When These Appeals Were Argued Before Us, Ourattention Was Invited By Mr. Jasani To A Division Benchjudgment Of This Court Reported In [2015] 377 Itr 129 (Bom.) v. Ovira Logistics P. Ltd.}.Mr. Jasani Submits That Earlier This Very Controversy Was Dealtwith And The Revenue's Appeal Was Dismissed

suresh IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.733 OF 2015WITH INCOME TAX APPEAL NO.734 OF 2015WITHINCOME TAX APPEAL NO.879 OF 2015WITH INCOME TAX APPEAL NO.70 OF 2016 WITH INCOME TAX APPEAL NO.125 OF 2016 Principal Commissioner of Income Tax-11, MumbaiVs.Tops Security Limited .... Appellant.... Respondent Mr. Arvind Pinto for the Appellant.Mr. Atul K. Jasani for the Respondent. CORAM: S.C. DHARMADHIKARI &B.P. COLABAWALLA, JJ. DATE : SEPTEMBER 10, 2018 P.C:1.The Revenue's appeals challenge the orders of theIncome Tax Appellate Tribunal, Bench at Mumbai. 2. In all these appeals, the Revenue proposes a Page 1 of 5 suresh common question and terms it to be a substantial question of law. The common question reads as under:- "Whether, in law and on the facts and in thecircumstances of the case, the Hon'ble ITAT was justifiedin holding that the service tax though debited to theprofit and loss account but not credited to the CentralGovernment cannot be disallowed under Section 43B ofthe Income Tax Act, 1961?" 3.The facts and circumstances in Income Tax Appeal No.733 of 2015 are sufficient for the purposes of the final orderthat we propose to pass in these appeals. 4.This appeal is for the Assessment Year 2006-07. 5.The respondent/assessee before this Court filed areturn of income for Assessment Year 2006-07 on 29-3-2007declaring income of Rs.6,48,57,187/-. The assessee claimed thatit is engaged in the business of providing detection and securityservices to its clients. During the examination of the BalanceSheet, the Assessing Officer, inter alia, noted that the Companyhad claimed Rs.5,12,22,734/- being unpaid service tax as itsliability. Additionally, a sum of Rs.3,47,03,462/- was also shown Page 2 of 5 suresh 5-ITXAG-733.2015.doc under the same head, but the respondent had disallowed a sumof Rs.95,94,128/-. It is stated that the gross receipts include theservice tax but whenever it is due and payable, namely, whenthe amount for the services is realised, it would be remitted.That is how the above sum was shown as liability in the BalanceSheet. 6.The Assessing Officer was of the view that by virtueof Section 43B of the Income Tax Act, 1961, service tax can beallowed only when paid and therefore the amount is not liableas deduction. Further, certain details of the clients were also notprovided. Hence, the same was added as income. 7.Being aggrieved by this order, the assessee preferredan appeal to the Commissioner of Income Tax (Appeals) and heheld in favour of the assessee. 8.Then, the matter was carried in appeal to theTribunal and the Tribunal, relying upon its finding in the earlierassessment years, came to the conclusion that though the servicetax was included in the bill raised on the customers but it was Page 3 of 5 suresh 5-ITXAG-733.2015.doc not actually collected from them. The First Appellate Authorityheld that, tax becomes payable only when it is collected from thecustomer. It is in these circumstances that following its earlierview, the Tribunal agreed with the First Appellate Authority anddismissed the Revenue's appeal. 9.When these appeals were argued before us, ourattention was invited by Mr. Jasani to a Division BenchJudgment of this Court reported in [2015] 377 ITR 129 (Bom.){Commissioner of Income-Tax v. Ovira Logistics P. Ltd.}.Mr. Jasani submits that earlier this very controversy was dealtwith and the Revenue's appeal was dismissed. 10.With the assistance of both sides, we have perusedthis Judgment and we find that it dealt with an identical issue.This Court held that Section 43B does not contemplate liabilityto pay service tax before actual receipt of the funds in theaccount of the assessee. Hence the liability to pay service taxinto the Treasury will arise only upon the assessee receiving thefunds and not otherwise. Thus the consideration has to be Page 4 of 5 suresh 5-ITXAG-733.2015.doc 10.With the assistance of both sides, we have perusedthis Judgment and we find that it dealt with an identical issue.This Court held that Section 43B does not contemplate liabilityto pay service tax before actual receipt of the funds in theaccount of the assessee. Hence the liability to pay service taxinto the Treasury will arise only upon the assessee receiving thefunds and not otherwise. Thus the consideration has to be Page 4 of 5 suresh 5-ITXAG-733.2015.doc actually received and thereupon the liability will arise. 11.No conclusion contravening the above has been brought to our notice by the Revenue. 12.In fact, Mr. Pinto was fair enough to bring to ournotice this Judgment. 13.In the circumstances, each of these appeals raise nosubstantial question of law. They are dismissed accordingly. Theissue being covered by a Division Bench and to which one of us(Shri S.C. Dharmadhikari, J.) was a party, the appeals aredisposed of but without any order as to costs. (B.P. COLABAWALLA, J.) (S.C. DHARMADHIKARI, J.) Digitally signedSureshby SureshJagdishJagdishSajnawatDate:Sajnawat2018.09.1211:34:11 +0530 Page 5 of 5