Decided on September 10,2007

Noble And Hewitt (I) Pvt Ltd Respondents


MADAN B.LOKUR,J - (1.) THE Revenue is aggrieved by an order dated 17th November, 2006 passed by the Income Tax Appellate Tribunal('Tribunal') Delhi Bench "D" New Delhi in ITA No. 2910/Del/2004 relevant for the assessment year 1999-2000.
(2.) THE Assessee maintains a mercantile system of accounting. It had collected service tax during the previous year relevant to the assessment year in question. Out of the service tax so collected the Assessee had deposited part of the amount but an amount of Rs. 14.40 lakhs was not deposited by the Assessee with the concerned authorities. The Assessee did not claim any deduction in this regard nor did it debit the amount as an expenditure in the Profit and Loss Account. The Assessing Officer as well as the Commissioner of Income Tax (Appeals) ['CIT(A)'] nevertheless disallowed the amount and added it back to the income of the Assessee. The CIT (A) was of the view that the Assessee had not followed the correct accounting procedure. If it had done so, the amount would have had to be debited to Profit and Loss Account and thereafter the Assessee could claim a deduction thereon. The Commissioner relied upon decision of the Calcutta High Court in Chowringhee Sales Bureau P. Ltd. v. Commissioner of Income Tax, West Bengal-I (1977) 110 ITR 385.
(3.) IN appeal, the Tribunal was of the opinion that in view of the provisions of Section 43 B of the Income Tax Act, 1961('Act'), since the Assessee had not claimed a deduction there was no question of disallowing the deduction which was not even claimed. The relevant extract of Section 43 B of the Act reads as follows: "43B. Certain deductions to be only on actual payment. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of - (a) Any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for the time being in force, (b) xxxxxxxxxxxxxx (c) xxxxxxxxxxxxxx (d) xxxxxxxxxxxxxx (e) xxxxxxxxxxxxxx (f) xxxxxxxxxxxxxx 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.........................." ;

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