TMI Blog2021 (6) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the decision rendered by Hon ble Supreme Court in the case of Chowringhee Sales Bureau (Pvt.) Ltd [ 1960 (11) TMI 99 - CALCUTTA HIGH COURT] and then expressed the view that the provisions of sec.43B are not attracted, if the particular item is not claimed as deduction. We hold that the outstanding service tax liability is not liable to be added u/s 43B of the Act, since the same has not been claimed as deduction. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the impugned addition. - Decided in favour of assessee. - ITA No.300 & 301/Bang/2019 - - - Dated:- 15-6-2021 - Shri B. R. Baskaran, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Shri S. Ramasubramanian, A.R. For the Respondent : Smt. R. Premi, D.R. ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER: Both the appeals have been filed by the assessee and they are directed against the orders passed by Ld. CIT(A)-4, Bengaluru and they relate to assessment year 2012-13. The appeal numbered as ITA 300/Bang/2019 is directed against the order passed by Ld. CIT(A) u/s 154 of the Income-tax Act,1961 ['the Act' for short]; while the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no necessity to dispose of the same separately. Accordingly, we dismiss the appeal filed against the rectification order (ITA No.300/Bang/2019) as infructuous. 7. The only issue urged in the appeal relates to disallowance made u/s 43B of the Act. The A.O. noticed that there was an outstanding liability of ₹ 55.03 lakhs in respect of service tax payable by the assessee as at the year end. Since the assessee did not disallow the same voluntarily as per the requirement of section 43B of the Act, the A.O. disallowed the same. The Ld. CIT(A) also confirmed the same. 8. The Ld. A.R. submitted that the assessee has maintained the service tax account as a Balance sheet item, i.e, it did not route through the collection and payments of service tax through the profit loss account. Hence the assessee has not claimed any deduction towards service tax liability. He submitted that the provisions of section 43B of the Act shall apply only if an item is claimed as deduction, which is evident from the reading of initial part of sec.43B. He submitted that the provisions of sec.43B starts with the phrase Notwithstanding anything contained in any other provisions of this Act, a ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted when no deduction was claimed by the assessee. 11. The co-ordinate bench, in the case of N.R Kumaraswamy (supra) has taken the view that the provisions of sec.43B are not attracted, if the tax liability is not claimed as deduction. The coordinate bench has taken support of the decision rendered by Hon ble Bombay High Court in the case of Knight Frank (India)(P) Ltd (supra). We also notice that the Ahmedabad bench of Tribunal has taken an identical view in the case of SDCE Projects (P) Ltd (ITA No.2556/Ahd/2017 dated 01-10-2019). The Ahmedabad bench has followed the decision rendered by Hon ble Delhi High Court in the case of CIT vs. Noble Hewitt (I)(P) Ltd reported in 166 Taxman 48. We notice that the Hon ble Delhi High Court has considered the decision rendered by Hon ble Supreme Court in the case of Chowringhee Sales Bureau (Pvt.) Ltd (supra) and then expressed the view that the provisions of sec.43B are not attracted, if the particular item is not claimed as deduction. 12. We notice that the Ahmedabad bench has passed a detailed order in the case of SDCE Projects (P) Ltd (supra). For the sake of convenience, we extract below the relevant discussions made by Ahmeda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s brought under the statute with effect from 01-04-1983. Thus it is clear that the aforesaid judgment was not rendered in the context of the provision of section 43B of the Act. In holding so we find support and guidance from the judgment of Hon'ble Delhi High Court in the case of CIT vs. Noble Hewitt (I)(P) Ltd reported in 166 Taxman 48 wherein it was held as under: Learned counsel for the revenue urges that the decision of the Calcutta High Court in Chowringhee Sales Bureau (P.) Ltd.'s case (supra) covers the point in its favour. We are unable to agree. In that case it was held that the liability to pay sales tax arose the moment a sale or purchase was effected and if an assessee was maintaining accounts on the mercantile system it would be entitled to deduction of the estimated liability of sales tax, even though such sales tax had not been paid to the sales tax authorities. The question there concerned was the entitlement of the assessee to deduction under sections 10(1) and 10(2)(xv) of the Indian Income-tax Act, 1922. The decision is clearly distinguishable in its application to the present case. Here we are concerned with an assessee who has not even claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the goods to the place of its location and condition as on the date of valuation. Explanation.--For the purposes of this section*, any tax, duty, cess or fee (by whatever name called) under any law for the time being in force, shall include all such payment notwithstanding any right arising as a consequence to such payment 6.5 A plain reading of the above provision reveals that it is confined to the purchase and sale of goods and the determination of the inventories. As such the provision of section 145A of the Act requires the assessee to include the amount of any tax, duty, cess or fee in the value of the purchases, sales and inventories. The provision of section 145A of the Act does not require the assessee to include the amount of service tax either in the purchases or sales. Therefore, we are not inclined to place our reliance on the case laws as referred by the learned CIT-A in his order. 6.6 Now, the controversy arises whether the impugned amount of service tax for ₹ 25,40,376/- paid after the due date of filing of income tax return, is liable to be added to the total income of the assessee under the provisions of section 43B of the Act. At this ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the above case, are squarely applicable to the case on hand. Therefore, we are not inclined to uphold the finding of the authorities below. 13. The decision rendered by the coordinate Bangalore bench in the case of N R Kumaraswamy (supra) and by the Ahmedabad bench in the case of SDCE Projects (P) Ltd (supra) covers the present issue in favour of the assessee. We have noticed that the Bangalore bench has followed the decision rendered by Hon ble Bombay High Court in the case of Knight Frank (India)(P) Ltd (supra) and the Ahmedabad bench has followed the decision rendered by Hon ble Delhi High Court in the case of CIT vs. Noble Hewitt (I) (P) Ltd (supra). Accordingly, following the above said decisions, we hold that the outstanding service tax liability is not liable to be added u/s 43B of the Act, since the same has not been claimed as deduction. Accordingly, we set aside the order passed by Ld CIT(A) and direct the AO to delete the impugned addition. 14. In the result, the appeal filed in ITA No.301/Bang/2019 is allowed and the other appeal is dismissed as infructuous. Order pronounced in the open court on 15th June, 2021 - - TaxTMI - TMITax - In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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