2016 (1) TMI 1399 - AT - Income Tax

Disallowance on account of reimbursement of salary and related expenses made u/s 40(a)(ia) - Held that - We are of the opinion that the identical issue has consistently been decided by the Tribunal in favour of the assessee. Therefore, respectfully following the earlier orders of the Tribunal on the similar issue as well as following the principles of consistency , we decide the issue involved in Ground no.2 in favour of the assessee. Disallowance of expenses on account of shuttering material and depreciation thereon - Held that - Considering the above, we are of the opinion that the identical issue has consistently been adjudicated by the Tribunal and the matter was remanded in the earlier years. Therefore, respectfully following the earlier orders of the Tribunal on the similar issue as well as following the principles of consistency , we remand the issue. Ground allowed for statistical purposes.

Summary

Issues:
1. Disallowance of reimbursement of salary and related expenses under section 40(a)(ia) of the Act.
2. Disallowance of expenses on account of shuttering material as Revenue Expenditure.
3. Rejection of claim for grant of depreciation on entire shuttering material.

Issue 1: Disallowance of reimbursement of salary and related expenses under section 40(a)(ia) of the Act:
The appeal was against the order of the CIT (A) for the assessment year 2010-2011. The assessee, an Association Of Persons (AOP) with a Joint Venture agreement, challenged the disallowance of reimbursement of salary and related expenses amounting to Rs. 4,33,33,687 under section 40(a)(ia) of the Act. The AO had made this disallowance during assessment. The CIT (A) dismissed the appeal, leading the assessee to approach the Tribunal. The Tribunal noted that a similar issue had been decided in favor of the assessee in a previous year. Citing consistency and previous Tribunal decisions, the Tribunal allowed the appeal, overturning the disallowance.

Issue 2: Disallowance of expenses on account of shuttering material as Revenue Expenditure:
The second issue pertained to the disallowance of expenses amounting to Rs. 54,76,488 on account of shuttering material and the claim for depreciation on the same. The Tribunal referred to a previous order in the assessee's case for the AY 2009-2010 where a similar issue was remanded to the AO's file. Following the principle of consistency, the Tribunal remanded the issue back to the AO for decision in accordance with the previous order. Grounds 3 and 4 raised by the assessee were allowed for statistical purposes.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, overturning the disallowance of reimbursement of salary and related expenses under section 40(a)(ia) of the Act based on previous favorable decisions for the assessee. The disallowance of expenses on account of shuttering material and the claim for depreciation were remanded to the AO for further consideration in line with previous Tribunal directives.