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2021 (8) TMI 103 - AT - Income TaxAddition u/s 43B - Method of accounting - unpaid statutory dues of service tax, Excise and PF by changing the method of accounting - HELD THAT:- CIT(A) after considering the submission of assessee and held that the assessee’s service tax disallowance and added by AO has never been claimed as expenses by assessee in its profit and loss account but claim as liability in the balance-sheet. The Assessing Officer has not brought this fact in the assessment order. AO merely calculated the service tax by taking total tax collected by deducting the amount of service tax paid. CIT(A) concluded that no disallowance under section 43B can be made in this case because no expense on this count has been claimed. The assessee followed the exclusive method of accounting and whatever liability or expense debited in the profit and loss account had been paid through CENVAT credit and profit and loss account so no addition under section 43B on account of unpaid service tax is warranted. Hon'ble Delhi High Court in CIT vs. Noble & Hewitt (I) (P) Ltd. [2007 (9) TMI 238 - DELHI HIGH COURT] held that when the assessee was following mercantile system of accounting and had not deposited parts of service tax collection with the authorities concerned. The assessee neither claimed the deduction in this regards nor it debited the amount as expenditure in profit and loss account, there is no question for disallowance of said amount. Objection of Ld. DR for the revenue is that no payment was made by the assessee, therefore, no deduction was allowable - CIT(A) while granting relief to the assessee has taken not of the fact that no disallowance under section 43B can be made in this case because no expense on this count has been claimed. The assessee followed the exclusive method of accounting and whatever liability or expense debited in the profit and loss account had been paid through CENVAT credit and profit and loss account so no addition under section 43B on account of unpaid service tax is warranted. Thus, the grounds of appeal raised by the revenue are dismissed
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