Allied Investments and Housing Pvt. Ltd., CHENNAI V. DCIT, CHENNAI

ITA 882/CHNY/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8493 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 06-04-2016
• Court: TRIBUNAL
• Department Lawyers: SHIVA SRINIVAS
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Business income
• Section: 43B; 143(3); 14A; 68

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I T.A. NO. 882 /MDS/201 6 / ASSESSMENT YEAR :20 1 1 - 12 M/S. ALLIED INVESTMENTS AND HOUSING PVT. LTD., NO. 13, VIDHAN HOUSE, VENKATARAMAN ROAD, T. NAGAR, CHENNAI 600 017 [PAN:A AACA7460P ] VS. THE DEPUTY COM MISSIONER OF INCOME TAX , CORPORATE CIRCLE 1 ( 1 ) , C HENNAI 600 006. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI R . VIJAYARAGHAVAN , A DVOCATE / RESPONDENT BY : SHRI S HIVA SRINIVAS , JCIT / DATE OF HEARING : 2 1 . 0 7 .201 6 / DATE OF P RONOUNCEMENT : 16 . 0 9 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISS IONER OF INCOME TAX (APPEALS) 1 , CHENNAI , DATED 16 . 02 .20 1 6 RELEVANT TO THE ASSESSMENT YEAR 20 1 1 - 1 2 . THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS WITH REGARD TO CONFIRMATION OF DISALLOWANCE OF SERVICE TAX UNDER SECTION 43B OF THE I NCOME TAX ACT, 1961 [ ACT IN SHORT] . 2. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF FLATS, BUILDINGS AND PROPERTY DEVELOPMENT. IT FILED I.T.A. NO . 882 /M/ 16 2 ITS RETURN OF INCOME FOR ON 27.9.2011 ADMITTING A TOTAL INCOME OF .4,43,980 / - . THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE U NDER SECTION 143(2) OF THE ACT DATED 31.7.2012 WAS SERVED ON THE ASSESSEE . IN RESPONSE THERETO, THE ASSESSEE FILED ALL THE DETAILS AND AFTER CONSIDERING THE SAME , THE ASSESSMENT WAS COMPLETED U NDER SECTION 143(3) OF THE ACT DETERMINING TOTAL INCOME OF THE ASSESSEE AT .2,14,38,899 / - BY MAKING THE DISALLOWANCES OF (I) UNPAID SERVICE - TAX LIABILITY OF .2, 06,08,325/ - AND DISALLOWANCE OF .3,86,594/ - UNDER SECTION 14A OF THE ACT. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND BY FOLLOWING VARIOUS DECISIONS, THE LD. CIT(A) PARTLY AL LOWED THE APPEAL OF THE ASSESSEE. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND CHALLENGED THE DISALLOWANCE OF UNPAID SERVICE TAX LIABILITY. BY FILING THE DETAILS OF AMOUNTS COLLECTED IN THE FINANCIAL YEAR 2010 - 11 RELEVANT TO THE ASSESSMENT YEAR 2011 - 12 AND REMITTED THE SAME IN THE GOVERNMENT ACCOUNT BELATEDLY, THE LD. COUNSEL FOR THE ASSESSEE HAS PLEADED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER BE DELETED. 5. IN THE ASSESSMENT ORDER, T HE A SSESSING O FFICER HAS OBS ERVED AS UNDER: I.T.A. NO . 882 /M/ 16 3 AS PER THE NOTES ON ACCOUNTS - 15, THE AUDITOR HAVE QUALIFIED THAT 'RECEIPTS FROM THE CUSTOMERS IS YET TO BE PAID BY THE COMPANY TO THE AUTHORITIES. SERVICE TAX LIABILITY AS PER THE ACCOUNTS AS AT 31.3.2011 AMOUNT TO .2,02, 06,151/ - , INTER EST FOR THE CURRENT YEAR FOR NON PAYMENT OF SERVICE TAX AMOUNTS TO .4,05,174/ - AND THIS HAS BEEN PROVIDED IN THE ACCOUNTS AS AT 31.3.2011, THE COMPANY IS IN THE PROCESS OF ASCERTAINING THE ACTUAL LIABILITY TOWARDS SERVICE TAX / INTEREST FOR THE DELAYED PE RIOD. THE COMPANY IS MAKING NECESSARY ARRANGEMENTS TO REMIT THE SAME AT THE EARLIEST AND IS CONFIDENT OF SETTLING THE ENTIRE SERVICE TAX DUES BEFORE DECEMBER 2011 . WHEN THIS WAS PUT BEFORE THE AR, THE AR SUBMITTED ITS REPLY DATED 27.03.2014 AND SUBMITTED ITS REPLY AND CASE LAWS WAS ATTACHED TO THAT. THE ASSESSEE'S REPLY WAS CONSIDERED AND THE CASE LAWS ALSO PERUSED. UPON PERUSAL IT IS FOUND THAT THE ASSESSEE HAD NOT TOLD ANYTHING WITH REGARD TO THE COLLECTION OF SERVICE TAX FROM ITS CUSTOMERS. BUT THE AUDI TOR HAS QUALIFIED THAT THE ASSESSEE HAS COLLECTED THE SERVICE TAX FROM ITS CUSTOMERS BUT NOT REPAID THE SAME AND ALL THE CASE LAWS QUOTED BY THE ASSESSEE ARE DISTINGUISHABLE BY THE FACT THAT IN THAT CASES REFERRED, THE SERVICE TAX DUES WAS NOT COLLECTED. B UT IN THE ASSESSEE'S CASE IT IS COLLECTED BUT NOT PAID TO THE SERVICE TAX AUTHORITIES. HENCE, AN INCOME OF .2,02,06,151/ - IS ADDED TO THE CONTRACT RECEIPT AND BROUGHT TO TAX. THE FINANCIAL YEAR IN WHICH THE ASSESSEE PROVES WITH EVIDENCE THE COLLECTED SERVICE TAX HAS BEEN PAID, THE SAME WILL BE ALLOWED IN THE RELEVANT A Y. ON THE SIMILAR LINE, THE INTEREST ON S ERVICE TAX PAYMENT OF .4,05,174/ - INCLUDED IN THE P&L A/C IS ALSO DISALLOWED AS IT IS NOT PAID AND PENAL IN NATURE. 6. BY RELYING VARIOUS CASE LAW, T HE BRIEF SUMMARY OF THE ARGUMENTS ADVANCED BY THE AR OF THE ASSESSEE BEFORE THE LD. CIT(A) ARE AS UND ER: (I) LIABILITY OF PAY SERVICE TAX ARISES ONLY ON RECEIPT OF MONEY FROM THE ULTIMATE CUSTOMER AS PER SECTION 68 OF THE FINANCE ACT, 1994. EVEN OTHERWISE, THE PAYMENT OF SERVICE TAX IS NOT CLAIMED AS EXPENDITURE, THE QUESTION OF DISALLOWANCE OF THE SAME DOES NOT ARISE. (II) ASSESSEE WORKS AS AN AGENT WHO COLLECTS THE SERVICE TAX ON BEHALF OF THE GOVERNMENT AND REMITS THE SAME WITHIN THE TIME SPECIFIED IN THE FINANCE ACT, 1994. IT DOES NOT CLAIM ANY EXPENDITURE TOWARDS THE SAME, HENCE THE AMOUNT CANNOT BE CONSIDERED FOR DISALLOWANCE U/S 43 B OF THE ACT. (III) THE BASIC PREMISES UNDER WHICH THE SECTION 43 B INVOKES THAT THE AMOUNT SHOULD HAVE CONSIDERED FOR DEDUCTION WHILE COMPUTING I.T.A. NO . 882 /M/ 16 4 BUSINESS INCOME. THE AMOUNT WHICH IS NOT DEBITED TO P&L A/C, THE SAME C ANNOT BE ADDED BACK /DISALLOWED U/S 43B OF THE ACT. 7. AFTER CONSIDERING THE SUBMISSIONS AND BY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CHOWRINGHEE SALES BUREAU (P.) LTD. V. CIT [1973] 87 ITR 542 , WHEREIN IT WAS HELD THAT THE SALES TAX COLLECTED BY AN AUCTIONEER WOULD FORM PART OF ITS TRADING OR BUSINESS RECEIPTS AND HAVING REGARD TO THE PROVISIONS OF SERVICE TAX, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 8. WE HAVE HEARD BOTH SIDES, P ERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. BY ASSAILING THE DECISION OF THE AUTHORITIES BELOW AND FILING THE DETAILS OF AMOUNT COLLECTED ON TIME FOR THE RESPECTIVE MONTHS IN THE FINANCIAL YEAR 2010 - 11, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ACTUAL AMOUNT DUE AND COLLECTED WAS .56.42 LAKHS AND THE SAME WERE REMITTED TO THE GOVERNMENT ACCOUNT. BUT, BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS ADMITTED THAT THE ABOVE SERVICE TAX AMOUNT COLLECTED WAS RE MITTED ONLY ON 16.05.2012. THE PROVISIONS OF SECTION 43B OF THE ACT PROVIDES FOR DEDUCTION IN RESPECT OF ANY SUM PAYABLE BY WAY OF TAX, DUTY, CESS OR FEE BY WHATEVER NAME CALLED UNDER ANY LAW IN FORCE AND SUCH PAYMENT HAS TO BE MADE BEFORE THE DUE DATE UND ER SECTION 139(1) OF THE ACT AND DEDUCTION CAN BE ALLOWED IN THE YEAR OF ACCRUAL OF LIABILITY. ADMITTEDLY, IN THIS CASE, THE ASSESSEE IS STATED TO HAVE MADE PAYMENT, BUT MADE BELATEDLY AFTER THE DUE DATE AS PROVIDED UNDER I.T.A. NO . 882 /M/ 16 5 SECTION 139(1) OF THE ACT. WE FIND THAT IT IS NOT THE CASE THAT THE ASSESSEE HAS NOT REMITTED THE PAYMENT OF SERVICE TAX COLLECTED BY IT AND THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTION IN RESPECT OF THE SERVICE TAX AMOUNT COLLECTED IN THE RELEVANT FINANCI AL YEAR AND REMITTED. BUT, WE FIND THAT THERE IS HUGE VARIATION FROM THE DETAILS FURNISHED BY THE LD. COUNSEL FOR THE ASSESSEE AND THE AMOUNT QUANTIFIED BY THE ASSESSING OFFICER. UNDER THESE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO VERIFY THE DETAILS AND QUANTIFY THE SERVICE TAX LIABILITY AND ALLOW THE DEDUCTION IN ACCORDANCE WITH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITIES OF BEING HEARD TO THE ASSESSEE. 9 . IN THE RESULT, THE APPE AL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 16 TH SEPTEMBER , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 16 . 0 9 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.