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2022 (9) TMI 301 - AT - Income TaxDisallowance of Service Tax claimed in the profit and loss account - payment was disallowed by AO on the ground that the assessee has neither shown collection of Service Tax and payment of Service Tax and there is no mention in the Notes to the Accounts - CIT-A deleted the addition - HELD THAT - We find that the Assessing Officer has misdirected herself in understanding the Notes to the Accounts. Service Tax liability is liability of the assessee and it is not a case where Service Tax has been collected by the assessee from its customers. We, therefore, do not find any error or infirmity in the findings of the Ld. CIT(A). Ground No. 1 is dismissed. Disallowance on account of rejection of consumption of food and beverages claimed - assessee has not maintained/furnished quantitative details/stock register for goods traded/consumed - CIT-A allowed relief to assessee - HELD THAT - Considering the nature of business of the assessee and considering the fact that items like liquor is sold on the basis of quantity. It cannot be ruled out that the assessee is maintaining stock register. Since the ld. CIT(A) confirmed the disallowance in our considered opinion, this should meet the ends of justice. We, therefore, decline to interfere with the findings of the ld. CIT(A). Ground No. 2 is also dismissed.
Issues:
1. Disallowance of Service Tax claimed in profit and loss account. 2. Disallowance on account of rejection of consumption of food and beverages claimed. Issue 1: Disallowance of Service Tax claimed in profit and loss account The appeal by the Revenue was against the order of the ld. CIT(A) pertaining to Assessment Year 2014-15. The Assessing Officer disallowed Rs. 40,45,470 claimed as Service Tax payment by the assessee, stating that there was no mention in the Notes to the Accounts regarding collection or payment of Service Tax. The ld. CIT(A) deleted the addition, noting that Service Tax payment was an allowable liability for the assessee, not collected from customers. The ITAT found that the Assessing Officer misunderstood the Notes to the Accounts, clarifying that Service Tax liability is on the assessee and not collected from customers. Consequently, the ITAT upheld the decision of the ld. CIT(A) and dismissed Ground No. 1. Issue 2: Disallowance on account of rejection of consumption of food and beverages claimed The Assessing Officer disallowed Rs. 4,07,09,028 due to the assessee's alleged failure to maintain or furnish quantitative details or stock register for consumed goods. The ld. CIT(A) partially accepted the assessee's explanation, limiting the disallowance to 10% of consumption of foods and beverages, resulting in a sustained addition of Rs. 2,03,54,514. The ITAT observed the nature of the assessee's business, acknowledging the challenges in providing quantitative details for perishable items purchased daily. Considering the ld. CIT(A)'s decision and the nature of the business, the ITAT declined to interfere with the upheld disallowance amount. Consequently, Ground No. 2 was also dismissed. In conclusion, the appeal of the Revenue was dismissed by the ITAT, upholding the decisions of the ld. CIT(A) on both issues regarding the disallowance of Service Tax claimed in the profit and loss account and the rejection of consumption of food and beverages claimed. The judgment was pronounced on 01.09.2022.
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