On 2012 the rental service, received by the assessee and the invoice issued by the service provider without service tax, on 2015 service provider had a issue with the service tax department and paid the service tax and the same is claimed with the assessee on 2015 and the assessee paid the service tax amount and accounted as expenses. I am seeking the clarification regarding whether the service tax is allowed as a expenses in the financial year 2015-16?
Party-"A" is a rental service provider,
Party-"B" is a service receiver,
On 2012, "A" raised invoice without service tax. "A" had a issue with service tax department for the service tax on rental income from 2012-2015 and raised a demand for Rs.xxxx.
"A" paid the demand. and claimed the service tax on rent amount from B on 2015.
B accounted the same in the head "Service tax expenses" and treated as a indirect expenses.
Whether the expenses is allowed under the income tax act?
Payment of Service Tax and Interest can be claimed. If penalty is charged the same is not an allowable expenditure under Income Tax Act.
O P Bagla & Co LLP
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SMJ global advisors pvt ltd
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