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Commissioner of Income Tax 4, Mumbai Versus Prime Broking Company (I) Ltd.

2016 (11) TMI 371 - BOMBAY HIGH COURT

Payment on account of service tax - allowable as business expenses - Held that:- It is undisputed that the obligation under the Finance Act, 1994 to pay the service tax is on the Respondent-Assessee being the service provider. This obligation has to be fulfilled by the service provider whether or not it receives the service tax from its clients/customers. Non payment of such service tax into the treasury would normally result in demand and penalty proceedings under the Finance Act, 1994. Therefo .....

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ot to deduct TDS on Rent u/s.194I, on salary u/s.192 and watch and ward expenditure u/s.194C as the same is not paid in lieu of contractual agreement between a security agency and the assessee. No substantial question of law. - Income Tax Appeal No. 847 of 2014 - Dated:- 14-10-2016 - M. S. Sanklecha And S. C. Gupte, JJ. Mr. Suresh Kumar with Ms. Samiksha Kanani for Appellant Mr.Atul Jasani for Respondent ORDER P. C. 1. This appeal under Section 260A of the Income Tax Act, 1961 (the Act) challeng .....

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service tax allowable as business expenses? (B) Whether on the facts and in the circumstances of the case and in law, the Income Tax Appellate Tribunal was justified in upholding the order of the Ld CIT(A) and deleting the disallowance made by the A.O. inspite of the fact that the assessee is required to deduct TDS on Rent u/s.194I, on salary u/s.192 and watch and ward expenditure u/s.194C as the same is paid in lieu of contractual agreement between a security agency and the assessee has failed .....

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e did not pay the service tax as required in terms of the invoice for onward payment to the Government of India. In these circumstances, the Respondent-Assessee paid the service tax payable under the Finance Act, 1994 out of its own resources and claimed the same as deduction under Section 37(1) of the Act. The Assessing Officer by Assessment Order dated 3 November 2011 disallowed the claim for deduction on the above account holding that the obligation to pay the service tax is on the customer / .....

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e to pay the same to the Government of India. In the above view, the CIT (Appeals) held that the deduction of the service tax paid to the Respondent Assessee was a business expenditure incurred on account of commercial expediency and deductible under Section 37(1) of the Act. (c) Being aggrieved, the Respondent carried the issue in appeal to the Tribunal. By the impugned order, the Tribunal upheld the view of the CIT (Appeals). This is on the ground that the Respondent-Assessee was obliged under .....

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