREVIOUS YEAR. OUT OF THE SERVICE TAX SO COLLECTED IT DID NOT DEPOSIT PART OF THE ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 6 SERVICE TAX AMOUNT WITH THE CONCERNED AUTHORITIES. HOWEVER, THE COMPANY DID NOT CLAIM ANY DEDUCTION IN THIS REGARD NOR DID IT D EBIT THE AMOUNT AS AN EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT. DEPARTM ENTAL AUTHORITIES RELAYING ON THE CASE OF CHOWINGHEE SALES BUREAU (P.) LTD. (S UPRA) DISALLOWED THE AMOUNT AND ADDED IT BACK TO THE INCOME OF THE COMPA NY. HONBLE DELHI HIGH COURT UNDER SUCH CIRCUMSTANCES HELD THAT WE ARE UNABLE TO AGREE. IN THAT CASE IT WAS HELD T HAT THE LIABILITY TO PAY SALES TAX AROSE THE MOMENT A SALE OR PURCHASE WAS EFFECTE D AND IF AN ASSESSEE WAS MAINTAINING ACCOUNTS ON THE MERCANTILE SYSTEM IT WO ULD BE ENTITLED TO DEDUCTION 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 UN DER SECTION 10(1) AND 10(2) (XV) OF THE INDIAN INCOME-TAX ACT, 1922. THE DECISION IS CLEARLY DISTINGUISHABLE IN ITS APPLICATION TO THE PRESENT C ASE. HERE WE ARE CONCERNED WITH AN ASSESSEE WHO HAS NOT EVEN CLAIMED ANY DEDUC TION ON THE GROUND OF SERVICE TAX AND HAS NOT DEBITED THE AMOUNT TO ITS P ROFIT AND LOSS ACCOUNT. MOREOVER THE PROVISIONS OF SECTION 43B OF THE ACT A RE QUITE CLEAR IN THIS REGARD. THE DECISION OF THE CALCUTTA HIGH COURT IN CHOWRINGHEE SALES BEREAU (P.) LTD.S CASE (SUPRA) WAS NOT IN THE CONTEXT OF THE APPLICABILITY OF SECTION 43B OF THE ACT.. 3.4 HONBLE DELHI HIGH COURT IN THE CASE OF JET LIT E (INDIAN) LTD. [2015] 63 TAXMANN.COM 62 (DELHI) CASE LAW PAGE -41 TO 61) VID E ITS ORDER DATED 04.11.2015, ON THE ISSUE OF ADDITION OF THE AIR TRA VEL TAX UNDER SECTION 43B BY THE AO HELD THAT THE ITAT FOLLOWED ITS ORDER DATED 8 TH AUGUST 2008 IN ITA NO. 294/LUC/2000 WHICH HELD THAT SECTION 43B IS ONLY ATTRACTED WHEN THE ASSESSEE CLAIMS DEDUCTION FOR ANY SUN PAYABLE BY WAY OF TAX OR DUTY UNDER NAY LAW FOR THE TIME BEING IN FORCE, AND, WHERE, AS IN THE CASE OF THE ASSESSEE, NO CHARGE IS ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 7 CLAIMED OR MADE TO THE PROFIT OR LOSS ACCOUNT, THER E WAS NO QUESTION OF DISALLOWING THE AMOUNT TAKEN TO THE BALANCE SHEET O N THE LIABILITIES SIDE OR OF :ADDING BACK AND DELETED THE ADDITION. CONSEQUENT LY, THE COURT UPHOLDS THE ORDER OF THE ITAT WHICH AFFIRMED THE ORDER BY THE C IT(A) DELETING THE ABOVE ADDITION. THE ISSUE IS DECIDED IN FAVOUR OF THE ASS ESSEE AND AGAINST THE REVENUE. 3.5 FURTHER, HONBLE CALCUTTA HIGH COURT IN THE CAS E OF A.W. FIGGIS & CO. LTD. [2003] 127 TAXMAN 130 (CALCUTTA) (CASE LAW PAGE-62 TO 68) ADJUDICATING AN IDENTICAL ISSUE HELD THAT THEREFORE, FROM A CAREFUL PERUSAL OF THE PROVISION S MADE IN SECTION 43B IT CAN BE SAID THAT SECTION 43B CAN BE APPLIED ON WHEN THE TAX OR DUTY HAS BEEN CLAIMED AN EXPENDITURE BUT THE SAME TAX HAD NOT BEE N PAID. IN OUR VIEW, IN THE PRESENT CASE ADMITTEDLY THE ASSESSEE DID NOT CL AIM ANY AMOUNT BY WAY OF SALES TAX AS A DEDUCTION AND, THEREFORE, THE QUESTI ON OF DISALLOWING ANY SUCH TAX OR DUTY UNDER SECTION 43B IS TOTALLY MISCONCEIV ED. SUCH BEING THE FACT IN THIS CASE WE ARE UNABLE TO ACCEPT THE CONTENTION OF MR. DEV THAT IN VIEW OF EXPLANATION 2 OF SECOND PROVISO TO SECTION 43B, THE QUESTION OF DISALLOWING ANY SUCH TAX OR DUTY UNDER SECTION 43B CANNOT AT AL L BE ACCEPTED.. 3.6 IT IS PERTINENT TO NOTE THAT THE ASSESSEE DID N OT RECEIVE THE AMOUNT ON WHICH SERVICE TAX WAS PAYABLE FROM THE PARTIES TO W HOM SERVICES WERE RENDERED AND THUS, THE PROVISIONS OF SECTION 43B WE RE NOT ATTRACTED. 3.7 HONBLE ITAT CHENNAI BENCH IN THE CASE OF REAL IMAGE MEDIA TECHNOLOGIES (P.) LTD. [2008] 114 ITD 573 (CHENN AI) ON THE ISSUE OF SERVICE TAX GETTING COVERED BY THE PROVISIONS OF SECTION 43 B WAS OF THE VIEW THAT THE RIGOURS OF SECTION 43B MIGHT BE APPLICABLE TO THE C ASE OF SALES-TAX OR EXCISE ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 8 DUTY BUT THE SAME COULD NOT BE SAID TO BE THE POSIT ION IN CASE OF SERVICE-TAX BECAUSE OF THE FOLLOWING TWO REASONS:- (I) THE ASSESSEE IS NEVER ALLOWED DEDUCTION ON ACCO UNT OF SERVICE TAX WHICH IS COLLECTED ON BEHALF OF THE GOVERNMENT AND IS PAID T O THE GOVERNMENT ACCOUNT, ACCORDINGLY. THEREFORE, A SERVICE PROVIDER IS MERELY ACTING AS AN AGENT OF THE GOVERNMENT, AND IS NOT ENTITLED TO CLA IM DEDUCTION ON ACCOUNT OF SERVICE TAX. HENCE, ON THIS ACCOUNT ALONE ADDITION UNDER SECTION 43B COULD NOT HAVE BEEN MADE. (II) SECTION 43B(C) USES THE EXPRESSION ANY SUM PA YABLE. FOR MAKING ANY DISALLOWANCE, FIRST OF ALL IT HAS TO BE ESTABLISHED THAT SUCH SUM IS PAYABLE. THE WORD PAYABLE USED IN SECTION 43B MEANS THAT THERE IS A KIND OF OBLIGATION ON THE PART OF PAYEE TO MAKE THE PAYMENT WHICH IS ALRE ADY DUE. A PLAIN READING OF RULE 6 OF THE SERVICE TAX RULES WOULD SHOW THAT SERVICE PROVIDER BECOMES LIABLE TO MAKE THE PAYMENT OF SERVICE TAX BY THE 5 TH OF THE MONTH IMMEDIATELY FOLLOWING THE CALENDAR MONTH IN WHICH THE PAYMENT A RE RECEIVED TOWARDS THE VALUE OF TAXABLE SERVICE. THE FIRST PROVISO PROVIDE S FOR AN EXCEPTION IN CASE OF INDIVIDUALS OR PROPRIETARY FIRMS OR PARTNERSHIP FIR MS, AND IN SUCH CASES, SERVICE TAX HAS TO BE PAID TO THE CREDIT OF THE CENTRAL GOV ERNMENT BY THE 5 TH OF THE MONTH IMMEDIATELY FOLLOWING THE QUARTER OF CALENDAR YEAR IN WHICH THE PAYMENTS ARE RECEIVED. THE ONLY DIFFERENCE IS THAT IN CASE OF INDIVIDUAL OR PROPRIETARY OR PARTNERSHIP FIRM, PAYMENT HAS TO BE MADE ON 5 TH OF THE FOLLOWING MONTH AFTER THE FOLLOWING QUARTER OF CALE NDAR YEAR WHEREAS IN CASE OF OTHER ORGANIZATIONS IT HAS TO BE PAID ON THE 5 TH OF THE MONTH IMMEDIATELY FOLLOWING THE CALENDAR MONTH. BUT IN BOTH THE CASES , THE LIABILITY ARISES TO MAKE THE PAYMENT ONLY AFTER THE SERVICE PROVIDER HA S RECEIVED THE PAYMENTS. THUS, IF THERE IS NO LIABILITY TO MAKE THE PAYMENT TO THE CREDIT OF THE CENTRAL GOVERNMENT BECAUSE OF NON- RECEIPT OF PAYMENTS FRO M THE RECEIVER OF THE SERVICES, THEN IT CANNOT BE SAID THAT SUCH SERVICE TAX HAS BECOME PAYABLE IN ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 9 TERMS OF CLAUSE (A) OF SECTION 43B BECAUSE THAT CLA USE SPECIFICALLY MENTIONS SUM PAYABLE BY THE ASSESSEE. 3.8. IT IS PERTINENT TO NOTE THAT THE POINT OF TAXA TION RULES FROM F.Y. 11-12 HAVE BEEN CHANGED FROM CASH TOWARDS ACCRUAL BASIS. IN OTHER WORDS THE REMITTANCE OF SERVICE TAX TO GOVERNMENTS ACCOUNT B Y THE PERSON LIABLE TO PAY SERVICE TAX NEED NOT DEPEND ON WHETHER HE HAS ACTUA LLY RECEIVED THE PAYMENT FOR SERVICES PROVIDED, BUT MUST DEPEND UPON THE DAT E OF COMPLETION OF PROVISION OF SERVICE OR AT BEST DATE OF ISSUE OF I NVOKE SINCE ON THAT DATE THE PAYMENT ACCRUES TO HIM. HOWEVER, FOR THE RELEVANT A .Y. 2009-10 (F.Y. 2008- 09) THE LIABILITY TO PAY THE SERVICE TAX AROSE ONLY WHEN IT WAS RECEIVED FROM THE SERVICE RECEIVER. 3.9. HONBLE ITAT MUMBAI BENCH IN THE CASE OF PHARM A SEARCH [2012] 21 TAXMANN.COM 44 (MUM.) , RELYING ON THE DECISION IN THE CASE OF REAL IMAGE MEDIA TECHNOLOGIES (P.) LTD. (SUPRA), ECHOED SIMILA R VIEWS THAT SERVICE TAX WOULD BE OUT OF THE RIGORS OF SECTION 43B. 3.10. HONBLE BOMBAY HIGH COURT VIDE ITS ORDER DATE D 17.04.2015, IN CASE OF OVIRA LOGISTICS (P.) LTD. TOOK COGNIZANCE OF THE AB OVE MENTIONED JUDGMENT IN THE CASE OF PHARMA SEARCH (SUPRA) AND ALSO THE RATI O LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CHWRINGHEE SALES BUREA U (P.) LTD. (SUPRA) HELD THAT HAVING PERUSED THE AFORESAID DECISIONS, WE AR E CLEARLY OF THE VIEW THAT SECTION 43B DOES NOT CONTEMPLATE LIABILITY TO PAY T HE SERVICE TAX BEFORE ACTUAL RECEIPT OF THE FUNDS IN THE ACCOUNT OF THE ASSESSEE . IN OUR VIEW, LIABILITY TO PAY SERVICE TAX INTO THE TREASURY WILL ARISE ONLY UPON THE ASSESSEE RECEIVING THE FUNDS AND NOT OTHERWISE. ACCORDINGLY, WHEN SERVICES ARE RENDERED, THE LIABILITY TO PAY THE SERVICE TAX IN RESPECT OF THE CONSIDERAT ION PAYABLE WILL ARISE ONLY UPON THE RECEIPT OF SUCH CONSIDERATION AND NOT OTHE RWISE. ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 10 3.11. HONBLE ITAT JAIPUR BENCH, UNDER IDENTICAL SE T OF FACTS, IN THE CASE OF ASHOK PARNAMI, ITA NO. 777/JP/2013, RELIED ON THE R ATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF NOBLE HEITT (I) (P) LTD. (SUPRA) AND HELD THAT WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE ASSESSEE HAS NOT DEBITED SERVICE TAX IN P&L ACCOUNT, WHICH HAS BEEN SHOWN IN SERVICE TAX AC COUNT SEPARATELY. THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS. NOBLE H EWITT (I) (P) LTD. (SUPRA) HAS BELD THAT THE ASSESSEE FOLLOWED MERCANTILE SYST EM OF ACCOUNTING AND COLLECTED SERVICE TAX. THE AMOUNT OF SERVICE TAX HA S NOT BEEN DEBITED IN THE P&L ACCOUNT AS ALSO NOT CLAIMED AS DEDUCTION, THERE FORE, AMOUNT COULD NOT BE DISALLOWED. FURTHER THE HONBLE BOMBAY HIGH COURT I N THE CASE OF CIT VS. M/S CALIBRE PERSONNEL SERVICE PVT. LTD. (SUPRA) BY CONS IDERING THE HONBLE DELHI HIGH COURT DECISION IN THE CASE OF CIT VS. NOBLE HE WITT (I) (P) LTD. (SUPRA) WHEREIN BOTH THE ISSUES I.E. SECTION 43B AND ISSUE OF MERCANTILE SYSTEM OF ACCOUNTING HAD ALSO BEEN CONSIDERED AND HELD THAT I N CASE OF ASSESSEE, SECTION 43B NO DISALLOWANCE CAN BE MADE. THE HONBL E SUPREME COURT HAS ALSO DISMISSED THE SLP FILED BY THE DEPARTMENT IN T HE CASE OF CIT VS. M/S CALIBRE PERSONNEL SERVICES PVT. LTD. (SUPRA). BY RE SPECTFULLY FOLLOWING THE DECISION OF BOTH THE HONBLE COURTS, WE DELETE THE ADDITION CONFIRMED BY THE LD. CIT (A). 3.12 FURTHER, HONBLE BOMBAY HIGH COURT, VIDE ITS O RDER DATED 16.08.2016, IN THE CASE OF KNIGHT FRANK (INDIA) PVT. LTD., ITA 247 OF 2014, HELD THAT SECTION 145A(A)(II) APPLIES ONLY TO GOODS AND NOT SERVICES. SERVICE-TAX BILLED ON RENDERING OF SERVICES IS NOT INCLUDBLE AS TRADING R ECEIPTS. NO DISALLOWANCE U/S 43B CAN BE MADE FOR THE UNPAID SERVICE-TAX LIABILIT Y WHICH IS NOT CLAIMED AS A DEDUCTION. IT WAS ALSO HELD BY THE HONBLE BOMBAY H IGH COURT IN THE ABOVE MENTIONED CASE THAT WHEN ASSESSEE HAS NOT CLAIMED A NY DEDUCTION ON ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 11 ACCOUNT OF SERVICE TAX PAYABLE IN ORDER TO DETERMIN E THE TAXABLE INCOME, THERE CAN BE NO OCCASION TO INVOKE SECTION 43B OF THE ACT . 3.13 HONBLE ITAT JAIPUR BENCH IN THE CASE OF SVS E XPRESS SERVICES, JAIPUR VS. DCIT ITA NO. 987/JP/15 HAS ADJUDICATED THE SIMILAR ISSUE AGAINST ASSESSEE. HOWEVER, THE FACTS OF THE CASE ARE DIFFERENT THAN T HAT OF THE ASSESSEES CASE AS EXPLAINED BELOW: FACTS OF SVG EXPRESS SERVICES, JAIPUR VS. DCIT: RELATED TO A.Y. 2012-13 I.E. F.Y. 2011-12, THE YEAR IN WHICH POINT OF TAXATION RULES HAVE BEEN CHANGED FROM CASH TOWARDS ACCRUAL BASIS. THE ASSESSEE COLLECTED THE AMOUNT OF SERVICE TAX BU T NOT DEPOSITED THE SAME WITH THE GOVERNMENT. RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE ITAT BANGLORE BENCH IN THE CASE OF JAIN CHRISTOPHER (2013) CCH 0011, WHICH DISTINGUISHED THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOBLE AND HEWITT (I) P. LTD. [2008] 305 ITR 324 ( DELHI). IN JAIN CHRISTOPHER ALSO THE AMOUNT OF SERVICE TAX WAS REALIZED BY THE ASSESSEE. FACTS OF ASSESSEES CASE: RELATED TO A.Y. 2009-10 I.E. F.Y. 2008-09, THE YEAR IN WHICH POINT OF TAXATION RULES WERE ON CASH BASIS ONLY. THE ASSESSEE DID NOT COLLECT THE AMOUNT OF SERVICE TAX AND AS A RESULT OF WHICH DID NOT DEPOSIT THE SAME WITH THE GOVERNMENT. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE PROVISIONS OF SECTION 43B HAS BEEN I NVOKED IN RESPECT OF VAT AS WELL AS SERVICE PAYABLE BY THE ASSESSEE AT THE E ND OF THE RELEVANT FINANCIAL YEAR AND NOT PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. FIRSTLY, REGARDING VAT, THE ISSUE IS NO MORE REST INTERGRA IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN CASE OF CHOWRINGEE SALES B UREAU. IN ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 12 CONTEXT OF SECTION 43B, HOW THE SAID RULING CONTINU ES TO HOLD GOOD HAS BEEN DISCUSSED BY THE COORDINATE BENCH IN CASE OF SVG EXPRESS (ITA NO. 987/JP/15) (WHERE ONE OF US WAS A PARTY) WHERE IT W AS HELD AS UNDER: UNLIKE THE SITUATION PREVAILING AT THE TIME WHEN T HE HONBLE SUPREME COURT DELIVERED ITS JUDGEMENT IN CASE OF CHOWRINGHEE SALE S BUREAU WHEN THERE WERE NO CLEAR PROVISIONS PARI-MATERIA TO SECTION 43 B OF THE ACT, NOW GIVEN THAT THERE ARE SPECIFIC PROVISIONS IN TERMS OF SECT ION 43B OF THE ACT, TO OUR MIND PRINCIPLE AND RATIO LAID DOWN IN CASE OF CHOWR INGHEE SALES BUREAU CONTINUES TO HOLD GOOD EXCEPT THAT ITS RIGOUR HAS B EEN SLIGHTLY MODIFIED TO THE EXTENT THAT THE TAXES COLLECTED CAN BE DEPOSITE D BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME AND IN CASE THERE IS A D ELAY, IT WILL BE ADDED TO THE PROFESSIONAL RECEIPTS OF THE ASSESSEE AND WILL BE A LLOWED TO CLAIM DEDUCTION OF THE AMOUNT IN THE YEAR OF PAYMENT. IN LIGHT OF ABOVE, DISALLOWANCE OF VAT PAYABLE AMOU NTING TO RS 93,750 HAS RIGHTLY BEEN MADE BY THE ASSESSING OFFICER AND THE SAME IS HEREBY CONFIRMED AND TO THIS EXTENT, WE CONFIRM THE FINDINGS OF THE LD CIT(A). 8. NOW COMING TO THE DISALLOWANCE REGARDING TO SERV ICE TAX. THE LD AR HAS CONTENDED THAT THE ASSESSEE HAS NOT RECEIVED TH E AMOUNTFROM THE PARTIES TO WHOM THE SERVICES WERE RENDERED AND IN RESPECT O F WHICH SERVICE TAX WAS PAYABLE AND THUS THE PROVISIONS OF SECTION 43B WERE NOT ATTRACTED. IT WAS FURTHER BROUGHT TO THE NOTICE OF THE BENCH THAT THE POINT OF TAXATION RULES HAVE BEEN AMENDED W.E.F. FINANCIAL YEAR 2011-12 WHE REIN IT IS PROVIDED THAT THE LIABILITY TO PAY THE SERVICE TAX TO THE GOVERNM ENT ACCOUNT IS NO MORE DEPENDENT UPON WHETHER THE SERVICE PROVIDER HAS ACT UAL RECEIVED THE PAYMENT FOR SERVICES BUT IS DEPENDENT UPON THE DAT E OF COMPLETION OF SERVICES OR AT BEST, THE DATE OF ISSUE OF THE INVOI CE SINCE ON THAT DATE THE PAYMENT ACCRUES TO HIM. THE SAID AMENDMENT IS PROS PECTIVE AND FOR THE YEAR ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 13 UNDER CONSIDERATION IE, FOR FINANCIAL YEAR 2008-09, THE LIABILITY TO PAY THE SERVICE TAX ARISE ONLY WHEN IT IS ACTUALLY RECEIVE D BY THE SERVICE PROVIDER FROM THE SERVICES RECIPIENT. IT WAS SUBMITTED THAT IN TH E INSTANT CASE, THE ASSESSEE DID NOT RECEIVE THE AMOUNT ON WHICH SERVICE TAX WAS PAYABLE FROM THE PARTIES TO WHOM SERVICES WERE RENDERED AND THUS, THE PROVIS IONS OF SECTION 43B WERE NOT ATTRACTED. WE PRIMA FACIE FIND FORCE IN THE CON TENTIONS OF THE LD AR THAT WHERE AMOUNT ON WHICH SERVICE TAX WAS PAYABLE WAS N OT COLLECTED, THERE CANNOT BE A QUESTION OF COLLECTION OR DEEMED COLLEC TION OF SERVICE TAX AND IN ABSENCE OF THE SAME, THERE CANNOT BE A QUESTION OF DEEMED RECEIPT AND APPLICABILITY OF SECTION 43B OF THE ACT. HOWEVER, WE FIND THAT THERE IS NO FINDING OF FACT RECORDED BY THE LOWER AUTHORITIES I N THIS REGARD TO SUPPORT THE SAID CONTENTION OF THE LD AR THAT THE ASSESSEE DID NOT RECEIVE THE AMOUNT ON WHICH SERVICE TAX WAS PAYABLE FROM THE PARTIES TO W HOM SERVICES WERE RENDERED. WE, ACCORDINGLY, SET ASIDE THE MATTER RE LATING TO SERVICE TAX TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE SAME A FRESH AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24/5/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 24/05/2017 *SANTOSH VKNS'K DH IZFRFYFI VXZSF'KR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - SHRI FAREED ANWAR L-14, KRISHNA MARG, C- SCHEME, JAIPUR. ITA NO. 825/JP/2013 SHRI FAREED ANWAR VS ITO,WARD 6(3),JAIPUR 14 2. IZR;FKHZ@ THE RESPONDENT - ITO, WARD 6(3), 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. 825/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.