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Showing 401 to 420 of 1182 Records
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2025 (2) TMI 782
Continued suspension GST registration pursuant to the issuance of a SCN - HELD THAT:- The record would bear out that despite a detailed reply having been filed soon thereafter, and more particularly on 08 October 2024, the SCN proceedings have not been finalized till date.
This writ petition is disposed off by directing the competent authority to ensure that the pending SCN proceedings are disposed of in accordance with law with due expedition and preferably within a period of two weeks from the date of presentation of a certified copy of our order.
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2025 (2) TMI 781
Voluntary cancellation of Goods and Services Tax (GST) registration - seeking disposal of its application in terms of which it had sought voluntary cancellation of its Goods and Services Tax registration - HELD THAT:- It appears that while the writ petition was disposed of on 02 December 2024, the operative directions were framed against the State GST authorities. It is informed that the application is pending consideration of the Central GST authorities and which fact was not disclosed at the time of disposal of the writ petition.
The first respondent is requested to duly examine and dispose of the pending application in accordance with law and with due notice to the writ petitioner - petition disposed off.
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2025 (2) TMI 780
Challenge to impugned order on the premise that there is violation of principles of natural justice - petitioner is ready and willing to pay 25% of the disputed tax and seeks grant of one final opportunity before the adjudicating authority - HELD THAT:- The impugned order dated 18.07.2024 is set aside.
The petitioner shall deposit 25% of the disputed taxes as admitted by the learned counsel for the petitioner and the respondent, within a period of four weeks from the date of receipt of a copy of this order.
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2025 (2) TMI 779
Withdrawal of Advance Ruling application - GST Search can be conducted other than the place specified in the Search warrant or not - cash or valuables can be seized by the department from the place other than specified and authenticated in the search warrant or not - cash and goods pertaining to the person other than the assessee can be seized by the Department or not - confiscation of cash seized - HELD THAT:- The applicant has not raised any questions which are found to be covered under any of the clauses of sub-section (2) of section 97 of the GST Act. It is satisfied that the applicant has been provided reasonable opportunity to counter the observations. Therefore, there are no reason to accept the instant application made by the applicant for pronouncement of ruling. The application is, therefore, rejected on this ground alone.
In terms of first proviso of sub section (2) of section 98 of the GST Act “the authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provisions of this Act”. Here, found that as the matter has already been decided by Assistant Commissioner, CGST division-J, Ajmer vide Order in Original No. 14/GCM/GST/DIV-I/2024-25/AC dated 11.06.2024. Therefore, the application filled by the applicant is not fit to accept for pronouncement of ruling. The application is liable to be rejected, hence, rejected.
Since the ruling authority has not found any reason to accept the application for pronouncement of ruling as above and the applicant has also requested for withdrawal of the application, therefore, their request to withdraw the application is considered.
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2025 (2) TMI 778
Offence punishable u/s 276B - TDS (Tax Deducted at Source) was collected by the company but not deposited into the Central Government account in time - delay of payment on 39 occasions as per the online data available - as decided by HC [2024 (1) TMI 1440 - TELANGANA HIGH COURT] when the entire amount of TDS along with interest was paid even prior to the first communication from the Department and the balance interest amount was paid after the notice, this Court deems it appropriate to quash the proceedings against the petitioners - HELD THAT:- There is a gross delay of 239 days in filing the special leave petition. The reasons assigned for seeking condonation of delay are neither sufficient in law so as to condone the same nor satisfactory. Hence, the application seeking condonation of delay is dismissed.
Consequently, the special leave petition also stands dismissed.
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2025 (2) TMI 777
Reopening of assessmnet u/s 147 - “reason to believe” OR “reason to suspect” - delay filling SLP
As decided by HC [2023 (2) TMI 426 - BOMBAY HIGH COURT] Reasons recorded do not suggest at all whether pursuant to receipt of information, the assessing Officer had independently applied its mind to the information received or conducted its own inquiry into the matter for the purpose of coming to a conclusion that indeed income assessable to tax had escaped assessment or that the transaction in question with the alleged shell entity was only a paper transaction
HELD THAT:- There is a delay of 354 days in filing the present special leave petition, which has not been adequately and satisfactorily explained. Even on merits, we do not see any good ground and reason to interfere with the impugned judgment.
Recording the aforesaid, the application for condonation of delay and, consequently, the special leave petition are dismissed.
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2025 (2) TMI 776
Denial of exemption u/s 11 - delay in electronically uploading Form 10B but filed it manually within the prescribed period - HELD THAT:- We are satisfied that the Petitioner filed Form 10B manually or physically within the prescribed period. True, Form 10B was not uploaded electronically. Petitioner was not intimated for a long time that this was the requirement for which the exemption was being denied. Belatedly, the Petitioner was informed that this was one of the reasons. Therefore, the Petitioner took expedient steps.
Petitioner also explained that she had nothing to gain from non-compliance. The non-compliance, if any, was due to the advice of a professional Chartered Accountant. Even the Chartered Accountant filed an affidavit explaining her bona fides and the factum of the advice. After the Petitioner became aware of the reasons, she took several steps and ultimately uploaded Form 10B electronically. Still, the application for condonation of delay has been rejected without adequate compliance with the principles of natural justice and fair play.
The delay should be condoned as long as such lapse is not mala fide and the assessee has not derived any undue advantage out of his own lapse.
Besides, in this case, though the delay appears considerable, there is some merit contentions that the delay should be construed from the day Petitioner was informed of the real reason for the denial of exemption. After it was informed of the real reason, the Petitioner's conduct cannot be said to be either informed with lethargy or indolence. The Petitioner took several steps and time and again pointed out that Form 10B was already filed manually within the prescribed time.
That even before the CIT (Exemption), the Petitioner categorically pleaded and made good their submissions about Form 10B being filed manually within the prescribed time limit. This was a crucial circumstance when considering the Petitioner’s conduct and its application for condonation of delay. The possession of the certification is a mandatory requirement. The mode of proof may not always be. In any event, no dispute is raised about the Petitioner submitting the prescribed form within the prescribed period manually or physically. The impugned order, however, takes no cognisance of this crucial circumstances.
We are satisfied that discretion should have been exercised, and the delay should be condoned.
We condone the delay in electronically uploading Form 10B after noting that his form was already filed in the physical form within the prescribed period, i.e. on 30 September 2014, about which there is no dispute whatsoever.
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2025 (2) TMI 775
Validity of reassessment proceedings - notice as issued u/s 148A(b) to the petitioner on the basis of High Risk CRIU/VRU information available on ‘Insight Portal’ - receipt of accommodation entries in the form of bogus capital expenses from fictitious entity - HELD THAT:- Revenue appears to have conducted a physical verification which was confirmed vide the Clarificatory Letter dated 22.08.2024. However, without issuing a further notice in respect of the alleged non-existence of the said entity at the Jasola address and calling for an explanation in that regard, the respondent/Revenue passed the impugned order u/s 148A (d) of the Act dated 31.08.2024. This procedure, to our mind, is abject violation and infraction of the principles of natural justice, inasmuch as, the conclusion regarding the said entity being a non-existent bogus entity was never put to the petitioner in the show cause notice dated 09.08.2024 issued u/s 148A (b) of the Act. In other words, the petitioner was never afforded an opportunity to respond to the said allegation.
The aforesaid infraction gathers great significance having regard to the fact that the original assessment proceedings for the AY 2018-19 stood closed. It was only by the impugned notice u/s 148A (b) of the Act dated 09.08.2024, the initiation of re-assessment proceedings were to commence. Ordinarily, after the closure of the assessment proceedings, AO would be functus officio and to re-confer jurisdiction upon the AO to initiate re-assessment proceedings, relevant incriminating material ought to be put to the assessee before any such re-commencement can be sought.
Reassessment proceedings set aside - Decided in favour of assessee.
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2025 (2) TMI 774
Condonation of delay in filing form 10 CCB u/s 119 - Petitioner prayed for condonation of delay for revised Income Tax Return to be accepted, as a return filed u/s 139 (5) - HELD THAT:- The management of the company did not know about his personal problems until socially unacceptable conduct came to light when his wife barged into the Registered Office of the company along with her children.
Petitioner further stated that, it was only after the receipt of notice u/s 142 (1) calling for information and details pursuant to notice issued u/s 143 (2) the company realised that the original tax filings on 7th November 2017, were based on incorrect figures.
Petitioner has also submitted that, in the midst of all this, the director of the company, was also irregular in attending the office due to his mother’s deteriorating ill health during the period from June 2017 to March 2018. The Petitioner has submitted that, during this period, his mother was operated for 3 major spine problems at Hinduja Hospital. His mother was completely bedridden after the surgeries and, hence, the director could not attend the office on a regular basis. Petitioner also submitted that since the business of the company had expanded, and there was need for an ERP system for the company to manage its operations, the company, during F.Y. 2016-17, implemented a new ERP accounting programme system in its office. During this phase, the company experienced a high attrition rate impacting accounting work on day to day basis, leading to delayed preparation of financial information. In these circumstances, the Petitioner has sought for condonation of delay.
Such factors which are purely fortuitous and purely human attributes necessarily required due consideration, when it comes to compliances of time limits prescribed under the IT Act.
As observed by this Court in Jyotsna M. Mehta [2024 (9) TMI 585 - BOMBAY HIGH COURT] the situation in hand would be akin to how a Court would consider in the legal proceedings before it, in condoning delay in filing of proceedings.
Resultantly, the impugned Order dated 21st September 2023 is quashed and set aside. The Respondents are directed to permit the Petitioner to file returns with penalty, fees and interest, if any, within a period of two weeks from the date a copy of this Order is available.
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2025 (2) TMI 773
Validity of Order passed u/s 92CD(3) - Whether an Appeal under Section 246A(bb) is the appropriate remedy for the Petitioner? - HELD THAT:- What the Petitioner refers to as a letter dated 31st March, 2024 (Exh. ‘Q’ to the Petition) is not a letter but an Order passed under Section 92CD(3). Against the said Order, an Appeal is provided under Section 246A(bb) of the Act. Section 246A(bb) of the Act clearly provides for an Appeal to the Commissioner (Appeals) against the Order made under sub-section (3) of Section 92CD of the Act.
21. In these circumstances, since the efficacious alternate remedy of an Appeal is available to the Petitioner under Section 246A (bb) of the Act, we are not inclined to entertain this Petition and we are inclined to relegate the Petition to the alternate remedy of an Appeal.
It has been pointed out to us that, subsequent to the filing of this Petition, an Order has been passed under Section 154 r/w Section 92CD of the Act. The said Order shows that, even as per the Revenue, a sum of Rs. 23,77,74,400/- is refundable to the Petitioner. Even though we are dismissing this Petition on the ground of an alternate remedy available to the Petitioner, we are of the view that this admitted amount of Rs. 23,77,74,400/- should be paid to the Petitioner along with interest.
The Petitioner is at liberty to file an Appeal under Section 246A (bb).) Respondents are directed to refund to the Petitioner an amount as per the Order passed under Section 154 r/w Section 92CD of the Act along with applicable interest until the date of payment.
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2025 (2) TMI 772
Denying credit for Tax Deduction at Source (TDS) - Whether ITAT erred in confirming the action of the Respondent in denying the credit for the TDS amount although TDS Certificates stood in the name of the Appellant and credit could be given only to the Appellant as the deductee and not to any one else? - HELD THAT:- It is not in dispute that the income corresponding to the TDS was not offered to tax by the appellant. It is stated to have been offered to tax by ISPL alongwith the TDS. The Appellant has not placed on record as to what was the exact position in respect of the returns of the ISPL qua the said amount and whether the ISPL, in offering the relevant income, has claimed TDS or otherwise.
Admittedly, in the present case, the assessee has filed a NIL return. It would not require any elaboration that the TDS is on the income/receipt of the assessee and forms part of the income of the assessee. Thus, when there is no income being offered qua the corresponding TDS and as TDS is part of the assessee’s income, the position being taken by the appellant is a position contrary to its returns. There cannot be a situation that the principal income corresponding to the TDS as claimed, is not offered for assessment as a NIL return is filed, however, merely the benefit of TDS income is claimed.
This would be contrary to the provisions of Section 198 which provides that the tax deducted at source would be the income received. Admittedly in the present case, for the Assessment Year in question, independent tax returns have been filed by the assessee as also by the ISPL. Thus, such incongruence and a position contrary to the return of the appellant goes contrary to the provisions of Section 198 read with Section 199 of the Income Tax Act. Decided in favour of the Revenue.
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2025 (2) TMI 771
TCS u/s 206C - As per the Revenue verification of the declaration to be furnished by the purchaser is to be done by the seller (i.e. the assessee in the instant matter) - Whether it is duty and the responsibility of the assessee company to collect TCS @ 1% u/s 206C (1A) of the Act from all buyers on the sale of coal if it is not used for self-consumption or for the purpose for which it was intended to be used ? - whether assessee company is not responsible for verification of Form 27C if it is duly filed in and signed by the declarant?
HELD THAT:- The ‘declarant’ in Form-27C is the ‘purchaser’ and not the ‘seller’
Quite clearly, the phrase ‘verified in the prescribed manner’ in the scheme of the Act and the Rules, mean that the verification/ declaration is to be made by the purchaser who is providing the signed/ verified form to the seller, and neither the Act, nor the Rules, in any manner lay down that any verification whatsoever is to be done by the seller, as is being sought to be contended by the Revenue.
There is no question of law, much less any substantial question of law involved in the instant appeal, as, what is being contended by the Revenue is clearly de hors what is laid down in section 206C (1A) of the Act read with Rule 37C of the Rules and Form 27C.
Hon’ble Supreme Court in the case of CIT v. A.A. Estate (P) Ltd. [2019 (4) TMI 957 - SUPREME COURT] has held that if the High Court is of the view that if an appeal does not involve any substantial question of law so as to attract the rigor of section 260-A of the Act for its admission, the appeal ought to be dismissed in limine.
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2025 (2) TMI 770
Maintainability of appeal on low tax effect - assessees submit that the tax effect in these appeals is less than Rs. 50,00,000/- - HELD THAT:- The letter dated 20 August 2018 categorically states that the modification introduced thereby to the CBDT circular dated 11 July 2018 shall come into effect on the date of issue of this letter. Thus, no retrospective effect is given to the two added exceptions by letter dated 20 August 2018. Paragraph 13 of the CBDT circular dated 11 July 2018 remains unamended. This means that, insofar as the increased monetary limits are concerned, they would apply even to the pending appeals. However, when it comes to applying the exceptions, the same would apply from 20 August 2018 and not earlier.
A similar issue arose before the co-ordinate bench in the case of V. M. Salgaonkar and Brothers (P.) Ltd. [2024 (12) TMI 717 - BOMBAY HIGH COURT] On analysing circulars 5 of 2024 and 9 of 2024, the coordinate bench held that the monetary limits would apply to the pending appeals, but when it comes to the exceptions subsequently introduced, such exceptions could not be construed retrospectively.
The above decision was followed by us in M/s IPL Loan Trust) [2025 (2) TMI 453 - BOMBAY HIGH COURT] Applying the same principles to the circulars and amending letters involved in the present appeals, we are satisfied that these four appeals which were instituted before 20 August 2018 would have to be disposed of as the tax effect involved in these appeals is below the monetary limits of Rs.50,00,000/-.
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2025 (2) TMI 769
MAT applicability to a company engaged in the business of providing electricity and governed by the Electricity Supply Act - HELD THAT:- The issue raised in various appeals insofar as applicability of Section 115JB is covered by the decision of Ajmer Vidyut Vitran Nigam Ltd. [2021 (11) TMI 1103 - RAJASTHAN HIGH COURT] and Tata Power Delhi Distribution Ltd. [2025 (1) TMI 879 - DELHI HIGH COURT] We may further observe that both the parties have agreed that the ratio laid down in the case of Union Bank of India [2019 (5) TMI 355 - BOMBAY HIGH COURT], M/s. Dresdner Bank AG [2025 (2) TMI 707 - BOMBAY HIGH COURT] and Dena Bank [2019 (8) TMI 1924 - BOMBAY HIGH COURT] squarely applies to the facts of the present case since even the banking companies are not required to make their financials according to the Companies Act, but since they are required to make their financials as per the Banking Regulation Act, the provision of Section 115JB would not be applicable. Decided in favour of the Assessee.
Addition of interest charged u/s. 234D - The issue is covered against the Assessee and in favour of the Revenue by the decision of this Court in the case of Indian Oil Corporation Ltd. [2012 (9) TMI 517 - BOMBAY HIGH COURT]. Therefore, following the decision of the Coordinate Bench Question (ii) is answered in favour of the Revenue against the Assessee.
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2025 (2) TMI 768
Power of CIT(A) to dismiss the appeal for non-prosecution - delay in filing the appeal to be condoned due to sufficient cause, including the impact of the COVID-19 pandemic - HELD THAT:- Sub-section 2 of Section 251 states that the Joint Commissioner (Appeals) or the Commissioner (Appeals), as the case may be, shall not enhance an assessment or a penalty or reduce the amount of refund unless the appellant has had a reasonable opportunity of showing cause against such enhancement or reduction.
Explanation contained in Section 251 states that in disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant.
Thus, on a plain reading of the above provision indicates that the Commissioner (Appeals) should decide the appeal petition on merits.
The Hon’ble Supreme Court in Aditya Khaitan & Ors. [2023 (10) TMI 155 - SUPREME COURT] had taken note of the impact of the covid pandemic and observed that when the whole world is in grip of devastating pandemic, it could never have been said that the parties were slipping over their rights. In the instant case it is no doubt that the entire period was not covered during the pandemic but the part of the period was undoubtedly covered during the pandemic.
Even thereafter there has been some delay in the matter. However, what is to be borne in mind is the settled legal principle that the facts of each case have to be considered before applying the legal principle as to how an application under Section 5 of the Limitation Act has to be decided.
Ordinarily, a litigant does not stand to gain by either preferring an appeal belatedly or not appearing before the appellate forum. There may be cases where for certain mala fide reasons the appellant will avoid proceedings. However, in the instant case there is no such record to show that the appellant had deliberately lodged appeal belatedly before the Tribunal or that deliberately they did not appear before the CIT(A) for certain other collateral purposes.
Therefore, apart from that, since the matter involves the tax liability, and the appellant’s remedy before the CIT(A) is a very valuable remedy since the Commissioner’s powers are coterminus with that powers of the assessing officer, we deem it appropriate to restore the appeal to the CIT(A) for being decided on merits subject to the condition that the appellant should not seek for any adjournment and should cooperate in the disposal of the appeal by the Commissioner.
Appeal is allowed and the order passed by Tribunal is set aside as well as the order passed by the CIT dated 16.10.2019 and the appeal stands restored to the file to be decided on merits in accordance with law.
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2025 (2) TMI 767
TDS u/s 195 - liability to deduct TDS on payments made to non-residents - ITAT come to conclusion that the payments made to three non-resident Companies do not fall within the meaning of ‘royalty’ as defined in DTAA - HELD THAT:- We agree with the aforesaid conclusion drawn by the ITAT.
The conclusion drawn by the CIT(A) in favour of the Revenue was primarily by relying upon the judgment in the case of Samsung Electronics Co. Ltd. [2011 (10) TMI 195 - KARNATAKA HIGH COURT] and also by holding that the payments received by assessee from two affiliates by granting user right to software is royalty and has been brought to tax in India. The said judgment has been over-ruled. In this regard, we may also refer to the judgment of the Supreme Court in the case of Engineering Analysis [2021 (3) TMI 138 - SUPREME COURT]
Similarly, a reference is also made to the judgments of Infrasoft Ltd. [2013 (11) TMI 1382 - DELHI HIGH COURT] and ZTE Corporation [2017 (1) TMI 1338 - DELHI HIGH COURT] to hold High Court is not correct in referring to Section 9 (1) (vi) of the Income Tax Act after considering it in the manner that it has and then applying it to interpret the provisions under the Convention between the Government of the Republic of India and the Government of Ireland for the Avoidance of Double Taxation and for the Prevention of Fiscal Evasion with respect to Taxes on Income And Capital Gains - when a copyrighted article is sold, the end-user gets the right to use the intellectual property rights embodied in the copyright which would therefore amount to transfer of an exclusive right of the copyright owner in the work, is also wholly incorrect. Decided against revenue.
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2025 (2) TMI 766
Computation of deduction u/s 80-IA - quantum of deduction which the assessee would be entitled to claim u/s 80IA - AO did not accept the case of the assessee that the market value of the electricity should be computed based on the rates fixed by the State Electricity Board for the electricity which is purchased by the assessee and held that there was excessive claim of deduction on captive consumption and restricted the deduction claimed by the appellant u/s 80IA of the Act.
HELD THAT:- For the purpose of taking a decision on merits, we need not labour much as we are guided by the decision of the Hon’ble Supreme Court in Jindal Steel and Power Limited. [2023 (12) TMI 417 - SUPREME COURT] as held that market value of the power supplied by the State Electricity Board to the industrial consumers should be construed to be the market value of electricity. It should not be compared with the rate of power sold to or supplied to the State Electricity Board since the rate of power to a supplier cannot be the market rate of power sold to a consumer in the open market. The State Electricity Board’s rate when it supplies power to the consumers have to be taken as the market value for computing the deduction u/s 80-IA of the Act.
We hold that the Tribunal had rightly computed the market value of electricity supplied by the captive power plants of the assessee to its industrial units after comparing it with the rate of power available in the open market, i.e., the price charged by the State Electricity Board while supplying electricity to the industrial consumers. Decided against revenue.
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2025 (2) TMI 765
Reopening of assessment u/s 147 - as argued procedure contemplated by Section 148A as not been followed before issuing the impugned notices - case of the appellant was not such as permitted the department to avoid following the procedure contemplated u/s 148A more so because it could not be said that proceedings u/s 132A had been initiated against the appellant in the instant case.- HELD THAT:- Appellant's submission appears to confuse between the existence of a power u/s 132A of the I.T. Act and the manner of exercise of that power.
Merely because the Department had resorted to a different procedure under the Cr.P.C. for the purposes of effectuating the action initiated under Section 132A it could not be said that the power under Section 132A had not been invoked, and the proceedings thereunder initiated, for the purposes of the I.T. Act. Inasmuch as the provisions of Section 132A have been invoked, we are in agreement with the finding of Single Judge that there was no requirement for compliance with the procedure contemplated u/s 148A of the I.T. Act prior to issuing the impugned notices under Section 148.
Thus, Writ Appeal fails, and is accordingly dismissed.
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2025 (2) TMI 764
Revision u/s 263 - Whether the assessment order under section 143(3) was erroneous and prejudicial to the interests of the revenue? - HELD THAT:- What is relevant for clause (a) of Explanation 2 to section 263 of the Act is whether the AO has passed the order after carrying our enquiries or verification, which a reasonable and prudent officer would have carried out or not. It does not authorize or give unfettered powers to the Ld Pr. CIT to revise each and every order, if in his opinion, the same has been passed without making enquiries or verification which should have been made.
This would inevitably mean that every order of the lower authority would thus become susceptible to section 263 of the Act and, in turn, will cause serious unintended hardship to the tax payer concerned for no fault on his part.
Apparently, this is not intended by the Explanation. Howsoever wide the scope of Explanation 2(a) may be, its limits are implicit in it. It is only in a very gross case of inadequacy in inquiry or where inquiry required on the basis of record available before the AO was not conducted, the revisionary power so conferred can be exercised to invalidate the action of AO.
AO in the present case has not accepted the submissions of the assessee on various issues summarily but has duly scrutinize the whole issue of excess stock as apparent from various queries made during the assessment proceedings. He passed after making due enquiries after due application of mind.
Twin conditions are not satisfied for invoking the jurisdiction under section 263. Here, in our view, it cannot be held that the assessing officer did not carry out enquiry or verification which should have been done.
Thus, CIT was not justified and not correct in law in holding that the impugned assessment order was erroneous. Accordingly, we find merit in the contentions of the assessee that the revision order passed by ld. PCIT for the year under consideration is beyond the scope of section 263 of the Act and hence not valid. Accordingly, we set aside the revision order passed by him. Assessee appeal allowed.
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2025 (2) TMI 763
Disallowance u/s 37 in respect of an ‘expense’ which has not at all been claimed in the Profit & Loss a/c - HELD THAT:- Underlying amount paid by the assessee qualifies as an expenses incurred by the assessee in order to secure the business of earning commission income from Max Life and such amount does not partake the character of service tax liability since such service tax liability was, under law never that of the assessee.
Such service tax liability was essentially that of Max Life under “reverse charge” mechanism. We also note that there is no specific provision which prohibits entering into such contractual agreement for sharing service tax liability and hence such agreement cannot be held to be an offence and hence prohibited by Explanation to Section 37.
AO’s contention that the amount in question was collected by Max Life from assessee but was not deposited to with the Government and was kept for itself, whereas the assessee had booked the same as an expenses, we observe that as per the provision of Section 2(1)(d) of the Service Tax Rules, 1994 such service tax liability was that of Max Life and not that of the assessee.
Therefore underlying amount of service tax which was agreed to be borne by the assessee does not partake the character of service tax liability, but is a “contractual arrangement” entered into between Max Life Insurance with a view to secure the business of Insurance Auxiliary Services from Max Life.
Such expenses should be allowed to the assessee u/s 37 - Assessee’s appeal is allowed.
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