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TMI Blog2023 (10) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial years prior to F.Y.2015-16. There is no dispute about these facts. Superintendent of Central Excise Service Tax had passed the order in F.Y.2014-15 directing the assessee to pay the Service Tax for the Services provided from July, 2012 to March, 2014. Therefore, the liability to pay the service Tax had arisen in earlier financial years and the contention of the assessee is rejected that the demand was not crystallized. Thus, in the case of United Glass Manufacturing CO [ 2012 (9) TMI 914 - SUPREME COURT] allowed deduction u/s 43B, of Sales tax paid on estimate basis. Therefore, no merit in the argument of the assessee that the Liability of Service Tax was not crystallized during F.Y.2014-15 and it was crystallized only in F.Y.2015-16, though the Service Tax amounts were paid in F.Y.2014-15. In this case since the amount was not paid during the F.Y. 2015-16, but it was actually paid in F.Y.2014-15 and earlier years the AO has rightly disallowed the impugned amount as un-allowable expenditure u/s. 43B of the Act for A.Y.2016-17.Therefore, in these facts and circumstances of the case we agree with the AO and upheld the disallowance. Decided against assessee. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax and no any component of penalty included in the said claim. 5. Alternatively, and without prejudice to the above grounds of appeal, the learned CIT(A) erred in law and on facts in not directing the learned AO to grant such deduction in year of payment as per the provisions of section 43B of ITA, 1961. 6. The appellant craves leave to add, alter, clarify, explain, modify, delete any of the grounds of appeal, and to seek any just and fair relief. Brief facts of the Case : 2. The assessee company e-filed its original return of income for A.Y.2016-17 on 08.09.2016 declaring a loss of Rs. 3,13,80,561/-. The assessee s case was selected for scrutiny. The Assessing Officer(AO) issued various notices. The AO noted that assessee had claimed service tax liability of Rs. 3,69,88,541/- as allowable expenditure during the year. The AO called for the details. The AO noted that the service tax amount of Rs. 3,69,88,541/- was paid in earlier financial years as under : Year Liability Payment year FY 12-13 13-14 (July 12 - March 14) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee filed appeal before this Tribunal. Submission of ld.Authorised Representative(ld.AR) : 4. The ld.AR filed a paper book. Ld.AR submitted that the assessee had paid service tax liabilities in F.Y.2014-15 under protest. The assessee had filed appeal against the order of Superintendent, Central Excise and Service Tax. The ld.AR therefore, pleaded that the liability was not crystalised in F.Y.2014-15 and hence, as per section 43B, only the crystalised liability can be claimed, hence, assessee has claimed the said liability during the year i.e. F.Y.2015-16. The ld.AR also submitted that it is a revenue neutral exercise. Therefore, ld.AR pleaded that it should be allowed in the year F.Y.2015-16 as claimed by the assessee. The ld.AR relied on the decision of the Hon ble Supreme Court in the case of Maruti Suzuki India Ltd(Earlier known as Maruti Udyog Ltd.,) Vs. CIT, Delhi in Civil Appeal No.11923 of 2018 dated 07.02.2020. 4.1 The ld.AR alternatively pleaded that the AO may be directed to allow these service tax liabilities in the year of actual payment as mentioned in the Audit Report. Submission of ld.Departmental Representative(ld.DR) : 5. The ld.DR for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay 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 him : Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return9. Explanation 1. For the removal of doubts, it is hereby declared that where a deduction in respect of any sum referred to in clause (a) or clause (b) of this section is allowed in computing the income referred to in section 28 of the previous year (being a previous year relevant to the assessment year commencing on the 1st day of April, 1983, or any earlier assessment year) in which the liability to pay such sum was incurred by the assessee, the assessee shall not be entitled to any deduction under this section in respect of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case whether the assessee had to pay the service tax liability in that year or not as per service tax rules will not change the allowability u/s 43B of the Income Tax Act as long as the Assessee had actually paid it. 9. Lets try to under stand the exact nature of the impugned Service Tax Liability. As noted from submission of the Assessee made before the Service Tax Authorities, The Assessee is a Contract Research Organization based in Pune, it offers a wide range of Animal and other pre-clinical safety studies for novel pharmaceutical, agrichemical, biotechnological products to enable their registration with Governmental Agencies. The assessee provides these services to its clients in India and abroad. The Service Tax Authorities held that these services attract Service Tax even if clients are abroad as Place of provision of services is in India Pune. 9.1 Assessee has filed an Appeal before the Customs Excise Service Tax Appellate Tribunal and it is pending. 10. Be it as it may be, when we analyse the facts of the case in the light of the law enunciated by Hon ble Supreme Court(supra), it is observed that the Assessee had paid the impugned service Tax Liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in F.Y.2014-15 directing the assessee to pay the Service Tax for the Services provided from July, 2012 to March, 2014. Therefore, the liability to pay the service Tax had arisen in earlier financial years and the contention of the assessee is rejected that the demand was not crystallized. 11.1 The Hon ble Supreme Court in the case of CIT Vs. United Glass Mfg. Co. Ltd., [2012] 28 taxmann.com 429 (SC) [12-09- 2012] has held as under : Quote, 1.4 There is not dispute that the assessee has paid tax which was calculated on estimation under the Karnataka Sales Tax Act, 1957. In the circumstances, Section 43B of the Income Tax Act, 1961, squarely applies. 1.5 We see no reason to interfere with the impugned judgement. The civil appeal filed by the Department is, accordingly, dismissed with no order as to costs Unquote. 11.2 Thus, in the case of United Glass Manufacturing CO the Hon ble Supreme Court allowed deduction u/s 43B, of Sales tax paid on estimate basis. 11.3 Therefore, we do not find any merit in the argument of the assessee that the Liability of Service Tax was not crystallized during F.Y.2014-15 and it was crystallized only in F.Y.2015-16, though the Service Tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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