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TMI Blog2023 (10) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... nt is not made in the year under consideration. The learned CIT(A) and learned AO (hereinafter called 'learned IT authorities' together) ought to have appreciated that, the service tax liability was crystalized during the year though the payment for the same was made in an earlier year i.e. A.Y.2015-16. 2. The learned CIT(A) and the learned AO erred in law and on facts in interpreting the provisions of section 43B incorrectly without appreciating that, allowance of deduction of expenditure covered under provisions of section 43B on payment basis only applicable to such deductions which are otherwise allowable under ITA, 1961. The learned IT authorities ought to have appreciated that, expenditure of service tax liability is allowable as a deduction only in the year of crystallization & incurrence the said expenditure i.e. A.Y.2016-17, and the same was paid only as an advance in earlier years. 3. The learned CIT(A) erred in law and on facts in holding that, expenditures covered under provisions section 43B are allowable only in the year of payment, irrespective of the fact that, the said expenditure is incurred or crystalized in the subsequent year. 4. The learned CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the month of October, 2015 confirming the demand and interest. The assessee had paid the service tax as per the show cause notice issued by the Commissioner, Central Excise and Service Tax, Pune-3 dated 01.10.2014. Similarly, assessee had paid Rs. 86,41,000/- pertaining to F.Y.2014-15, during the F.Y.2014- 15. The AO held that payment of service tax is covered under section 43B of the Income Tax Act and same is allowable in the year of payment only. Since the assessee paid the service tax in earlier years, the AO disallowed the assessee's claim of Rs. 2,63,49,863/- which was paid in earlier years. The AO allowed assessee claim of Rs. 1,06,38,678/- on account of service tax paid during the year, as per provision of section 43B of the Act. 2.3. Aggrieved by the order of the AO, the assessee filed appeal before the ld.CIT(A), where the ld.CIT(A) confirmed the addition. 3. Aggrieved by the order of the ld.CIT(A), the assessee filed appeal before this Tribunal. Submission of ld.Authorised Representative(ld.AR) : 4. The ld.AR filed a paper book. Ld.AR submitted that the assessee had paid service tax liabilities in F.Y.2014-15 under protest. The assessee had filed appeal against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any sum payable by the assessee as interest on any loan or borrowing from any public financial institution or a State financial corporation or a State industrial investment corporation, in accordance with the terms and conditions of the agreement governing such loan or borrowing , or (e) any sum payable by the assessee as interest on any loan or advances from a scheduled bank in accordance with the terms and conditions of the agreement governing such loan or advances, or (f) any sum payable by the assessee as an employer in lieu of any leave at the credit of his employee, 8[or] Following clause (g) shall be inserted after clause (f) of section 43B by the Finance Act, 2016, w.e.f. 1-4-2017 : (g) any sum payable by the assessee to the Indian Railways for the use of railway assets, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him : Provided that nothing contained in this section shall apply in relation to any sum which is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, in the light of the Law enunciated by the Hon'ble Supreme Court, as above, we have to analyze the facts of the present case. 8.1 There is no dispute that the payment of Service Tax had been actually paid by the assessee in earlier years, we have already mentioned the dates. 8.2 The payment made by the Assessee on account of Service Tax is under the provisions of Section 73(1) Finance Act 1994, read with Service tax Rules. Thus, it is as per Central Government Act. 8.3 According to the Service Tax Authorities the Assessee incurred liability to pay the Service Tax Amount the day services were provided. 8.4 The Hon'ble Supreme Court has explained 'any sum payable'means the assessee incurred liability in the previous years even such sum might not have been payable within that year under the relevant statute. Therefore, in this case whether the assessee had to pay the service tax liability in that year or not as per service tax rules will not change the allowability u/s 43B of the Income Tax Act as long as the Assessee had actually paid it. 9. Lets try to under stand the exact nature of the impugned Service Tax Liability. As noted from submission of the Assessee made before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were actually performed in financial years prior to F.Y.2015-16. There is no dispute about these facts. The Superintendent of Central Excise & Service Tax had passed the order in F.Y.2014-15 directing the assessee to pay the Service Tax for the Services provided from July, 2012 to March, 2014. Therefore, the liability to pay the service Tax had arisen in earlier financial years and the contention of the assessee is rejected that the demand was not crystallized. 11.1 The Hon'ble Supreme Court in the case of CIT Vs. United Glass Mfg. Co. Ltd., [2012] 28 taxmann.com 429 (SC) [12-09- 2012] has held as under : Quote, " 1.4 There is not dispute that the assessee has paid tax which was calculated on estimation under the Karnataka Sales Tax Act, 1957. In the circumstances, Section 43B of the Income Tax Act, 1961, squarely applies. 1.5 We see no reason to interfere with the impugned judgement. The civil appeal filed by the Department is, accordingly, dismissed with no order as to costs" Unquote. 11.2 Thus, in the case of United Glass Manufacturing CO the Hon'ble Supreme Court allowed deduction u/s 43B, of Sales tax paid on estimate basis. 11.3 Therefore, we do not find any merit in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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