2015 (4) TMI 684

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..... ting that the said liability was clearly disallowable within the provisions of the said section?  (b) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the unpaid service tax would not be disallowable under section 43B of the Act as the liability to pay service tax had not arisen without appreciating the fact that the assessee has shown the said amount as a liability in its Balance Sheet? 2] The facts in brief are as follows:­ The Respondent­Assessee filed its returns for assessment year 2007­ 08 declaring total income of Rs. 4,46,46,873/­ on verification of the computation of income, it was found that the Assessee had set off entire business income again .....

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..... to be rejected by the Tribunal on 31st October, 2012 while partly allowing the Appeal for statistical purposes. The Revenue being aggrieved by this order has raised the questions of law under section 260A of the Income Tax Act, 1961. 5] Before us, Mr. Pinto, the learned counsel, appearing for the Appellant submitted that the earlier order of the Tribunal in Pharma Search V/s. Assistant Commissioner of Income Tax­15(3), Mumbai (2012) 53 SOT 1 (Mum) was followed. According to Mr. Pinto, the liability to pay service tax had already accrued. He drew our attention to the order of the Tribunal which was passed for the assessment year 2007­ 08. Mr. Pinto submitted that the Tribunal ought not to have set aside the disallowance on both coun .....

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..... and they disallowed the deduction and added it to income. In the Appeal, the Tribunal observed that since the assessee did not debit the amount to the profit and loss account as an expenditure nor did the assessee claim any deduction in respect of the amount since the assessee was following the mercantile system of accounting , the question of disallowing the deduction not claimed does not arise. 8] Mr. Pardiwalla referred to a decision of the ITAT in the case of Pharma Search V/s. Assistant Commissioner of Income Tax­15(3), Mumbai (2012) 53 SOT 1 (Mum) in which the Assessing Officer had concluded that service tax in the sum of Rs. 32 lacs being consultation fees should be added to the income. But this was set aside on the basis that .....

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