2015 (10) TMI 1381 - AT - Income Tax

Disallowance u/s. 40(a)(ia) delay in remitting TDS within the time allowed into Government account - Held that - As it has been admitted by the assessee itself that the TDS has been remitted into Government account on 5.10.2009, we direct the CIT(A) to allow the TDS payment in the next year. Disallowance of depreciation - Held that - AO has passed ex-parte order u/s. 144 of the Act and reasonable opportunity was not given to the assessee to represent its case. Assessee submitted that the assessee is in possession of relevant bills with respect to purchases made during the year under consideration. However, the same were not produced even before the CIT(A). In the interest of justice, we remit the issue back to the file of the CIT(A) to examine the bills and thereafter consider the claim of depreciation made by the assessee. - Decided in favour of assessee for statistical purposes. Disallowance of various expenses incurred by the assessee - Held that - CIT(A) has not applied his mind on disallowance pertaining to (1) packaging charges, commission expenses and (2) distribution charges and, therefore, we remit the issue of disallowance of expenditure in respect of the above three items to the file of the CIT(A) with a direction to adjudicate upon these items in the light of the evidences produced by the assessee before him, and decide in accordance with law.- Decided in favour of assessee for statistical purposes. Disallowance of expenditure incurred for material consumed - CIT(A) allowed the claim - Held that - CIT(A) has given a finding that increase in material consumption has effected a corresponding increase in circulation revenue. It is the basic principle that when there is a rise in circulation revenue there should be a corresponding increase in material consumption. The consumption of raw material increases on printing more number of copies of printed publication. Hence, we are in conformity with the order of the CIT(A) on this issue and allow the expenditure incurred for material consumed - Decided in favour of assessee

Summary

Issues involved:
1. Disallowance of TDS under section 40(a)(ia) of the Income-tax Act, 1961.
2. Disallowance of depreciation on fixed assets.
3. Disallowance of various expenses related to material consumption, packing charges, commission expenses, and distribution charges.

Issue 1: Disallowance of TDS under section 40(a)(ia) of the Income-tax Act, 1961:
The assessee had remitted TDS into the Government account after the due date. The CIT(A) upheld the disallowance under section 40(a)(ia) based on precedents. The Tribunal directed the CIT(A) to allow the TDS payment in the next year as the TDS was remitted after the due date.

Issue 2: Disallowance of depreciation on fixed assets:
The AO disallowed depreciation on fixed assets added during the year, citing lack of bill evidence from the assessee. The CIT(A) upheld the disallowance. The Tribunal observed that the AO's ex-parte order deprived the assessee of a fair opportunity to present evidence. The issue was remitted back to the CIT(A) for reevaluation based on the bills provided by the assessee.

Issue 3: Disallowance of various expenses related to material consumption, packing charges, commission expenses, and distribution charges:
Regarding material consumption expenses, the AO disallowed a significant amount due to a perceived disproportionate increase. The CIT(A) analyzed the correlation between circulation revenue and material consumption, allowing the expenditure. However, the Tribunal noted oversight in adjudicating other expenses like packing charges, commission expenses, and distribution charges. The issue was remitted to the CIT(A) for detailed examination based on the evidence presented.

The Tribunal allowed the assessee's appeal for statistical purposes, directing reevaluation of the depreciation and various expense disallowances. The Departmental appeal was dismissed, affirming the CIT(A)'s decision on material consumption expenses. The judgment emphasized fair opportunity for presenting evidence and detailed examination of expenses to ensure compliance with the law.