TMI Blog2020 (4) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has not claimed any deduction on account of said amount of service tax which was neither collected nor paid to the Govt. account. As relying on M/S POWER LINERS VERSUS A.C.I.T., CIRCLE-3, JAIPUR [ 2018 (1) TMI 512 - ITAT JAIPUR] when the assessee has neither included this amount of service tax in the turnover/ revenue receipts nor claimed as deduction in the profit and loss account then the said amount cannot be disallowed u/s 43B for the year under consideration. The assessee cannot claim deduction of this amount in the subsequent years when it is paid to the Govt. Account by invoking the provisions of Section 43B of the I.T. Act, 1961. In fact, this is a claim allowability of which has to be first decided u/s 28 to 42 and on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 1,25,39,228/-. 2.1 The assessee is a company and was engaged in the business of providing cable TV distribution to cable operators. The assessee company filed its return of income on 21-09-2012 declaring Nil income after adjusting the brought forward business loss of ₹ 1,41,45,146/-. During the course of assessment proceeding, the AO noted that the assessee has not paid the service tax liability of ₹ 1,25,39,228/-. Accordingly, the AO asked the assessee to show cause as to why outstanding statutory liability not paid before filing of the return of income, should not be disallowed u/s 43B of the Act. In response, the assessee submitted that as per Service Tax Rules prior to 30-06-2011, the liability to pay the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balance as on 01-04-2011. Therefore, the said amount was even outstanding at the beginning of the year and the entire outstanding amount of ₹ 1,25,39,228/- was relating to the period prior to 30-06-2011. Thus the ld.AR of the assessee submitted that when it was not payable under the provisions of Service Tax Rules, 1994 exists at the relevant point of time then the same cannot be disallowed by invoking the provisions of Section 43B of the Act. The ld.AR of the assessee further contended that the assessee has not booked this amount to the profit and loss account and the therefore, the question of disallowing the same does arise. In support of his contentions, the ld.AR of the assessee relied on following decisions. 1. M/s. Power Lin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion dated 23-03-2018 of ITAT Delhi Benches in the case of M/s. Hemkunt Infratech (P) Ltd vs DCIT (ITA No. 6683/Del/2017 for the Assessment Year 2013-14). 2.4 In rebuttal, the ld.AR of the assessee has submitted that the decision relied on by the ld. DR is not applicable in the facts of the present case as the said decision was for the Assessment Year 2013-14 relating to the period after the amendment of Service Tax Act and Rules w.e.f. 30-06-2011. Further in the said case, the assessee despite collection of the amount not deposited the service tax to the account of Govt. of India whereas in the present case in hand, the assessee even did not collect the amount, the same was outstanding and finally it became unrecoverable. 2.5 We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s part of turnover. The Hon'ble Bombay High Court in the case of CIT Vs Knight Frank (India) Pvt. Ltd.(supra) has held in para 7 as under: 7. Regarding question (ii): (a) It is an admitted position before us that the respondent assessee had not claimed any deduction on account of the service tax payable in order to determine its taxable income. In the above view, there can be no occasion to invoke Section 43B of the Act. (b) Mr. Suresh Kumar, learned Counsel for the Revenue fairly states that the issue stands concluded against the Revenue by the decision of this Court in Commissioner of Income Tax Vs Ovira Logistics Pvt. Ltd. 377 ITR 129 and Commissioner of Income Tax Vs Calibre Personnel Service Pvt. Ltd. (Income Tax App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vent of payment does not arise. The Provisions of Section 43B are only restrictive in nature and not an enabling provision. If the claim is otherwise not allowable as deduction then the same cannot be allowed by invoking the provisions of Section 43B of the Act. Accordingly, in view of the facts and circumstances of the case and also following the earlier decisions of the Tribunal (supra), we delete the disallowance/ addition made by the AO. The AO is directed to ensure that the said amount cannot be allowed as deduction in future at the time of actual payment. Thus the appeal of the assessee is allowed. 3.0 In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 14 /02/2020. - - TaxTMI - TMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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