My client received notice from income tax department, u/s 43B, covering following topic
There is "Service Tax Payable but not deu" for 2008-09, in balance sheet, which is not actually received by clint from customer.
Now the income tax dep. has issued notice to disallow the same u/s-43B.
Do whether thw same has been allowed or not u/s 43B?
Kindly give corret answer with any case law any, because my scrutiny is going on with ITO..
Regards
Dear Nimesh,
The I.T Dept. is correct in sending Notice to the assessee.. as Service Tax is a tax, which would be allowed as an expense only when the same has been paid to the Government, before the due date of ITR... else, it would be allowed in the P.Y. in which the same will be paid.
Kindly read sec. 43B of I.T. Act. The extract from the same is as follows:-
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, or......
b)..........
Best Regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com
+91-9891400405
Dear Nimesh,
The I.T Dept. is correct in sending Notice to the assessee.. as Service Tax is a tax, which would be allowed as an expense only when the same has been paid to the Government, before the due date of ITR... else, it would be allowed in the P.Y. in which the same will be paid.
Kindly read sec. 43B of I.T. Act. The extract from the same is as follows:-
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, or......
b)..........
Best Regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com
+91-9891400405
Thanks for replay
But as per Old service Tax rules Service Tax is payable only Payment Received From Customer, until that it can be shown in Balance sheet as liabilities which is payable but not due.
As an when payment received then the same is taxable in the year of payment received if the same is not paid to goverment u/s-43B.
Service Tax which is not due/payable to govt. how can be disallowed u/s-43B. Under that section tax is disallowed only that which is due/payable and not paid no or brfore due date of filling of return...
Dear Nimesh,
sorry to say.. but you are getting some facts wrong..
please tell me, when you haven't received payment from customer, then why are you taking it as your S.T. liability (i am talking about old provision i.e. before Point of Taxation)... your liability arises only when you have received the amount and didn't pay it to the Govt.
My suggestion was that you shouldn't have taken it as your S.T. liability and as you have taken it in your balance sheet, then you have to pay that amount to Govt. before the due date of filing ROI. By that time, you must have received that amount from your customer.
And, kindly do not get confused among due and payable in it, even A.O. will not hear this.
Thanks and regards,
CA Lovely Arora
ca.lovelyarora @ gmail.com
+91-9891400405
CAclubindia
