TMI Blog2016 (9) TMI 1616X X X X Extracts X X X X X X X X Extracts X X X X ..... o purchase and sale of goods only, and does not extend to service contracts. Thus, the liability of the service tax dos not also arise as per section 145A . As 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 for services rendered was not received in the financial year under consideration. Similarly for the issue raised for the depreciation claimed @ 100% on the hoarding structure, we find that the hoarding structures are temporary in nature and they cannot be equated with the building for the reason that the temporary structures are raised in temporary location which are taken on lease once the structures are removed the value becomes almost nil and cannot be used again. - Decided in favour of assessee. - ITA No.2065/Kol/2013, ITA No.2122/Kol/2014 - - - Dated:- 30-9-2016 - SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K. NARSIMHA CHARY, JUDICIAL MEMBER For th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial statement has shown the life of hoarding structures over a period of 3-5 years as per its accounting policy on item No. 1.4. Accordingly, the depreciation was to be provided in the books of account depending upon the estimated useful life of the hoarding structure. However, Ld. CIT observed that the assessee has claimed depreciation @ 100% on hoarding structures amounting to ₹ 1,05,24,933/- which is against the provision of law. Accordingly, Ld. CIT further observed that the hoarding structures are not purely temporary structures and therefore the depreciation should be allowed on this structures @ 10% per annum like non residential buildings. Therefore, the excess depreciation to the tune of ₹ 1,31,90,323/- [14191130 (10% of 58,25,005 + 50% of 10%) 83,66,125/-] was allowed in the assessment order framed u/s.1 43(3) of the Act. In view of the above, notice was issued to the assessee u/s 263 of the Act for seeking the explanation why the order of AO should not be held as erroneous and prejudicial to the interest of Revenue. In compliance to the notice, assessee submitted that as under:- a) Non-payment of service tax amounting to ₹ 1,37,15,804/-, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the order of AO is erroneous and prejudicial to the interest of revenue and he directed the AO to look into the matter afresh and pass necessary order as per law. Aggrieved, assessee preferred an appeal before us. 5. Before us Ld. AR filed two sets of paper book one which is running pages from 1 to 70 and supplementary paper book which is running pages 1 to 108 pages and stated that the issue of statutory payment of tax liability and other payments according to Sec.43B of the Act has been duly investigated by the AO at the time of assessment proceedings. He in support of assessee s claim drew our attention to the query raised by the AO u/s. 142(1) of the Act at the time of assessment which is placed on page 49 of item No 18 of the paper book. Ld. AR also drew our attention on page 51 of the paper book where the reply for the statutory payments of tax liability according to Sec. 43B of the Act was placed. Ld. AR of the assessee accordingly submitted that the matter of the service tax liability has been duly investigated by the AO at the time of assessment proceedings and therefore on this ground the order of AO cannot be held as erroneous and prejudicial to the interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . with regard to depreciation claimed by assessee @ 100% on hoarding structures, it was submitted that the order of AY 1972-73 was passed 40 years back. Thee must have been changes in the hoarding structures, therefore the facts should be looked afresh while allowing 100% depreciation on the hoarding structures. As per the accounting policy of the assessee, the useful life of hoarding structure has been determined over a period of 3-5 years. Ld. Finally the ld. DR vehemently supported the order passed by Ld. CIT u/s. 263 of the Act. 6. We have heard the rival contentions of both the parties and perused the materials available on record. From the foregoing discussion, we find that Ld. CIT has held the order of AO as erroneous in so far as prejudicial to the interest of revenue on account of two reasons Firstly service tax amount has not been paid on or before filing the IT return as mandated under the provision of Sec. 43B of the Act. Secondly, the AO at the time of assessment has allowed the depreciation @ 100% on the hoarding structure. Now the question before us arise whether the impugned order passed by ld CIT u/s 263 of the Act is erroneous and prejudicial to the interest of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, or (b) . Reading of this section makes it clear that any deduction claimed of any amount paid by way of any tax, duty, cess, etc. will be allowed only if the said sum is paid. In the present case the liability to pay service tax itself has not, crystallized owing to non receipt of payment. Thus, the question of claiming deduction of such tax does not arise. The Chennai Bench of ITAT in the case of Assistant Commissioner of Incometax, Media Circle-II, Chennai v. Real Image Media Technologies (P) Ltd. [2008] 114 ITD 573 (CHENNAI) had an occasion to examine identical case it was held that, the rigor of the provision of section 43B would be attracted only to a case where an item is allowable as deduction but because of the failure to make payment, such deduction would not be allowed. The rigor of section 43B might be applicable to the case of sales-tax or excise duty but the same could not be said to be the position in case of service-tax because of two reasons. firstly, the assessee is never allowed deduction on account of service tax which is collected on behalf o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also rely the order of co-ordinate Bench of this Tribunal in B in ITA No.657 to 659/Kol/2011 for AY 06-07 to 08-09 dated 01.01.2015, the relevant operative portion of the said order is reproduced below:- .. From arguments of both the sides and considering the appellate order, we are of the view that the LED Video Display Boards are temporary structures and they cannot be equated with plant and machinery for the reason that these structures are displayed outside in temporary locations and on land taken on lease for a temporary period. Once you dismantle these temporary structures, it will reduce its value to almost nil and it cannot be used second time or third time and life span of LED Vide Display Boards is also not more than 6 months to 1 year. The land is neither owned by the assessee nor it is held by assessee on lease basis. The structures put on such and, whatever in nature, are purely temporary structures. Even sometimes, these structures are not taken by the assessee for re-use again. When such structures re put on land not belonging to assessee, the expenditure is held to be the nature of revenue in view of the judgment of Hon'ble Supreme Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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