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TMI Blog2019 (10) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... ted from the customers as part of the turnover. Accordingly, the assessee has not included the amount of service tax in its turnover which has been shown as current liability. Therefore there was no deduction claimed by the assessee in its profit and loss account at the time of actual payment. We are not inclined to uphold the finding of the authorities below for the reasons as discussed in the preceding paragraph. Hence the ground of appeal of the assessee is allowed. Addition on account of interest on delayed payment of service tax after the due date of filing the income tax return - HELD THAT:- We can presume that the submission of the assessee is correct in the given facts and circumstances. Thus the question arises whether such interest expenses can be added to the total income of the assessee under the provision of section 43B of the Act. In our considered view, the answer is in negative. It is because, the assessee has not claimed the deduction of the amount as discussed above. Thus, we are of the view that there cannot be any addition to the extent of the interest amount as claimed by the assessee on account of delayed payment of service tax to the total income o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or ₹ 25,40,376/- on account of delayed payment of service tax under the provisions of section 43B of the Act. 2. The facts in brief are that the assessee in the present case is a private limited company and engaged in the business of providing civil construction services on contract basis. The assessee in the year under consideration has shown service tax liability as on 31 March 2013 amounting to ₹ 52,58,086/- only in its financial statements. Out of such liability, an amount of ₹ 25,40,376/- was paid/deposited by the assessee to the service tax department after the due date of filing of income tax return under section 139(1) of the Act. 2.1 The assessee during the assessment proceedings claimed that it has collected the service tax from the customers on behalf of the government and the same was paid subsequently to the Government Exchequer. Accordingly, the assessee on the collection of such service tax amount has shown liability in its books of accounts which was subsequently paid to the Government along with the interest in case of delayed payment. Accordingly, the assessee further submitted that it has not claimed any deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of the authorities below. 6. We have heard the rival contentions of both the parties and perused the materials available on record. The major thrust of the learned CIT (A) was that the impugned amount of service tax, not deposited within the due date of filing return, has to be treated as trading receipts in view of the judgment of Hon ble Supreme Court in the case of Chowringhee Sales Bureau (Pvt.) Ltd. Vs. CIT reported in 87 ITR 542 which reads as under: The amount realised on sales tax by the assessee in his character as an auctioneer formed part of its trading or business receipts. The Supreme Court further held that the fact that assessee credited the amount received as sales tax under the head sales tax collection account did not make any material difference. The liability to pay sales tax arises the moment sale or purchase is effected. The fact that that liability has not been quantified for payment, which the law enjoins an assessee to do, is not relevant in determining accrual of legal liability. If that is the position, in order to determine that liability where the assessee had not paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n its application to the present case. Here we are concerned with an assessee who has not even claimed any deduction on the ground of service tax and has not debited the amount to its Profit Loss Account. Moreover the provisions of section 43B of the Act are quite clear in this regard. The decision of the Calcutta High Court in Chowringhee Sales Bureau (P.) Ltd.'s case (supra) was not in the context of the applicability of section 43B of the Act. 6.2 We further note that the Hon ble Supreme Court in the case of Chowringhee Sales Bureau (Pvt.) Ltd. (supra) has also observed that the assessee shall be entitled for the deduction on account of sales tax liability as and when it will be incurred irrespective of the actual payment. The relevant finding of the Hon ble Apex court stands under: the sales tax amount realised by the assessee formed part of its trading receipts. However, the assessee was entitled to deduction inasmuch as the liability had arisen for payment of sales tax for the relevant years, even though these amounts had not been paid to the sales-tax authorities . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to place our reliance on the case laws as referred by the learned CIT-A in his order. 6.6 Now, the controversy arises whether the impugned amount of service tax for ₹ 25,40,376/- paid after the due date of filing of income tax return, is liable to be added to the total income of the assessee under the provisions of section 43B of the Act. At this juncture, we are inclined to refer the relevant provisions of section 43B of the Act which reads as under: Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of - [(a) any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or] XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct apply to the service ta payable at the end of the year. In the case of assessee amount of ₹ 13.56 lacs was added to the net profit as profit and loss account towards inadmissible items at the time of filing return of income. Post assessment, assessee preferred appeal before ld. CIT(A) raising the ground that service tax payable was not wrongly added to the net profit by applying the provisions of section 43B of the Act because service tax payable was not reflected in the profit and loss account With CO No.145/Ahd/2013 Asst. Year 2006-07 and it was a mere liability in the balance sheet for tracking the tax payable because in this case assessee is a mere collecting agent. This ground of the assessee was allowed by ld. CIT(A). In order to further examine the issue that whether service tax payable is covered under the provisions of section 43B sub-section(a) of the Act, we find that section 43B sub-sec.(a) of the Act refers to any sum payable by the assessee by way of tax, duty, cess or fees. Now taking example of service tax there can be two possibility firstly an assessee has taken some services and has paid service tax on such services taken from other persons. In this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 145A of the Act requiring the assessee to include the amount of service tax in the value of the purchases and sales. But such amendment is applicable with effect from 1 April 2017. The relevant extract of the section reads as under: For the purpose of determining the income chargeable under the head Profits and gains of business or profession , - ( i ) *** ( ii ) the valuation of purchase and sale of goods or services and of inventory shall be adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods or services to the place of its location and condition as on the date of valuation; ( iii ) *** ( iv ) *** Provided *** Provided further *** Explanation 1. - For the purposes of this section, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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