DCIT Vs Seven Hills Project Private Limited (ITAT Kolkata)
ITAT Kolkata holds that under Section 43B, service tax liability arises only when funds are actually received. The Tribunal upholds CIT(A)’s deletion of Rs. 3.62 Cr addition but remands the case for proper verification of P&L routing and receipt of payments.
This case involves an appeal filed by the Income Tax Department (Revenue) against an order by the Commissioner of Income Tax (Appeals) [CIT(A)] regarding the assessment of Seven Hills Project Private Limited for the assessment year 2015-16. The central issue is the disallowance of Rs. 3,62,47,086, which the Assessing Officer (AO) added back to the company’s income under Section 43B of the Income Tax Act, 1961, for unpaid service tax.
The company, engaged in mining, transport, and trading, had an audited income of Rs. 1,92,95,845. The AO, however, increased this to Rs. 5,57,19,180 by including the outstanding service tax liability. The company argued that this tax had been paid before the due date for filing the return under Section 139(1), either through CENVAT or cash. They also made an alternate submission, claiming the actual liability was Rs. 2,00,03,409 due to accounting errors. The CIT(A) did not consider this alternate submission, stating there was no provision for it under Section 246A.
