TMI Blog2013 (11) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax Act - Granting relief of Rs.25,12,296/- on account of disallowance u/s.43B of the Act and restricting the disallowance to Rs.52,054/- out of total liability of VAT u/s.43B of the Act – Held that:- The CIT(A) has verified all the accounts of the service tax as well as VAT account and finally he determined the total unpaid tax liability u/s. 43B Rs.41,643/- and other payments have already been made on or before due date of return filed by the assessee on the basis of service tax received by the appellant – Confirmed the order of Commissioner(A) – Decided against the Revenue. Disallowance u/s 40A(3) of the Income Tax Act - Cash payment exceeding Rs.20,000/- to Abada Musabhai Ismailbhai, subcontractor and violated the provisions of 40A(3) of the IT Act on four payments mentioned in the assessment order – Held that:- It is found that TDS has already been deducted by the appellant u/s. 194C of the IT Act and no single payment is more than Rs.20,000/- for which the evidence placed – Assessee relied upon in case of CIT vs. S.S.P. (P.) Ltd. in [2010 (12) TMI 370 - PUNJAB AND HARYANA HIGH COURT] and decided the issue in favor of Assessee – Decided against the Revenue. - ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... times. The A.O. observed that the G.P. as well as net profit had declined during the year compared to preceding year. Therefore, the appellant was given reasonable opportunity of being heard on this issue, which was considered by the A.O. The appellant had debited labour expenses amounting to Rs. 40,53,382/- and payment to the labourers were made in cash on self drawn vouchers, which are not verifiable. Besides this, the appellant had not maintained day-to-day records on consumption of raw materials. The consumption of raw material in Kutch site had been shown higher by about 2% as compared to Dhule site. The work carried out in both the sites was similar and there may not be any reason for variation in consumption. There was no plausible explanation from the side of appellant for such uneven consumption of raw material. During the assessment proceedings for A.Y. 06-07, which was taken place in the month of December 2008, the partners had admitted that the major expenses were paid by cash to various labourers. It was very difficult to prove the same. Hence, partners had agreed upon to tax further profit of Rs.9,56,888/- to the return income subject to non initiation of penalty proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer to invoke provision of Section 145(3) in rejecting the books of account. Amritsar Bench of the Hon ble Tribunal in Ashok Kumar Co. v. ITO (2004) 2 SOT 518 (SMC) held that rejection of books cannot be restored to simply on the basis of absence of some vouchers and failure to produce the same by the assessee. He further relied in case of ITO vs. Maganbhai Madaliya in ITA No.248/RJT/2006 for A.Y. 2002-03, wherein identical additions were made by the A.O. on disallowance 10% of labour charges payment on the ground certain discrepancy in vouchers but rejection of books u/s.145(3) is not found justified. Therefore, ld. Counsel requested to confirm the order of the CIT(A). 5. We have heard the rival contentions and gone through the paper books. The appellant made payment to the labour in cash but which has been signed by the recipients (page no.47 of paper book). The assessee had shown comparative chart not only with preceding year but site wise which shows that labour charges paid during A.Y. 06-07 were 14.74% of total expenses which has been reduced at 3.3% during the year under consideration. It reveals that more labours were used in A.Y. 06-07 and in A.Y. 07-08, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through these details clearly demonstrated following points: (i) The liability to pay / deposit service tax arrives only when the payment is received for the service rendered towards which the service tax is collected. This is supported by provision of rule 6(1) of service tax Rule 1994. (ii) The cenvat credit and other education cess etc. is available for set of against such tax payable to the appellant as per scheme of VAT . (iii) The appellant either paid such amount or adjusted against such credit, as clearly evidenced from the copy of service tax return filed by it on 25/10/2007 for F.Y. 07-08 which has all such details with details of payment and adjustment from 01/04/2007 to 30/09/2007 i.e. before filing of return of income on 29/10/2007. (iv) The provisions of section 43B of the Act is applicable on the sums payable out of such duty, tax, cess etc. and not on paid . Rather if such amount is paid before due date of filing of return of income the same is allowed. The payable here used by the legislature is deliberate as held recently by the Hon ble special bench of ITAT Vishakha patnam in the case of M/s. Merilyn Shipping Transports v. ACIT Range- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then it cannot be said that such service-tax has become payable in terms of clause (a) of Section 43B because that clause specifically mentions sum payable by the assessee . [Para16] In view of the above observations, since service-tax was no t payable by the assessee, the rigour of section 43B could not have been applied to the case of the assessee. Under these circumstances, there was nothing wrong with the order of the CIT(A) on this issue and the same may be confirmed. 9. We have heard the rival contentions and perused the material on record. The CIT(A) has verified all the accounts of the service tax as well as VAT account and finally he determined the total unpaid tax liability u/s. 43B Rs.41,643/- and other payments have already been made on or before due date of return filed by the assessee on the basis of service tax received by the appellant. Thus, we do not find any reason to intervene in the order of the CIT(A). Accordingly, revenue s appeal, on both grounds, is dismissed. 10. Ground no.4 is against disallowances amounting to Rs.23,414/- u/s. 43A(3) of the IT Act. The A.O. held that the assessee has made cash payment exceeding Rs.20,000/- to Abada Musabhai Ismailbh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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