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III. Direct Taxes Case Laws:
1. CIT Vs. Ovira Logistics Pvt. Ltd., I.T.A. No. 1023/2013, Date of Order: 17.04.2015, high Court of Bombay
Section
43B of Income Tax Act, 1961, does not contemplate liability to pay the
service tax before actual receipt of the funds in the account of the
assessee.
During
the assessment proceedings, the Ld. AO disallowed service tax u/s 43B on
the basis that same was not deposited into the treasury. Assessee
contained that service tax was not payable as amount has not been
credited in assessee’s account. Hon’ble Tribunal observed that assessee
was following mercantile system of accounting, it has not debited such
amount in P & L nor has claimed deduction for it, and therefore
question of disallowance does not arise.
Dismissing
the appeal, the Hon’ble High Court held that “section 43B does not
contemplate liability to pay the service tax before actual receipt of
the funds in the account of the assessee. Liability to pay service tax
into the treasury will arise only upon the assessee receiving the funds
and not otherwise. Accordingly, when services are rendered, the
liability to pay the service tax in respect of the consideration payable
will arise only upon the receipt of such consideration and not
otherwise.”
(Please click here for judgment)
2. Malineni Babulu (HUF) Vs. ITO, I.T.A. No. 1326/Hyd/2014, Date of Order: 07.08.2015, ITAT - Hyderabad
Disallowance
made u/s 40(a)(ia) of Income Tax Act, 1961 for non filing of
declaration in Form 15G/15H is unwarranted, provision of section
272A(2)(f) could apply in such case.
In
appellant proceeding before CIT a notice was issued upon assessee u/s
263 of the act for disallowing interest expenditure u/s 40(a)(ia) for
non deducting of TDS. Assessee submitted that he had obtained Form 15H
from the respective parties and same was filed before the CIT and a copy
was also filed before AO, hence provision of Section 40(a)(ia) are not
applicable. The Ld.CIT brushing aside the explanation offered by the
appellant and passed an order U/s. 263 holding that the assessment order
was erroneous and prejudicial the interest of Revenue in as much as the
above issues were not considered and added by the AO in the assessment
order.
Hon’ble
ITAT held that assessee failed to produced proof in support of dispatch
of Form 15H to the CIT, however a copy of Form 15H was filed before the
AO. This fact has not been disputed by the Revenue. It is only technical
breach of law and the act provides for separate penal provisions for
such default. Therefore, no disallowance can be made to the provisions
of Section 40(a)(ia) of the Act. In this regard, ITAT placed reliance on
the decision of Hon’ble Delhi Bench of ITAT in the case of Vijaya Bank
Vs. ITO [2014] [49 Taxmann.com 533 (Delhi-Trib) where it was held that
“that if the assessee bank was not liable to deduct tax at the time of
payment of interest, then section 40(a)(ia) of the Act is not attracted
and the assessee cannot be held liable to pay tax as the assessee in
default and interest thereon. At this juncture, it is pertinent to
mention that for non-filing of Forms 15G and 15H within the prescribed
time, there is a provision of penalty under section 272A(2)(f) of the
Act”.
(Please click here for judgment)
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