MEDIA EXPERTS P. LTD, MUMBAI v. DCIT CIR 3(2), MUMBAI

ITA 5825/MUM/2013 | 2010-2011
Pronouncement Date: 19-10-2016

Appeal Details

RSA Number 582519914 RSA 2013
Assessee PAN AADCM0204A
Bench Mumbai
Appeal Number ITA 5825/MUM/2013
Duration Of Justice 3 year(s) 22 day(s)
Appellant MEDIA EXPERTS P. LTD, MUMBAI
Respondent DCIT CIR 3(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Assessee
Bench Allotted B
Tribunal Order Date 19-10-2016
Date Of Final Hearing 13-08-2015
Next Hearing Date 13-08-2015
Assessment Year 2010-2011
Appeal Filed On 27-09-2013
Judgment Text
IN THE INCO ME TAX APPELLATE TRIBUNAL B BENCH MUMBAI BEFORE SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH JUDICIAL MEMBER I.T.A. NO. 5825/M/2013 (ASSESSMENT YEAR: 2010 - 2011 ) M/S. MEDIA EXPERTS PRIVATE LIMITED 126 - B MITTAL TOWERS FREE PASS MARG NARIMAN POINT MUMBAI 400 021. / VS. DCIT CIRCLE 3(2) AAYAKAR BHAVAN CHURCHGATE MUMBAI - 20. ./ PAN : AADCM0204A ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MILIN BAKHAI / RESPONDENT BY : SHRI B. SATYANARAYANA RAJU DR / DATE OF HEARING : 06.10.2016 / DATE OF PRONOUNCEMENT : 19 .10.2016 / O R D E R PER D. KARUNAKARA RAO AM: THIS APPEAL FILED BY THE ASSESSEE ON 27.9.2013 IS AGAINST THE ORDER OF THE CIT (A) - 4 MUMBAI DATED 19.7.2013 FOR THE ASSESSMENT YEAR 2010 - 11 . IN THIS APPEAL ASSESSEE RAISED THE FOLLOWING GROUN D WHICH READ AS UNDER: - LD CIT (A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING INTEREST PAID ON SERVICE TAX OF RS. 4 34 210/ - ON THE GROUND THAT INTEREST ON SERVICE TAX IS NOT COVERED UNDER THE PURVIEW OF SECTION 43B(A) OF THE ACT. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE DISALLOWANCE OF RS. 4 34 210/ - OUGHT TO BE DELETED. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF INVESTMENT FINANCE COMMISSION AND CONSULTANCY. ASSESSEE FILED THE RETURN OF INCOM E DECLARING THE TOTAL INCOME OF RS. 95 36 550/ - UNDER NORMAL PROVISIONS AND RS. 94 58 709/ - U/S 115JB OF THE ACT. ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS.99 70 760/ - . IN THE ASSESSMENT AO MADE DISALLOWA NCE OF RS. 4 34 210/ - ON ACCOUNT OF PAYMENT OF INTEREST ON SERVICE TAX TO THE GOVERNMENT . AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 2 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY AFTER CONSIDER ING THE SUBMISSIONS OF THE ASSESSEE CIT (A) CONFIRMED THE ADDITION MADE BY THE AO VIDE DISCUSSION GIVEN IN PARA 5.3 OF THIS ORDER. AGAIN AGGRIEVED WITH THE SAID DECISION OF THE CIT (A) ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. DURING THE PRO CEEDINGS BEFORE US LD COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE COLLECTED SERVICE TAX FROM THE CUSTOMERS AND THE SAME WAS REMITTED TO THE GOVERNMENT BELATEDLY. ASSESSEE PAID INTEREST FOR THE SAID DELAY AND CLAIMED THE ENTIRE AMOUNTS AS ALLOWAB LE DEDUCTION U/S 43B(A) OF THE ACT. IN THIS REGARD LD COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER OF THE ITAT DELHI IN THE CASE OF DCIT VS. MESSEE DUSSELDORF INDIA (P) LTD [(2010) 129 TTJ (DEL) (UO) 81] FOR THE PROPOSITION THAT SUCH INTEREST PAID IN CONNECTION WITH THE REMITTING OF THE SERVICE TAX COLLECTED IS AN ALLOWABLE DEDUCTION . RELYING ON THE JUDGMENT OF THE HONBLE HIGH COURT OF TELANGANA & ANDHRA PRADESH IN THE CASE OF CIT VS. ANDHRA SUGARS LTD [2014] 367 ITR 195 LD COUNSEL FOR THE ASSESS EE DREW PARALLEL ON THE INTEREST PAYABLE TO THE PURCHASE DUTY IS AN ALLOWABLE DEDUCTION U/S 43B OF THE ACT. FURTHER RELYING ON THE JUDGMENT OF THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF SHREE DIGVIJAY CEMENT CO. LTD VS. CIT [2007] 289 ITR 0250 LD COUNSEL FOR THE ASSESSEE EXPLAINED THAT THE INTEREST IF ANY WITHOUT ACTUALLY PAID CONSTITUTES AN ALLOWABLE DEDUCTION U/S 43B OF THE ACT AS THE SAME CONSTITUTES A KIND OF TAX. RELEVANT HELD PORTION FROM THE SAID JUDGMENT READS AS UNDER: - THE AMOUNT OF INTEREST DUE ON OUTSTANDING AMOUNT OF SALES TAX BECOMES PART OF THE SALES TAX AND WILL BE COVERED IN THE WORD TAX AND THUS INTEREST PAYABLE ON ARREARS OF SALES TAX IS IN REALITY PART AND PARCEL OF LIABILITY OF THE SALES TAX AND THEREFORE THE SAME C ANNOT BE ALLOWED AS DEDUCTION UNLESS IT IS ACTUALLY PAID AS THE SAME IS HIT BY THE PROVISIONS OF SECTION 43B. IT IS ALSO REQUIRED TO BE NOTED THAT EVEN THE AMOUNT OF RS. 7 38 11 883/ - IS DISALLOWED BY THE AO WHILE PASSING THE ASSESSMENT ORDERS U/S 143(3 ) AND IT APPEARS THAT THE SAME HAS BEEN ACCEPTED BY THE ASSESSEE ALSO. THEREFORE AS SUCH THERE IS NO DISPUTE ON MERITS WHETHER THE AMOUNT OF RS. 7 38 11 883/ - WARRANTED DEDUCTION U/S 43B OR NOT MAHALAKSHMI SUGAR MILLS CO. VS. CIT (1980) 16 CTR (SC) 198 : (1980) 123 ITR 429 (SC) RELIED ON. 5. FROM THE ABOVE IT IS EVIDENT THAT THE CLAIM OF INTEREST IN RELATION WITH THE SALES TAX LIABILITY BECOMES A PART OF THE TAX AND THE SAME IS ALLOWABLE U/S 43B OF THE ACT WHEN THE SAME IS ACTUALLY PAID. WHILE COMING TO THE SAID CONCLUSION HONBLE GUJARAT HIGH COURT RELIED ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF MAHALAKSHMI SUGAR MILLS CO. VS. CIT (SUPRA). CONSIDERING THE ABOVE WE ARE OF THE 3 OPINION THAT THE INTEREST IN QUESTION IS PAID BY THE ASS ESSEE IN CONNECTION WITH THE LATE PAYMENT ON SERVICE TAX TO THE GOVERNMENT BECOMES ALLOWABLE DEDUCTION U/S 43B OF THE ACT. WE HAVE ALSO NOTICED FROM THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF MESSEE DUSSELDORF INDIA (P) LTD (SUPRA) AND FIND THE SAME IS RELEVANT FOR THE PROPOSITION THAT INTEREST PAID FOR THE DELAYED PAYMENT OF SERVICE - TAX IS COMPENSATORY AND HAS THE SAME CHARACTER AS SERVICE TAX AND THEREFORE IT IS AN ALLOWABLE DEDUCTION. THE ABOVE LEGAL PROPOSITION IS DIRECTLY ON THE ISSUE AND THEREFORE THE CLAIM OF SHOULD BE ALLOWED IN FAVOUR OF THE ASSESSEE. ACCORDINGLY THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OCTOBER 2016. SD/ - SD/ - ( AMARJIT SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 19 .10.2016 . . ./ OKK SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. / DR ITAT MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI