9911796707
TMI Blog2019 (2) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... s payable upon realisation of dues and assessee had made a provision in balance sheet for outstanding service tax payable, which was not claimed in profit and loss account as expenditure. As decided in COMMISSIONER OF INCOME TAX VERSUS NOBLE AND HEWITT (I) P. LTD. [2007 (9) TMI 238 - DELHI HIGH COURT] since the assessee did not debit the amount of profit and loss account as an expenditure nor did the 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 arise. - Decided against revenue - ITA No. 2711/Del/2015 - - - Dated:- 7-2-2019 - Shri N.K. Billaiya, Accountant Member And Smt. Beena A P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is engaged in business of logistics, installation and commissioning of electrical equipments etc., and derived income from business, short term capital gain and other sources. 2.2. Ld.AO on perusal of 26 AS statement observed that total receipts for year was ₹ 37.50 crores, whereas assessee only declared ₹ 34.01 crore in the P L account. It was accordingly called upon to explain difference. Assessee submitted that amount of ₹ 1.49 crores pertain to service tax, which was not rooted through P L account and details were furnished before Ld.AO. Ld.AO accordingly called upon assessee to show cause as to why amount of ₹ 1.49 crores should not be disallowed under section 43B of the Act. Assessee filed its reply vide l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable in the relevant assessment year) service tax was payable only when once the payment of remuneration for services rendered has been received by the assessee and as such that service tax was payable not by the assessee since payment for such services has not been received and when the amount is not payable; the question of disallowance does not arise. The above position is further established by the amendment by The Finance Act, 2011 which basically provides that from April 1, 2011, service tax will have to be paid on accrual basis meaning thereby till March 31, 2011 service tax is payable on collection or receipt basis, that is when you realise your dues you pay the service tax but from April 1,2011 now service tax will have to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was payable in the next year on receipt of service consideration and that was in fact paid in next year. The unpaid service tax was not claimed as expenses in its accounts. 4.1.5. Considering the facts and circumstances of the case and judicial pronouncements on the issue, I hold that that during the relevant year service tax on the unrealized contract receipts has not become payable as per the provisions of Rule 6 of the Service Tax Rules, 1994 and that the same cannot be disallowed as not paid u/s 43B of the Income Tax Act. Therefore, the addition made by the Ld.AO cannot be sustained and the same is directed to be deleted. 4. Aggrieved by order of Ld.CIT (A) revenue is in appeal before us now. 5. Ld.CIT DR placed reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by Ld.AR, wherein Hon ble Court observed that: 6. In our opinion since the assessee did not debit the amount of profit and loss account as an expenditure nor did the 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 arise. In our opinion the facts before us is identical to facts in case of CIT vs. Noble and Hewitt (I) Pvt. Ltd. , (supra). Respectfully following the same, we are inclined to uphold the view of Ld. CIT (A). 7.2. Accordingly grounds raised by revenue stands dismissed . 8. In the result appeal filed by revenue stands dismissed. Order pronounced in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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