Deduction of service tax
This query is : Resolved
30 December 2011
Assessee had purchased machinery and paid service tax on the same. as per service tax rules assessee is requiret to claim on cenvat 50 % in 1st year and other 50 % in 2nd year. However through and oversight tax credit had not taken in 2nd year. In addition, assessee had also surrendered his service tax number. So that now he can neighter avail of service tax credit nor refund money back.
So is it available as a deduction in income tax ?
So is it available as a deduction in income tax ?
30 December 2011
Unutilised cenvat credit you can transfer to Profit and Loss acoount.
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30 December 2011
Thanks for answer. can you give which section permit this ?
30 December 2011
Pls. refer circular no. 783/16/2004 -CX dated 28.04.2004.
Extract from circular "Accordingly, Board desires that field formations under your charge may be sensitized against the unintended dual benefit availed of by certain assessees on account of treatment of unutilized CENVAT credit balance at the year end. In case the CENVAT credit balance has been treated as expenditure in Profit and Loss account and has not been written off in Books of Accounts, the concerned Income Tax authorities should be suitably intimated. The audit parties should also keep this aspect in mind while conducting audit."
Extract from circular "Accordingly, Board desires that field formations under your charge may be sensitized against the unintended dual benefit availed of by certain assessees on account of treatment of unutilized CENVAT credit balance at the year end. In case the CENVAT credit balance has been treated as expenditure in Profit and Loss account and has not been written off in Books of Accounts, the concerned Income Tax authorities should be suitably intimated. The audit parties should also keep this aspect in mind while conducting audit."
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30 December 2011
But sir, my credit is not an unutilized. i was not claim in service tax return and number had been surrendered so that is it unutilized credit ?
it was mistake now what should we do that assessee doesn't suffer any loss.
it was mistake now what should we do that assessee doesn't suffer any loss.
30 December 2011
As per my view, As per your first message 50% cenvat credit become eligible from 2nd year onwards. However during the period if you surrender your Reg. it means in 2nd year eligible credit become unutilised.
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