Bartronics India Ltd. v. Asstt. CIT

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The Tax Publishers2012 TaxPub(DT) 2496 (Hyd-Trib) : (2012) 047 (II) ITCL 0361 : (2012) 052 SOT 0188 INCOME TAX ACT, 1961 --Business disallowance under section 43B--Tax cess duty, etc. Service-tax--Assessee was Public Limited Company filed its return of income for the assessment year under consideration. Assessing officer completed the assessment under section 143(3) and computed the taxable income after disallowing certain expenditure and liabilities under section 43B. The authorized representative for assessee submitted that the service-tax is not covered within the meaning of any tax or duty under section 43B and urged to delete the addition made by assessing officer. He reiterated that service-tax is not a duty and not covered by provisions of section 43B and assessing officer erred in adding the same under section 43B. Held: Service-tax is a tax and clearly covered under section 43B and non-payment of same within time is disallowable. Admittedly the assessee has not paid the service-tax as required under the provisions of section 43B which is also very much covered under section 43B. The provision of section 43B are very clear and they states that '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'. Therefore even service tax is liability which covers under section 43B and non-payment of the same within the stipulated time as specified under section 43B attracts disallowances. [Para 38] Income Tax Act, 1961, Section 43B INCOME TAX ACT, 1961 --Deduction under section 10B--Allowability Treatment of expenditure under section 40(a)(ia) and liability under section 43B--As per the provisions of section 10B recomputed profits shall be considered for the purpose of computation of deduction under section 10B. In view of various Tribunals & High Courts have held that disallowances of expenditure should be computed for the purpose of deduction under section 10B accordingly, the assessing officer recomputes the profit from eligible business by disallowing certain expenditure and liability under sections 40(a)(ia) and 43B, such recomputed profit shall be considered for the purpose of deduction under section 43B. assessing officer was directed to consider the additions made while calculating deduction under section 10B. Accordingly assessing officer was directed to recompute the deduction after taking into account disallowances. Income Tax Act, 1961, Section 10B INCOME TAX ACT, 1961 --Assessment--Statutory audit under section 142(2A) Common expedity vis-a-vis no defect in books of account--Assessee was 100% EOU has made export and domestic sales during the year under consideration. Assessee had maintained separate books of accounts for 100% EOU and Domestic business and recorded all the corresponding expenditure. During the course of assessment, assessing officer had ordered for special audit of books of accounts under section 142(2A). The special auditors had submitted their audit report. The special auditor appointed for the purpose submitted their report pointing out no discrepancies in the books of accounts. Assessing officer who ordered for special audit to find out the correctness of the books of accounts as regards allocation of common expenditure for export and domestic business, has ignored the special audit report and completed the assessment on the basis is own estimation. Held: When there are no mistakes in the books of accounts and books of accounts are in verifiable manner, assessing officer cannot reject the books of accounts and resort to best judgment assessment. Moreover in the instant case assessing officer himself got the accounts audited from special auditors under section 142(2A) cannot ignore the audit report submitted by the special auditors. If the special auditor points out any discrepancies with regard to allocation of expenditure and correctness of books of accounts, then it is open to assessing officer to reject the books of accounts and resort to estimation. Assessing officer is not correct in disallowing the common expenditure from the export profit. Assessing officer was directed to allow the expenditure and recompute the deduction under section 10B as claimed by assessee. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 2496 (Hyd-Trib) : (2012) 047 (II) ITCL 0361 : (2012) 052 SOT 0188

INCOME TAX ACT, 1961

--Business disallowance under section 43B--Tax cess duty, etc. Service-tax--Assessee was Public Limited Company filed its return of income for the assessment year under consideration. Assessing officer completed the assessment under section 143(3) and computed the taxable income after disallowing certain expenditure and liabilities under section 43B. The authorized representative for assessee submitted that the service-tax is not covered within the meaning of any tax or duty under section 43B and urged to delete the addition made by assessing officer. He reiterated that service-tax is not a duty and not covered by provisions of section 43B and assessing officer erred in adding the same under section 43B. Held: Service-tax is a tax and clearly covered under section 43B and non-payment of same within time is disallowable.

Admittedly the assessee has not paid the service-tax as required under the provisions of section 43B which is also very much covered under section 43B. The provision of section 43B are very clear and they states that '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'. Therefore even service tax is liability which covers under section 43B and non-payment of the same within the stipulated time as specified under section 43B attracts disallowances. [Para 38]

Income Tax Act, 1961, Section 43B

INCOME TAX ACT, 1961

--Deduction under section 10B--Allowability Treatment of expenditure under section 40(a)(ia) and liability under section 43B--As per the provisions of section 10B recomputed profits shall be considered for the purpose of computation of deduction under section 10B. In view of various Tribunals & High Courts have held that disallowances of expenditure should be computed for the purpose of deduction under section 10B accordingly, the assessing officer recomputes the profit from eligible business by disallowing certain expenditure and liability under sections 40(a)(ia) and 43B, such recomputed profit shall be considered for the purpose of deduction under section 43B. assessing officer was directed to consider the additions made while calculating deduction under section 10B. Accordingly assessing officer was directed to recompute the deduction after taking into account disallowances.

Income Tax Act, 1961, Section 10B

INCOME TAX ACT, 1961

--Assessment--Statutory audit under section 142(2A) Common expedity vis-a-vis no defect in books of account--Assessee was 100% EOU has made export and domestic sales during the year under consideration. Assessee had maintained separate books of accounts for 100% EOU and Domestic business and recorded all the corresponding expenditure. During the course of assessment, assessing officer had ordered for special audit of books of accounts under section 142(2A). The special auditors had submitted their audit report. The special auditor appointed for the purpose submitted their report pointing out no discrepancies in the books of accounts. Assessing officer who ordered for special audit to find out the correctness of the books of accounts as regards allocation of common expenditure for export and domestic business, has ignored the special audit report and completed the assessment on the basis is own estimation. Held: When there are no mistakes in the books of accounts and books of accounts are in verifiable manner, assessing officer cannot reject the books of accounts and resort to best judgment assessment. Moreover in the instant case assessing officer himself got the accounts audited from special auditors under section 142(2A) cannot ignore the audit report submitted by the special auditors. If the special auditor points out any discrepancies with regard to allocation of expenditure and correctness of books of accounts, then it is open to assessing officer to reject the books of accounts and resort to estimation. Assessing officer is not correct in disallowing the common expenditure from the export profit. Assessing officer was directed to allow the expenditure and recompute the deduction under section 10B as claimed by assessee.