ACIT, UDAIPUR v. M/s. Pyrotech Electronics Pvt. Ltd., UDAIPUR

ITA 475/JODH/2013 | 2010-2011
Pronouncement Date: 25-10-2013 | Result: Dismissed

Appeal Details

RSA Number 47523314 RSA 2013
Assessee PAN AABCP2186Q
Bench Jodhpur
Appeal Number ITA 475/JODH/2013
Duration Of Justice 22 day(s)
Appellant ACIT, UDAIPUR
Respondent M/s. Pyrotech Electronics Pvt. Ltd., UDAIPUR
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 24-10-2013
Assessment Year 2010-2011
Appeal Filed On 03-10-2013
Judgment Text
IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI N.K. SAINI ACCOUNTANT MEMBER. ITA NO.475/JODH/2013 (A.Y. 2010-11) ACIT CIRCLE-1 VS. M/S. PYROTECH ELECTRONICS UDAIPUR. PVT. LTD. F-16A ROAD NO.3 MIA MADRI UDAIPUR. PAN NO. AABCP 2186 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRAVAN KUMAR GUPTA DEPARTMENT BY : SHRI N.A. JOSHI- D.R. DATE OF HEARING : 22/10/2013. DATE OF PRONOUNCEMENT : 25/10/2013. O R D E R PER N.K.SAINI A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 04/07/2013 OF LD. CIT (A) UDAIPUR. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. DELETING THE DISALLOWANCE ON ACCOUNT OF HIGHER R ATE OF DEPRECIATION OF RS. 28 13 262/- CLAIMED ON CIVIL WORK FOR FOUNDATIO N ELECTRICAL EQUIPMENTS AND EVACUATION CHARGES ETC. RELATED TO W IND MILL IGNORING THE FACT THAT 2 (A) HIGHER RATE OF DEPRECIATION IS NOT AT ALL APPLI CABLE TO FOUNDATION WORK WHICH IS BASICALLY CIVIL WORK AND NOT AT ALL P ART OF WIND MILL. (B) HIGHER RATE OF DEPRECIATION IS SIMILARLY NOT AP PLICABLE TO ELECTRICAL ITEMS WHICH ARE ANCILLARY ITEMS AND NOT PART OF WIND MILL. (C) EVACUATION CHARGES HAS NOT RESULTED INTO ACQUIS ITION OF ANY DEPRECIABLE ASSET TO THE ASSESSEE LEAST THE WIND M ILL AND AT THE MAXIMUM THIS CAN BE INTANGIBLE ASSETS FOR WHICH SEP ARATE RATE OF DEPRECIATION IS APPLICABLE. 2. DELETING THE DISALLOWANCE OF SERVICE TAX EXPENSE S OF RS. 8 57 261/- DESPITE THE FACT THAT THE EXPENDITURE PERTAINS TO E ARLIER YEARS. THAT THE APPELLANT CRAVES TO ADD AMEND ALTER DEL ETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 2. GROUND NO.1 OF THIS APPEAL RELATES TO THE DELETION OF DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF HIGHER RATE OF DEPRECIATION ON CIVIL WORK FOR FOUNDATION ELECTRICAL EQUIPMENTS AND EVACUATION CHARGES RELATING TO THE WIND MILL. 3. AS REGARDS TO THIS ISSUE LEARNED COUNSEL FOR TH E ASSESSEE AT THE VERY OUTSET STATED THAT THIS ISSUE IS COVERED IN FA VOUR OF THE ASSESSEE IN ASSESSEES OWN CASE IN ITA NO. 294/JODH/2012 FOR TH E A.Y. 2009-10 VIDE ORDER DATED 24/01/2013. COPY OF THE SAID ORDER WAS FURNISHED. 4. THE AFORESAID CONTENTION OF THE LEARNED COUNSEL F OR THE ASSESSEE WAS NOT CONTROVERTED BY THE LEARNED D.R. 3 5. AFTER CONSIDERING THE SUBMISSIONS OF BOTH THE PART IES AND MATERIAL AVAILABLE ON RECORD IT IS NOTICED THAT A SIMILAR I SSUE HAVING IDENTICAL FACTS HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THIS BENCH OF THE TRIBUNAL VIDE AFORESAID REFERRED TO ORDER DATED 24/ 01/2013 IN ASSESSEES OWN CASE FOR THE PRECEDING YEAR I.E. A.Y. 2009-10 WHEREIN THE RELEVANT FINDINGS HAVE BEEN GIVEN IN PARA 4 & 5 WHICH READ AS UNDER:- 4. WE HAVE HEARD BOTH SIDES AND HAVE CAREFULLY PER USED THE ENTIRE RECORD. THE DETAILED SUBMISSION OF LD. A.R. VIDE HIS WRITTEN SUBMISSIONS IS BEING REPRODUCED BELOW :- AT THE VERY OUTSET WE RELY ON THE GROUNDS ARGUMEN TS EVIDENCES AND THE REASONING'S PLACED BEFORE THE CIT (APPEALS) UDAIPU R AGAINST EACH ADDITION MADE BY THE AO ON THE BASIS OF WHICH THE IMPUGNED ORDER UNDER APPEAL WAS PASSED BY THE LD. CIT (APPEALS) U DAIPUR IN THIS CASE. COPY OF WRITTEN SUBMISSIONS FILED BEFORE THE LD. CI T (APPEALS) IS ENCLOSED HEREWITH FOR READY REFERENCE AND FOR CONSI DERATION AT YOUR END ALSO AGAINST FIRST GROUND OF THE DEPARTMENT I.E. DELETIO N OF DISALLOWANCE OF DEPRECIATION OF RS. 7 94 160/- CLAIMED ON EVACUATIO N EQUIPMENTS WE HAVE TO SUBMIT THAT THE LD. CIT (APPEAL) UDAIPUR H AS DISCUSSED THE ISSUE IN DETAIL AT PAGE NO. 15 AND 16 OF HIS ORDER AND HA S APPRECIATED THE ARGUMENTS EVIDENCES FACTS AND CIRCUMSTANCES OF TH E CASE IN THEIR TRUE PERSPECTIVE AND HAS RIGHTLY CONSIDERED THE ISSUE IN FAVOUR OF ASSESSEE AND ACCORDINGLY DELETED THE DISALLOWANCE MADE BY TH E A.O. ON THIS ACCOUNT. THERE ARE NEITHER NEW MATERIAL EVIDENCES A VAILABLE ON RECORDS NOR ANY LATEST DECISIONS ON THE ISSUE PRONOUNCED WH ICH IS AGAINST THE HOLDING BY CIT (APPEALS). HENCE WE REQUEST YOUR GOO DSELF TO PLEASE DISMISS THE GROUND OF APPEAL OF THE DEPARTMENT IN T HIS RESPECT IN THE INTEREST OF EQUITY AND JUSTICE. AGAINST THE GROUND NO. 2 I.E. DELETION OF DISALLOWA NCE OF DEPRECIATION OF RS. 10 63 814/- CLAIMED ON CIVIL WORK OF FOUNDATION AND OTHER. WE HAVE TO 4 SUBMIT THAT THE LD. CIT (APPEAL) UDAIPUR HAS DISCU SSED THE ISSUE IN DETAIL AT PAGE NO. 14 AND 15 OF HIS ORDER AND HAS APPRECIA TED THE ARGUMENTS EVIDENCES FACTS AND CIRCUMSTANCES OF THE CASE IN T HEIR TRUE PERSPECTIVE AND HAS RIGHTLY CONSIDERED THE ISSUE IN FAVOUR OF A SSESSEE AND ACCORDINGLY DELETED THE DISALLOWANCE MADE BY THE A. O. ON THIS ACCOUNT. THERE ARE NEITHER NEW MATERIAL EVIDENCES AVAILABLE ON RECORDS NOR ANY LATEST DECISIONS ON THE ISSUE PRONOUNCED WHICH IS A GAINST THE HOLDING BY CIT (APPEALS). THE RATIO OF JUDGMENTS RELIED BY THE CIT (APPEALS) ARE FULLY APPLICABLE IN THE PRESENT CASE AS THE ISSUES ARE ID ENTICAL. HENCE WE REQUEST YOUR GOODSELF TO PLEASE DISMISS THE GROUND OF APPEAL OF THE DEPARTMENT IN THIS RESPECT IN THE INTEREST OF EQUIT Y AND JUSTICE. AGAINST THE GROUND NO. 3 I.E. DELETION OF DISALLOWA NCE OF DEPRECIATION OF RS. 6 57 214/- CLAIMED ON ELECTRICAL SUPPLY LINE AN D OTHERS. WE HAVE TO SUBMIT THAT THE LD. CIT (APPEAL) UDAIPUR HAS DISCU SSED THE ISSUE IN DETAIL AT PAGE NO. 16 OF HIS ORDER AND HAS APPRECIA TED THE ARGUMENTS EVIDENCES FACTS AND CIRCUMSTANCES OF THE CASE IN T HEIR TRUE PERSPECTIVE AND HAS RIGHTLY CONSIDERED THE ISSUE IN FAVOUR OF ASSESSEE AND ACCORDINGLY DELETED THE DISALLOWANCE MADE BY TH E A.O. ON THIS ACCOUNT. THERE ARE NEITHER NEW MATERIAL EVIDENCES A VAILABLE ON RECORDS NOR ANY LATEST DECISIONS ON THE ISSUE PRONOUNCED WH ICH IS AGAINST THE HOLDING BY CIT (APPEALS). HENCE WE REQUEST YOUR GOO DSELF TO PLEASE DISMISS THE GROUND OF APPEAL OF THE DEPARTMENT IN T HIS RESPECT IN THE INTEREST OF EQUITY AND JUSTICE. CONSIDERING THE OVERALL FACTS OF THE CASE AND THE POSITION OF LAW THE DELETION MADE BY THE CIT (APPEAL) AGAINST EACH ADDI TIONS ARE LEGAL AND AS PER FACTS AND ARE IN LINE TO THE RATIO OF JUDGME NTS PLACED BEFORE HIM IN THE COURSE OF APPEAL PROCEEDINGS. HENCE WE REQUEST YOUR GOODSELF TO PLEASE DISMISS THE APPEAL IN THE INTEREST OF EQUITY AND JUSTICE. 5. AS AGAINST THE ABOVE LD. D.R. COULD NOT BRING B EFORE US ANY CONTRARY DECISION. RATHER WE HAVE FOUND THAT ALL TH E ABOVE ITEMS ARE PART AND PARCEL OF THE WIND MILLS AS DISCUSSED IN THE DECISIONS RELIED ON BY LD. AR IN HIS WRITTEN SUBMIS SION. WE HAVE NO REASON TO DEVIATE FROM THE DECISION TAKEN BY LD. CIT(A). ACCORDINGLY WE CONFIRM THE IMPUGNED DELETION AND C ANNOT ALLOW THE APPEAL OF THE REVENUE. 5 6 . SO BY RESPECTFULLY FOLLOWING THE AFORESAID REFER RED TO ORDER IN ASSESSEES OWN CASE WE DO NOT SEE ANY MERIT IN THI S ISSUE RAISED BY THE DEPARTMENT. 7. VIDE GROUND NO.2 THE GRIEVANCE OF THE DEPARTMENT R ELATES TO THE DELETION OF DISALLOWANCE OF SERVICE TAX EXPENSES. 8. THE FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAD DEBITED RS. 16 39 407/- ON ACCOUNT OF SERVICE T AX ON FOREIGN COMMISSION INCOME WHICH INCLUDED RS. 8 57 261/- PE RTAINING TO THE YEARS EARLIER THAN FINANCIAL YEAR 2009-10. THE ASSESSING OFFICER DISALLOWED THE SAID AMOUNT. 9. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMITTED AS UNDER:- (I) THAT THE LIABILITY TO PAY SERVICE TAX AGAINST FOREIGN COMMISSION INCOME WAS OF THE ASSESSEE BECAUSE THE ASSESSEE HAS NOT SEPARATELY CHARGED SERVICE TAX ON SERVICES PROVIDED TO FOREIGN PRINCIPAL CUSTOMER. THIS FACT IS VERIFIABLE FROM THE COPIES O F DEBIT NOTES PRODUCED BEFORE THE LEARNED ASSESSING OFFICER AT TH E TIME OF ASSESSMENT PROCEEDINGS. IN FACT THE COMPANY HAS DE POSITED A SUM OF RS. 16 39 407/- THROUGH VARIOUS CHALLANS DURING THE PERIOD UNDER CONSIDERATION AGAINST SERVICE TAX LIABILITY AND ACC ORDINGLY THE SAME HAS BEEN DEBITED TO PROFIT & LOSS ACCOUNT. THE EXPE NSES OF SERVICE TAX IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURP OSE OF BUSINESS 6 ONLY. AT THE TIME OF ASSESSMENT THE LEARNED ASSESSI NG OFFICER OBSERVED THAT THE INCOME WAS DECLARED IN DIFFERENT YEARS THOUGH THE SERVICE TAX ON SUCH INCOME HAS BEEN PAID IN THE YEA R UNDER CONSIDERATION. THE LEARNED ASSESSING OFFICER HAS ER RED AT LAW IN ALLOWING THE EXPENDITURE ON THE BASIS OF PROPORTION ATE YEAR WISE INCOME DECLARED IN ACCOUNT INSTEAD OF ALLOWING TOTA L EXPENDITURE CLAIMED BY THE ASSESSEE. ACCORDINGLY THE LEARNED AS SESSING OFFICER HAS ERRED AT LAW IN DISALLOWING RS. 8 57 261/- OUT OF RS.16 39 407/- CLAIMED BY THE ASSESSEE IN THE ASSESSMENT OF INCOME OF THE YEAR UNDER CONSIDERATION. THE LEARNED ASSESSING OFFICER HAS NOT APPRECIATED THE TRUE AND CORRECT FACTS OF THE CASE AND THE POSITION OF LAW. THERE WAS NO DISPUTE OR DOUBT ABOUT THE PAYMEN T OF SERVICE TAX AND FURTHER IT IS ALSO VERIFIABLE FROM RECORDS THAT THE INCOME RELATED THERETO HAS BEEN DECLARED IN ACCOUNT THOUGH IN DIFF ERENT YEARS. IT IS ALSO VERIFIABLE THAT NEITHER EXPENDITURE OF THIS NA TURE CLAIMED IN EARLIER YEAR NOR ALLOWED BY THE LEARNED ASSESSING O FFICER IN THE ASSESSMENT OF EARLIER YEARS. (II) IN PRECEDING YEAR THE EXPENDITURE OF SERVICE TAX WAS NEITHER CHARGED TO PROFIT AND LOSS ACCOUNT NOR CLAIMED AS EXPENDITU RE UNDER THE BONAFIDE BELIEF AND IMPRESSION THAT SERVICE TAX IS NOT PAYABLE ON FOREIGN COMMISSION INCOME. LATER ON AFTER CLARIFICA TION ABOUT THE LIABILITY OF SERVICE TAX ON FOREIGN COMMISSION INCO ME AND FURTHER CLARIFIED BY THE SERVICE TAX DEPT THAT CREDIT IS NO T ALLOWABLE ON SERVICE TAX PAID AGAINST FOREIGN COMMISSION INCOME THE ASS ESSEE HAD MADE PAYMENT OF THE SAME. THE MATTER RELATED TO CHARGEAB ILITY OF SERVICE TAX WAS SETTLED IN THE YEAR UNDER CONSIDERATION ONL Y AND HENCE PAYMENT WAS MADE ON TOTAL FOREIGN COMMISSION INCOME EVEN THOUGH THE INCOME WAS ACCOUNTED FOR IN DIFFERENT YEARS. T HE PAYMENT OF SERVICE TAX IS RIGHTLY CLAIMED AS EXPENDITURE IN TH E YEAR OF PAYMENT CONSIDERING THE OVERALL FACTS OF THE CASE. AS THE E XPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS THE SAME IS ALLOWABLE IN THE YEAR OF CLAIM OF THE SAME. (III) AS PER THE PROVISIONS OF THE IT ACT 1961 TH E EXPENDITURE OF SERVICE TAX IS ALLOWABLE IN THE YEAR IN WHICH PAYMENT HAS B EEN MADE. IN THE PRESENT CASE THE PAYMENT HAS BEEN MADE IN THE YEAR UNDER CONSIDERATION HENCE THE SAME IS ALLOWABLE IN THE YE AR UNDER 7 CONSIDERATION. FURTHER THE APPELLANT COMPANY NEITHE R CLAIMED EXPENDITURE OF SERVICE TAX OF RS.8 57 261/- IN THE PRECEDING YEAR NOR ALLOWED BY THE DEPARTMENT EVEN THOUGH THE SERVICES WERE RENDERED IN THE PRECEDING YEAR. AS PER ACCOUNTS THE SERVICE TAX IS BEING CLAIMED IN THE YEAR OF PAYMENT ONLY. LN THE ACCOUNT S TOTAL PAYMENT OF SERVICE TAX HAS BEEN DEBITED TO SERVICE TAX CRED IT ACCOUNT AND SAME HAS BEEN TRANSFERRED TO SERVICE TAX EXPENDITUR E ACCOUNT ON 31/03/2010. PROOF OF PAYMENT ALREADY FURNISHED AT THE TIME OF ASSESSMENT PROCEEDINGS. (IV) AS PER LAW THE EXPENDITURE HAS TO BE CONSIDER ED WHETHER IT IS REVENUE EXPENDITURE OR CAPITAL EXPENDITURE FOR PURP OSE OF DETERMINATION OF INCOME FROM BUSINESS. THE GENUINEN ESS OF THIS EXPENDITURE HAS NOT BEEN DOUBTED BY THE LEARNED AO. THE ONLY OBJECTION TO THE ALLOWABILITY IN ENTIRETY IS THAT T HE RECEIPTS OR INCOME WAS DECLARED IN THE PRECEDING YEAR ALSO. AS PER LAW IF THE EXPENDITURE IS INCURRED PRELIMINARILY IN CONNECTION WITH THE ASSESSEE'S OWN BUSINESS IT WOULD STILL BE ALLOWED AS DEDUCTION EVEN IF IT ENSURES TO THE BENEFIT OF SOMEONE ELSE. BENEFIT OF EXPENDITURE MAY EXTEND BEYOND THE RELEVANT PREVIOUS YEAR. IT IS NOT NECESSARY THAT BENEFIT OF THE EXPENDITURE SHOULD BE LIMITED TO THE PREVIOUS YEAR IN WHICH THE EXPENDITURE IS INCURRED' A REVENUE EXPEND ITURE INCURRED DURING THE PREVIOUS YEAR IS DEDUCTIBLE EVEN IF BENE FIT OF EXPENDITURE IS EXTENDED BEYOND THE YEAR OF EXPENDITURE. THE LEA RNED AO HAS NOT APPRECIATED IN ITS TRUE PERSPECTIVES THE ABOVE PROP OSITION BEFORE MAKING ADDITION ON THIS ACCOUNT. HE FURTHER ERRED A T LAW IN DISALLOWING PROPORTIONATE EXPENDITURE ON THIS ACCOU NT WITHOUT CONSIDERING THE FACT THAT IT WAS THE REGULAR AND CO NSISTENT SYSTEM OF ACCOUNTING THAT THE GOVERNMENT TAXES HAVE BEEN CLAI MED AS EXPENDITURE IN THE YEAR OF PAYMENT ONLY. IN THE BU SINESS OF THIS NATURE THE LIABILITY OF SERVICE TAX WAS NOT SETTLED IN THE PRECEDING YEAR AND THE BUSINESS WAS CONDUCTED SINCE PRECEDING YEAR AND CONTINUED IN THE YEAR UNDER CONSIDERATION. THERE WAS NO CHANG E IN THE NATURE OF BUSINESS AND THE PAYMENT OF SERVICE TAX LIABILIT Y HAS BEEN CLAIMED AS EXPENDITURE ONLY ON SETTLEMENT OF LAW AND ISSUE OF CLARIFICATION BY THE RELEVANT DEPARTMENT. THE PAYMENT WAS MADE TO SE RVICE TAX DEPARTMENT GOVERNMENT OF INDIA AFTER CLARIFICATION RECEIVED FROM THEM. HENCE THE PAYMENT MADE TO THEM WAS BUSINESS E XPENDITURE IN 8 THE YEAR OF PAYMENT ONLY. UNDER SUCH CIRCUMSTANCES THE LEARNED ASSESSING OFFICER HAS WRONGLY INFERRED THAT THE EXP ENDITURE HAS BEEN ALLOWED ON PROPORTIONATE BASIS OF INCOME DECLARED B Y THE ASSESSEE. FURTHER IT IS SETTLED LAW BY NOW SO LONG AS THE EXP ENDITURE INCURRED 'WHOLLY AND EXCLUSIVELY' FOR THE PURPOSES OF BUSINE SS NOTHING SHOULD COME IN THE WAY OF ALLOWING DEDUCTION EVEN IF SOME BENEFIT FROM THE EXPENDITURE HAS FLOWN TO ANYBODY ELSE OR TO THE ASS ESSEE IN THE SUCCEEDING YEAR. NO PART OF THE SERVICE TAX EXPENDI TURE INCURRED BY THE ASSESSEE CAN BE RELATED TO THE NON BUSINESS PUR POSE OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES THE ENTIRE SERV ICE TAX EXPENSES INCURRED BY THE ASSESSEE WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF ASSESSEE'S BUSINESS AND ALLOWABLE IN THE YEAR OF PAYMENT OF THE SAME. KINDLY REFER SASSON J. DAVID & CO. P. LTD. V/ S CIT REPORTED AT (1979)118 LTR 261 (SC) AND M.P. RAMCHANDRA V/S DCIT (2010) 129 TTJ (MUMBAI) 190 WHICH SUPPORTS THE VIEW THAT THE BENEF IT WAS EXTENDED TO SUBSEQUENT YEAR DOES NOT PERMIT TO DISA LLOW THE EXPENDITURE IN THE YEAR IN WHICH SUCH EXPENDITURE W AS INCURRED. IN THE PRESENT CASE THERE IS NO DOUBT THAT THE ASSESSE E HAS MADE PAYMENT OF SERVICE TAX TO GOVERNMENT IN THE YEAR UN DER CONSIDERATION RELATED TO THE SAME BUSINESS. UNDER THE ABOVE CIRCUMSTANCES WE REQUEST YOUR GOODSELF TO PLEASE AL LOW THE EXPENDITURE IN THE YEAR UNDER CONSIDERATION ITSELF. THE DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER IS AGAINST TH E LAW HENCE DESERVES TO BE DELETED IN THE INTEREST OF EQUITY AN D JUSTICE. (V) PLEASE NOTE THAT THE LEARNED ASSESSING OFFICER HAS NOT COMMENTED TO ALLOW THE PROPORTIONATE EXPENDITURE IN THE PRECEDIN G YEAR AS THE INCOME HAS BEEN ASSESSED IN THE PRECEDING YEAR IF A T ALL HIS CONTENTION WAS CORRECT. IN THE ABOVE CIRCUMSTANCES WE REQUEST YOUR GOOD SE LF TO PLEASE CONSIDER THE GENUINENESS OF THE PAYMENT FOR THE EXC LUSIVE PURPOSE OF THE BUSINESS AND THEREBY DELETE THE ADDITION MADE O N THIS ACCOUNT IN THE INTEREST OF EQUITY AND JUSTICE. 10. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE ASSESSING OFFICER WAS NOT JUSTIFI ED IN DISALLOWING 9 PROPORTIONATE EXPENDITURE ON ACCOUNT OF PAYMENT OF SERVICE TAX WITHOUT CONSIDERING THE FACT THAT IT WAS A REGULAR AND CONS ISTENT SYSTEM OF ACCOUNTING THAT THE GOVERNMENT TAXES HAD BEEN CLAIM ED AS EXPENDITURE IN THE YEAR OF PAYMENT ONLY. HE FURTHER OBSERVED T HAT IN THE BUSINESS OF THIS NATURE THE LIABILITY OF SERVICE TAX WAS NOT S ETTLED IN THE PRECEDING YEAR AND THE BUSINESS WAS CONDUCTED SINCE PRECEDING YEAR AND CONTINUED IN THE YEAR UNDER CONSIDERATION. HE FURTHER OBSERV ED THAT THERE WAS NO CHANGE IN THE NATURE OF BUSINESS AND PAYMENT OF SER VICE TAX LIABILITY HAD BEEN CLAIMED AS EXPENDITURE ONLY ON SETTLEMENT OF L AW AND ISSUE OF CLARIFICATION BY THE RELEVANT DEPARTMENT AND THAT T HE PAYMENT WAS MADE TO THE SERVICE TAX DEPARTMENT GOVERNMENT OF INDIA AFTER CLARIFICATION RECEIVED FROM THEM. LEARNED CIT(A) FURTHER OBSERVE D THAT SINCE THE SERVICE TAX PAYMENTS WERE THE STATUTORY DUES ALLOWA BLE UNDER THE PROVISIONS OF THE ACT AND THE LIABILITY WAS CRYSTAL LIZED IN THE YEAR UNDER CONSIDERATION WHICH HAD BEEN PAID BY THE ASSESSEE. HE ACCORDINGLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. NOW THE DEPARTMENT IS IN APPEAL. 11. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT THE LIABILITY OF THE SERVICE TAX WHICH 10 WERE CLAIMED AS EXPENDITURE IN THE YEAR UNDER CONSI DERATION ALTHOUGH PERTAINED TO THE EARLIER YEAR BUT IT WAS SETTLED D URING THE YEAR UNDER CONSIDERATION AND AS THE LIABILITY WAS CRYSTALLIZED AND PAID DURING THE YEAR UNDER CONSIDERATION IT WAS ALLOWABLE AS EXPEN DITURE THEREFORE WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF LEARNED CI T(A). 12. IN THE RESULT APPEAL OF THE DEPARTMENT IS DISMISSE D. (ORDER PRONOUNCED IN THE COURT ON 25 TH OCTOBER 2013). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25 TH OCTOBER 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR ITAT JODHPUR.