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2017 (12) TMI 1811 - AT - Income TaxDeduction under the Service Tax claim written off - Whether assessee had relinquished the impugned claim which therefore, cannot be termed as normal business loss or a bad debt? - CIT-A deleted the addition as noted that the service tax paid on various export related services such as GTA Transport Services, technical testing and analysis service, port services etc. paid during the Financial Year 2006-07 to 2010-11 were reflected in the Balance Sheet under the head Service Tax Refundable Account - HELD THAT:- AO 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. 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 bad debts. In the assessment year under consideration, the assessee came to know that the government would not refund him, therefore he written off and claimed as bad debts in the books of accounts. We note that 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. We are of the view that the argument of the Assessing Officer is not tenable and cannot be accepted due to the reason that order passed by the Service Tax Officer are quasi judicial orders as equivalent to an order of a Court and it is the duty for the assessee to follow the same. Filing of appeal is only a prerogative which is optional and which may or may not be exercised. Since the Service Tax officer denied the payment by his order therefore assessee has written it off as bad debts. Therefore, we are of the view that assessee may write it off by debiting the said amount in profit and loss account as bad debts. Hence, we do not find any infirmity in the order passed by the ld. CIT(A) - Decided against revenue.
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