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TMI Blog2021 (8) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 (9) TMI 238 - DELHI HIGH COURT] held that when the assessee was following mercantile system of accounting and had not deposited parts of service tax collection with the authorities concerned. The assessee neither claimed the deduction in this regards nor it debited the amount as expenditure in profit and loss account, there is no question for disallowance of said amount. Objection of Ld. DR for the revenue is that no payment was made by the assessee, therefore, no deduction was allowable - CIT(A) while granting relief to the assessee has taken not of the fact that no disallowance under section 43B can be made in this case because no expense on this count has been claimed. The assessee followed the exclusive method of accounting and whatever liability or expense debited in the profit and loss account had been paid through CENVAT credit and profit and loss account so no addition under section 43B on account of unpaid service tax is warranted. Thus, the grounds of appeal raised by the revenue are dismissed - ITA No. 3495/AHD/2015 - - - Dated:- 26-7-2021 - Shri Pawan Singh, Judicial Member And Dr. Arjun Lal Saini, Accountant Member For the Assessee : Shri P.M.Jagash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided services various to its customers. For assessment year2009-10 the assessee filed its return of income on 30.09.2009 declaring income of ₹ 1.12 crores. Initially the return was processed under section 143(1) without making any adjustments. Thereafter, the case was re-opened under section 147of the Act. Notice under section 148 dated 21.01.2013 was issued and served on the assessee. In response to notice under section 148, the assessee field its reply and submitted that return filed on 30.09.2009 may be treated as return in response to notice under section 148 of the Act. The assessee asked for reasons recorded. The reasons recorded was supplied to the assessee. The Assessing Officer after serving statutory notice under section 143(2) r.w.s. 142(1) of the Act proceeded for re-assessment. The Assessing Officer during assessment proceeding while going through the auditor s report noted that certain dues were not paid by assessee-company till date of filing of return of income as confirmed by auditor. The assessee has not paid following dues:- SL Nature of Govt. dues Amount of due Amount paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of assessee is recorded para-5 of the order of Ld. CIT(A). In the submission, the assessee stated that they are following exclusive method of accounting and has neither included service tax in its gross receipt not claimed any expense or VAT, service tax or excise duty and the same cannot be disallowed u/s 43B of the Act. The assessee further explained that sec. 43B states that certain payment should be allowed to be claimed an expense only in the year in which they have been paid and not in the year in which the liability to such sum was incurred. The provision of sec. 43B shall not reply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing its return under section 139 in respect of previous year, in which liability paid such sum was incurred by the assessee. It was further explained that assessee has changed the method of accounting from inclusive to exclusive method from the total income of fabrication job work and erection, the total service portion is exclusive. However, service tax expenditure was again considered on cash basis whenever received from the customers. The assessee has consider service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty. The assessee have not sought the deduction of PF and excise. No disallowance under section 43B can be made in his part. The Assessing Officer merely calculated the service tax by taking total service tax collected by assessee and deducted the service tax paid after claiming the expense. The Ld. AR of the assessee submits that the assessee has not claimed liability in their balance-sheet. To support his submission, the Ld. AR of the assessee relied upon the decision of Hon'ble Delhi High Court in the case of CIT vs. Noble Hewitt (I) (P) Ltd., (2008) 305 ITR 324 (Del) wherein Hon'ble court held that when assessee neither claimed any deduction nor it debited amount as an expenditure in profit and loss account and the assessee was following mercantile system of accounting no addition to the income of assessee can be made. Total income strengthen his submissions the learned AR for the assessee relied on the following case laws; CIT vs. Noble Hewitt (I) Ltd., (2008) 166 Taxman 48 (Del) ITO Vs. Shri Sanjay Rampayare Prajapati ITA No.2401/Ahd/2017 (ITAT Ahd) SDCE Projects Pvt. Ltd. Vs DCIT, ITA No.2556/Ahd/2017 (ITAT Ahd) ACIT vs. Real Image Media T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such claim could be claimed in the year in which they were actually paid. It was observed that in that case, the assessee has not paid service tax ability, thus it cannot claim deduction. It was held that the assessee has not claimed the deduction in its account. Therefore nothing was to be disallowed by the Assessing Officer. Considering the aforesaid factual and legal discussion, we do not find any infirmity in the order passed by the Ld. CIT(A), which is affirmed. 10. The objection of Ld. DR for the revenue is that no payment was made by the assessee, therefore, no deduction was allowable. We find that Ld. CIT(A) while granting relief to the assessee has taken not of the fact that no disallowance under section 43B can be made in this case because no expense on this count has been claimed. The assessee followed the exclusive method of accounting and whatever liability or expense debited in the profit and loss account had been paid through CENVAT credit and profit and loss account so no addition under section 43B on account of unpaid service tax is warranted. Thus, the grounds of appeal raised by the revenue are dismissed. 11. In the result, the appeal of the Revenue is dis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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