Section 43B – Amount of service tax, billed to the client but not
received, not having been paid to the Central Government, in view of the
provisions of the Finance Act, 1994 read with Rule 6 of Service Tax
Rules, 1994, cannot be disallowed u/s. 43B.
Facts:
The
Assessing Officer disallowed a sum of Rs.6,43,88,850 u/s. 43B of the
Act in view of the fact that the assessee had not paid this amount till
due date of filing its return of income.
Aggrieved, the assessee
preferred an appeal to the CIT(A) where it contended that the amount
under consideration though was included in the bills but was not
collected from the customers. Referring to Rule 6 of Service Tax Rules,
1994, it was argued that tax becomes payable only when it is collected
from the customers. The CIT(A) following the decision of the Madras
Bench of the Tribunal in the case of CIT vs. Real Image Media
Technologies [114 ITD 573(Mad)] allowed this ground of appeal.
Aggrieved, the revenue preferred an appeal to the Tribunal.
Held:
TheTribunal
noted that in the assessee’s own case, for A.Y. 2005-06, this issue was
decided in favour of the assessee. It noted the following observations
in order dated 14.11.2014 –
“We further note that an
identical issue was considered and decided by this Tribunal in
assessee’s own case for A.Y. 2005-06, vide decision dated 30.6.2010, in
ITA No. 5393/ Mum/2008 in para 14 as under:-
14. After
considering the rival submissions and perusing the relevant material on
record it is seen that a sum of Rs.2,74,26,695 represents the amount
which was debited to the profit and loss account but not paid to the
Government as it was not collected. The remaining amount of Rs.45 lakh
and odd represents the amount which was collected by the assessee and in
turn paid to the Government in this year. The contention of the learned
Departmental Representative that the said sum of Rs. 3.19 crore which
was claimed as deduction should be disallowed u/s 43B as it was not paid
to the Government, does not merit acceptance in view of the direct
order of the Tribunal passed by the Chennai Bench in ACIT vs. Real Image
Media Technologies (P.) Ltd. [114 ITD 573 (Chennai)]. In this case it
has been held that service tax though billed but not received not having
been credited to the Central Government by virtue of Finance Act, 1994
read with Rule 6 of the Service Tax Rules, 1994, cannot be disallowed
u/s. 43B. No contrary judgment has been brought to our notice by the
learned Departmental Representative. Respectfully following the
precedent, we uphold the view taken by the learned CIT(A) on this issue.
This ground is not allowed.”
2.2 The issue before us, is
regarding disallowance of Service Tax which was not collected by the
assessee from the customers to the tune of Rs.5,12,22,734/-. Since an
identical issue was directed by this Tribunal in assessee’s own case
(supra), accordingly, following the earlier order of this Tribunal, we
do not find any error or illegality in the impugned order of CIT(A) qua
this issue. …..”
Following the above mentioned decision, for
the sake of consistency, the Tribunal decided this issue in favour of
the assessee and against the Revenue.
This ground of appeal of the revenue was dismissed.
