TaxTMI 
TaxTMI 
2016 (9) TMI 1616
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....ay of a consolidated order. Shri J.P. Khitan, & Sri Tarun Kumar Banerjee, Ld. Advocates appeared on behalf of assessee and Sri Niraj Kumar & Shri Aloke Nag , Ld. Departmental Representatives appeared on behalf of Revenue. First we take up assessee's appeal in ITA No. 2065/Kol/2013 for A.Y. 08-09. 2. Facts in brief as culled out from the order of lower authorities and other relevant documents are that assessee in the present case, a Private Limited Company and engaged in the business of advertising. Assessee for the year under consideration filed its return of income on 30.09.2008 declaring total income of Rs. 1,93,10,736/-. Thereafter case was selected for scrutiny and notice u/s 143(2) of the Act issued. The assessment was framed u/s. 143(3) of the Act at a total income of Rs. 3,5182,500/- by making certain additions / disallowances vide order dated 21.12.2010. 3. Sole issued raised by assessee in this appeal is that Ld. CIT erred in treating the order passed by Assessing Officer as erroneous in so far as prejudicial to the interest of Revenue u/s 263 of the Act. 4. The impugned order passed by ld. CIT u/s 263 of the Act by observing certain defects in the assessment order p....
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....efore, there was no mistake in the assessment order and no addition is required to be made. b) Regarding depreciation, the assessee submitted that necessary details with regard to depreciation claimed on the temporary structures had been furnished at the time of assessment proceedings. It was submitted that 100% depreciation was allowed in the course of first assessment year of assessee i.e., AY 1972-73 and thereafter. No disallowance of depreciation was ever made by the AO in the assessment proceedings. The assessee further submitted that the useful life of the hoarding structures were determined on the basis of technical certificate given by the Chartered Engineers. But it has nothing to do with the provisions specified under the Income Tax Act. The assessee is entitled to claim the depreciation under the IT Act in spite of the fact that no depreciation was charged by the assessee in its books of account. However, the Ld. CIT(A) has rejected the plea of assessee by observing that the payment of service tax is governed by the provision of Sec. 43B of the Act and therefore it is not allowed while framing the assessment u/s. 143(3) of the Act. Similarly, Ld. CIT observed that 100....
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....ng the previous year relevant to the assessment year 1999-2000. Out of the service tax so collected, it had deposited part of the amount but an amount of Rs. 14.40 lakhs was not deposited by it with the concerned authorities. The assessee did not claim any deduction in this regard nor did it debit the amount as an expenditure in the profit and loss account. The Assessing Officer as well as the Commissioner (Appeals) nevertheless disallowed the amount and added it back to the income of the assessee. The Tribunal set aside the order. On appeal to the High Court: 'Held, dismissing the appeal, that since the assessee did not debit the amount to the profit and loss account as an expenditure nor claim any deduction in respect of the amount and considering that the assessee was following the mercantile system of accounting, the question of disallowing the deduction not claimed would not arise.' Further, Ld. AR of assessee with regard to depreciation on hoarding structures submitted that Assessing Officer has raised specific query for the depreciation claimed on the hoarding structures. The query raised by the AO at the time of assessment is placed on page 53 of the paper book the asses....
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.... to service contracts. Thus, the liability of the service tax dos not also arise as per section 145A of the Act. The provisions of section 145A of the Income-tax Act 1961 that read as under:- "Notwithstanding anything to the contrary contained in Section 145, (a)The valuation of purchase and sale of goods') and inventory for the purposes of determining the income chargeable under the head "Profits and gains of business for profession" shall be- (i) in accordance with the method of accounting regularly employed by the assessee; and (ii) further adjusted to include the amount of any tax, duty, cess or fee (by whatever name called) actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation." It is clear from the above provisions that it applies only in respect of valuation of purchase and sale of goods and inventory and not to service contracts. Therefore the action of the Assessing Officer in invoking provisions of section 145A of the Act and adding Service Tax to Gross Receipts is incorrect in as much as against the very basic principles of section 145A. Apart from the above, we find that the payment ....
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....so provides for an exception in case of individuals or proprietary firms or partnership firms, and in such cases, service tax has to be paid to the credit of the Central Government by the 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 form the receiver of the services, then it cannot be said that such service tax has become payable in terms of clause. In this connection, we also relied in the judgment of Hon'ble Delhi High Court in the case of Noble And Hewitt (i) P. Ltd. (supra). Similarly for the issue raised for the depreciation claimed @ 100% on the hoarding structure, we f....