9911796707
TMI Blog2013 (4) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. Act, 1961. 2. The facts, in brief, borne out from the record on the issue involved, are that the assessee was engaged in manufacturing and repairing of transformers. At the end of the financial year, Service Tax was outstanding as a liability for Rs. 15,44,603/- and after filing return on due date, there was outstanding liability of Rs. 12,91,906/-. This liability was reflected in the balance sheet in Schedule-D as list of other liabilities. The Assessing Officer treated this liability as payable and added the same into income of the assessee u/s 43B of the Act (hereinafter called as "Act"). The Assessing Officer while making the disallowance observed that any sum payable by the assessee by way of tax, duty, cess or fee by whatever nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n receipt from the clients. Relying upon the aforesaid orders of the Tribunal, the CIT(A) has held that since the assessee did not claim liability of Service Tax in the profit & loss account and did not claim the same in the computation of income, the provision of section 43B cannot be invoked for making the disallowance. 4. Now the Revenue has preferred appeal before the Tribunal and placed heavy reliance upon the order of the Assessing Officer. 5. The learned Counsel for the assessee Shri Rakesh Garg has invited our attention to the fact that the assessee was following mercantile system of accounting and has not claimed the payment of Service Tax during the impugned assessment year, rather the Service Tax collected was not taken as part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... month or quarter, as the case may be, and not on the amount billed by the assessee on the customers. It is also undisputed fact that Service Tax was not passed through profit & loss account nor was taken as part of income. The similar situation was examined by the Tribunal in the case of ACIT vs. Real Image Media Technologies (P) Ltd. (supra) and the Tribunal came to the conclusion that since the Service Tax was not payable by the assessee, the rigour of the provision of Section 43B could not be applied to the facts of the case. The relevant observations of the Tribunal are extracted hereunder: "The rigour of the provision of section 43B would be attracted only to a case where an item is allowable as deduction but because of the failure t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5th of the month immediately following the quarter of calendar year in which the payments are received. The only difference is that in case of individual or proprietary or partnership firm, payment has to be made on 5th of the following month after the following quarter of calendar year whereas in the case of other organizations it has to be paid on the 5th of the month immediately following the calendar month. But in both the cases, the liability arises to make the payment only after the service provider has received the payments. If there is no liability to make the payment to the credit of the Central Government because of non-receipt of payments from the receiver of the services, then it cannot be said that such service tax has become p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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