TMI Blog2013 (4) TMI 842X X X X Extracts X X X X X X X X Extracts X X X X ..... IT ORDER PER GEORGE GEORGE K : This appeal of the assessee firm is directed against the order of the CIT (A)-II, Bangalore dated 17.4.2012. The relevant assessment year is 2009-10. 2. The assessee firm has raised seven grounds, in which ground No.1 is general in nature and, therefore, it becomes inconsequential. Ground No.6 is not maintainable as charging of interest under section 234B of the Act is mandatory and consequential in nature. Ground No.7 is also not maintainable as the initiation of penal proceedings was in its initial stage when the assessment proceeding was concluded. The remaining grounds relate to two issues, namely: (i) that the CIT (A) had erred in confirming the addition of professional receipt of ₹ 4,85,320/ to the returned income; (ii) that the CIT (A) had also erred in confirming the AO s stand in treating the service liability of ₹ 29,00,660/- outstanding as income of the assessee for the current year. 3. Briefly stated, the facts of the issues are as under: The assessee firm, engaged in the profession of chartered accountancy, had furnished its return of income, admitting a total income of ₹ 76,78,230/-. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the financial year or even up to the date of filing of the return of income. The appellant by not including this amount in his services, has clearly made a claim indirectly .. 4.1 Extensively quoting the ruling of the Hon ble Apex Court in the case of Chowringhee Sales Bureau Pvt. Ltd v. CIT [87 ITR 542 (SC)] and also distinguishing the findings of (i) Hon ble Chennai Tribunal in the case of ACIT v. Real Image Media Technologies (P) Limited reported in 306 ITGR 106; and (ii) the ruling of Hon ble Delhi High Court in the case of CIT v. Noble and Hewitt India (P) Ltd reported in 305 ITR 324 (Del), the CIT (A) had observed thus: 4.4. In fact this decision has settled this controversy on sales tax that unpaid sales tax credited in any account, whether claimed in the profit and loss account or not, is includible in the total income. The appellant s plea that sales tax is different from service tax cannot be accepted in the present case as what the appellant as a firm of Chartered Accountants is selling is services and not goods, so the tax applicable is service tax which stands on the same footing as sales tax in terms of services rendered as sales tax holds for goods so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the assessment year under consideration as alleged by the CIT (A); Disallowance of unpaid service tax liability u/s 43B of the Act: (vii) that S.43B of the Act begins by specifying that the deduction otherwise allowable under the Act shall not be allowed unless it is actually paid i.e., a claim should be first preferred by the taxpayer and then, the same will be disallowed u/s 43B of the Act in the previous year in which it was claimed only if taxpayer fails to remit the same before the due date u/s 139(1) of the Act. If the taxpayer had not preferred any claim towards service tax, there was no question of disallowing the same; (viii) that in the present case, the service tax amount which was added back as income was not debited to the P L account, that in other words, the assessee had preferred any claim towards service tax and that when a claim was not referred, the question of applicability of disallowance u/s 43B of the Act does not arise; Relies on the case laws: CIT v. Noble and Hewitt India (P) Ltd 305 ITR 324 (Del); ACIT v. Real Image Media Technologies (P) Ltd 306 ITR 106 ITAT, Chennai; DCIT v. Manish M Chheda 29 SOT 138- Mumbai ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the learned AR during the course of hearing before us. In fact, it was argued, no consent whatsoever was given for such an addition. In this connection, the learned AR had furnished an affidavit on behalf of the assessee. Moreover, it was submitted that the statutory audit for the first previous year 2008-09 (i.e., from 24.7.2008 31.3.2009) was completed only on 29.7.2010 and, thereafter, the assessee had raised an invoice on 30.7.2010 and accounted it as income in its books of account for the previous year 2010-11. To support its claim, the assessee had furnished the copies of the following documents:- (i) Certificate of Establishment of place of business in India of Project office from the Registrar of Companies dated 27.11.2009; (ii) Audit report of OPUS International (M) Berhad from the statutory auditors (the assessee) dated 29.7.2010 along with financial statements; (iii) Invoice raised on OPUS International (M) Berhad Indian Project office for the service for the previous year (AY 2009-10) dt.30.8.2010 [Courtesy: P 169 184 PB AR] 7.1.1 Taking into account the facts and circumstances of the issue, the affidavit in which it was categorically vouc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 of Finance Act, 1994 read with rule 6 of Service Tax Rules, 1994, the service tax becomes payable only on receipt of service tax from the client. Therefore, the amount of service tax included in bills but not received could not be disallowed under s. 43B . After analysing the relevant provisions of Income- tax Act as well as Service Tax Act, the Tribunal had, further, recorded its findings as under: 12 From a plain reading of the above provision it becomes clear that the rigour of this provision would be attracted only in a case where an item is allowable as deduction but because of the failure to make payment such deduction will not be allowed. It can be argued that in the case of ST also the assessee does not claim deduction since it has been held that non-payment of Sales-tax would attract provisions of section 43B, but that is being done on the basis of the principles laid down by the Hon ble Supreme Court in the case of Chowranghee Sales Bureau Ltd. V CIT 110 ITR 385 that Sales-tax is part of the trading receipt. Further, section 145A clearly provides that for the purpose of determining income under the head profits and gains of busi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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