Rent including service tax paid for the business purpose is allowable u/s 30

Ultimate Fashion Maker Ltd. Vs ACIT (ITAT Delhi)

ITAT Delhi held that rent including service tax on rent paid for the purpose of business is allowable under section 30 of the Income Tax Act.

Facts- The assessee is a lessee of the premises in Okhla Industrial Area, wherein the assessee is carrying the business of manufacturing of readymade garments, the assessee had been tenant of the said premises right from 05.03.2011 and paying the rent and the same was being allowed as deduction. Further submitted that, the said ‘expense for the purpose of business of assessee’ is covered by section 30 of the Act.
The ld. Assessing Officer has disallowed the amount of service tax paid on the rent on the ground that the reply of the assessee found to be not satisfactory’. In appeal before the CIT (Appeals) the said addition has been sustained.

Conclusion- Even the levy on the renting of immovable property wherein the service tax has to be borne by the lessee but the same has to be collected by the landlord who is under obligation to perform the function of facilities or wherein he collect the tax and deposits the same with the Revenue authorities. Thus, the liability of service tax on the rent is always passed on the recipient of the service.

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