Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

Sec. 43B won't apply if service tax claimed as an expense wasn't paid by assessee due to non-receipt from customer

Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deduction to be allowed only on actual payment (Service tax) - Assessment year 2006-07 - Assessee provided detection and security services to its clients - Assessee did not receive any amount from its clients, on which service tax was payable - Assessee claimed unpaid service tax as its liability - Assessing Officer was of a view that by virtue of section 43B, service tax could be allowed only when paid, thus, amount was not liable for deduction - High Court by impugned order held that since services were rendered, liability to pay service tax in respect of consideration would arise only upon assessee receiving funds and not otherwise, thus, liability claimed by assessee could not be disallowed under section 43B - Whether Special Leave petition filed against impugned order was to be dismissed - Held, yes [Para 10] [In favour of assessee]

CASE REVIEW
Pr. CIT v. Tops Security Ltd. [2018] 97 taxmann.com 525/258 Taxman 161 (Bom.) [SLP dismissed].
A.N.S. Nadkarni, ASG, Devashish Bharuka, Adv. and Mrs. Anil Katiyar, AOR for the Petitioner.

ORDER

1. Delay condoned.

2. The Special Leave Petition is dismissed.

Refer:[2019] 104 taxmann.com 168 (SC)

SUPREME COURT OF INDIA
Principal Commissioner of Income-tax 11
v.
Tops Security Ltd.

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