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2023 (4) TMI 293 - AT - Income TaxDisallowance of expenditure on account of accumulated service tax of rent - Addition on the ground that the ‘reply of the assessee found to be not satisfactory’ - HELD THAT:- The service tax is an indirect tax wherein the supplier of the ‘services’ collects the tax from the recipient of the services and deposits the same with Revenue authorities. Even the levy on the renting of immovable property wherein the service tax has to be borne by the lessee but the same has to be collected by the landlord who is under obligation to perform the function of facilities or wherein he collect the tax and deposits the same with the Revenue authorities. Liability of service tax on the rent is always passed on the recipient of the service. The reasoning given by the Revenue authorities in the present case are grossly erroneous. The allow-ability of rent paid for the purpose of business of assessee is covered under section 30 of the act. As regards service tax of rent, the same takes the character of the rent itself, as a result, the same should be allowed under section 30. Considering ‘documents’ produced by the assessee before us, we deem it fit to remand the issue to the file of the AO and examine the submission and the documents produced thereon and pass appropriate order in accordance with law after providing adequate opportunity of being heard to the assessee. Ground No. 1 of the assessee is allowed, for statistical purposes. Disallowance of payment of rent - no lease agreement and the assessee has not submitted any document to prove that the said premises has been used for business purpose - assessee entered into lease agreement in writing and the same has been renewed orally - HELD THAT:- Though the lease agreement need not be in writing and the tenancy can be oral, but to prove the tenancy the assessee could have produced the owner before the Assessing Officer in support of his claim and the burden cast upon the assessee to substantiate the claim that the premises has been used for ‘Business Purposes’. We deem it fit to remand the matter to the file of the AO with a direction to the assessee to prove the oral tenancy and also to prove that the premises has been used for the ‘business purpose’ and the AO is directed to decide the matter afresh after providing adequate opportunity of hearing to the assessee. Ground of the assessee is allowed for statistical purposes.
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