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TMI Blog2017 (12) TMI 1811X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Service Tax Officer. We do not accept the argument of the Assessing Officer, due to the reason that orders passed by the Service Tax Officer are quasi-judicial orders as equivalent to an order of a Court and it is the duty of the assessee to follow the same. Filing of appeal is only a prerogative which is optional and which may or may not be exercised. We also note that if the government does not refund the service tax, which is refundable to the assessee, then it would be a business loss to the assessee. That is, the assessee has entitlement on such amount and if the government does not refund him then it would be a loss in the hands of the assessee and in that situation the assessee write it off in the books and claims as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. Commissioner of Income Tax (Appeals)-XII, Kolkata in Appeal No. 496/XII/Cir-10/13-14, dated 21.07.2014, which in turn arises out of an order passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961, dated 07.03.2014. 2.The Revenue has raised the following grounds of appeal: 1. That is the facts and in law of the case the ld. CIT(A) erred in deleting the deduction of ₹ 96,78,546/- under the Service Tax claim written off. The assessee had relinquished the impugned claim which therefore, cannot be termed as normal business loss or a bad debt. 2. That the appellant craves for leave to add, delete or modify any of the grounds of appeal before or all the time of hearing. 3. The brief facts qua the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2009-10 80,66,540.83 - - - 1,81,73,333.34 4. 2010-11 27,55,508.94 78,43,992.00 33,35,294.00 96,78,546.34 34,06,303.94 TOTAL 2,09,28,842.28 78,43,992.00 33,35,294.00 96,78,546.34 The assessment orders passed by Service Tax Authority on different dates during the period 01.04.2010 to 31.03.2011 in respect of different vessels for which the service tax refund has been claimed by the assessee, were examined by AO. The Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject matter of this year, being prior period expenses. Further, the claim was surrendered by the assessee without any satisfactory logic and the loss computed for the same does not pertain to this year. The assessing officer also observed that the service tax amount for this accounting year 2010-11 is claimed as receivable for ₹ 27,55,508/- and against which the assessee has claimed refund of ₹ 33,35,294/-.Therefore, no loss was actually incurred by the assessee for assessment year 2011-12.Therefore, based on the above facts the assessing officer disallowed ₹ 96,78,546/- and added back to the returned income of assessee. 4. Aggrieved by the addition made by the Assessing Officer of ₹ 96,78,546/-on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebited in the Profit Loss Account. The ld. Counsel pointed out that the assessee was following the mercantile system of accounting during the year. There was also no change in the accounting system from the previous year and the same system of accounting was being followed by the assessee since more than 15 years and subsequently years also. The ld. Counsel also pointed out that under the mercantile system of accounting, expenses which accrues or arises even if the same is not paid, it is to be claimed as expenditure. The Assessing Officer has not allowed the claim of the assessee on the reasoning that the appeal was not filed by the assessee against the order passed by the Service Tax Officer and this should not be aground to disallow th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment on such amount and if the government does not refund him then it would be a loss in the hands of the assessee and in that situation the assessee write it off in the books and claims as bad debts. Under the Income Tax Act, 1961 the expenses are allowed as per mercantile system of accounting as well as cash system of accounting. The assessee is following the mercantile system of accounting during the year. There is also no change in the accounting system from the previous year and the same system of accounting was being followed by the assessee since more than15 years and subsequently also the same has been followed. Under the mercantile system of accounting, expenses which accrues or arises even if the same is not paid, it is to be c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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