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2015 (4) TMI 684 - BOMBAY HIGH COURT

2015 (4) TMI 684 - BOMBAY HIGH COURT - [2015] 377 ITR 129 (Bom) - Disallowance of unpaid service tax under section 43B - Tribunal deleted addition - whether liability to pay service tax had not arisen without appreciating the fact that the assessee has shown the said amount as a liability in its Balance Sheet? - Held that:- Section 43B does not contemplate liability to pay the service tax before actual receipt of the funds in the account of the assesee. In our view, liability to pay service tax .....

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TAX APPEAL NO.1023 OF 2013 - Dated:- 17-4-2015 - S. C. Dharmadhikari And A. K. Menon, JJ. For the Appellant : Mr. Arvind Pinto For the Respondent : Mr. Percy Pardiwalla, Senior Counsel, a/w Sameer Dalal Judgment(PER A. K. Menon, J.): The present appeal is filed by the revenue proposing that the following questions are substantial questions of law: (a) Whether on the facts and circumstances of the case and in law, the Tribunal was justified in deleting the disallowance of unpaid service tax unde .....

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e facts in brief are as follows:­ The Respondent­Assessee filed its returns for assessment year 2007­ 08 declaring total income of ₹ 4,46,46,873/­ on verification of the computation of income, it was found that the Assessee had set off entire business income against brought forward losses for earlier years. The Assessing Officer has passed an order on 29th December, 2009 assessing Nil income after set off the brought forward losses. The Book Profit under section 115JB was d .....

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paid before due date of filing return and, therefore, could not be disallowed under section 43B of the Act. As far as the remaining amount of ₹ 48,10,998/­ was concerned, the Commissioner of Income Tax (Appeals) has held that the same could not disallowed under section 43B of the Act since it was not payable as on 31st March, 2007. It was found that the amount on which service tax was payable had not been received from the parties to whom services were rendered. As a result, the provi .....

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260A of the Income Tax Act, 1961. 5] Before us, Mr. Pinto, the learned counsel, appearing for the Appellant submitted that the earlier order of the Tribunal in Pharma Search V/s. Assistant Commissioner of Income Tax­15(3), Mumbai (2012) 53 SOT 1 (Mum) was followed. According to Mr. Pinto, the liability to pay service tax had already accrued. He drew our attention to the order of the Tribunal which was passed for the assessment year 2007­ 08. Mr. Pinto submitted that the Tribunal ought no .....

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ous year in which the sum is only paid by him. 6] He submitted that the order of the Assessing Officer was in accordance with law and that the Tribunal had erroneously permitted the disallowance by rejecting the ground of Appeal by the Revenue. 7] Mr. Pardiwalla, the learned Senior Counsel, appearing on behalf of the respondent supported the order of the Tribunal and the Commissioner of Income tax (appeals). According to him, the Commissioner of Income Tax(Appeals) had correctly deleted the disa .....

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essee had not followed the correct accounting procedure and they disallowed the deduction and added it to income. In the Appeal, the Tribunal observed that since the assessee did not debit the amount to the profit and loss account as an expenditure nor did the assessee claim any deduction in respect of the amount since the assessee was following the mercantile system of accounting , the question of disallowing the deduction not claimed does not arise. 8] Mr. Pardiwalla referred to a decision of .....

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