2017 (5) TMI 118 - AT - Income Tax

Provision for foreign tour of sub-commission agent - disallowance - denial on the ground that it was a provision only, and not an ascertained liability - Held that - The ld.CIT(A) theoretically allowed, but with a rider that in case provision is allowed to the assessee in Asstt.Year 2008-09, then the deduction granted in Asstt.Year 2009-10 on actual incurrence of the expenditure would be withdrawn. Since we have allowed the provision in the Asstt.Year 2008-09 in the foregoing paragraphs, therefore, if any deduction is being granted to the assessee of ₹ 23,09,500/- in A.Y.2009-10, the same will be withdrawn by the AO - appeal rejected. It is a factual issue which requires verification at the end of the AO, and the ld.CIT(A) has rightly relegated the issue to the AO for verification and adjudication. We do not find any merit in this ground raised by the assessee. Accordingly, it is rejected. Charging of interest under section 234D of the Act - granting of interest under section 244 of the Income Tax Act - Held that - these are consequential in nature and hence, rejected. Appeal allowed - decided partly in favor of assessee.

Summary

Issues Involved:

1. Disallowance of tour expenses (China and Switzerland) for A.Y. 2008-09 and 2009-10.
2. Deduction of Egypt tour expenses for A.Y. 2008-09.
3. Credit of TDS amounting to ?20,34,335/- for A.Y. 2008-09.
4. Deduction of China tour expenses on payment basis for A.Y. 2009-10.
5. Addition of short contract receipt amount of ?1,64,490/- for A.Y. 2009-10.
6. Charging of interest under section 234D and granting of interest under section 244 of the Income Tax Act.

Detailed Analysis:

1. Disallowance of Tour Expenses (China and Switzerland):

The assessee challenged the disallowance of ?23,09,500/- for China tour expenses in A.Y. 2008-09 and Switzerland tour expenses in A.Y. 2009-10. The Tribunal noted that similar provisions were made in A.Y. 2007-08 for Egypt tour expenses, which were initially disallowed but later allowed by the Tribunal. The Tribunal found no disparity in facts and observed that the actual expenses incurred were higher than the provisions made. Hence, the Tribunal allowed the appeals and deleted the disallowances for both years.

2. Deduction of Egypt Tour Expenses:

The assessee sought the deduction of ?24,88,000/- for Egypt tour expenses in A.Y. 2008-09. This provision was disallowed in A.Y. 2007-08 but later allowed by the Tribunal. Since this amount was already allowed in A.Y. 2007-08, the Tribunal rejected the appeal for its allowance again in A.Y. 2008-09.

3. Credit of TDS Amounting to ?20,34,335/-:

The assessee contended that the AO did not grant credit for TDS amounting to ?20,34,335/-. The CIT(A) did not entertain this issue as it was part of the intimation under section 143(1). The Tribunal set aside this issue to the AO for verification and to grant the credit if found due.

4. Deduction of China Tour Expenses on Payment Basis:

In A.Y. 2009-10, the assessee claimed the deduction of ?23,09,500/- for China tour expenses on an actual payment basis. The CIT(A) allowed this with the condition that if the provision is allowed in A.Y. 2008-09, the deduction for A.Y. 2009-10 would be withdrawn. Since the provision was allowed in A.Y. 2008-09, the Tribunal upheld the CIT(A)'s decision to withdraw the deduction in A.Y. 2009-10.

5. Addition of Short Contract Receipt Amount of ?1,64,490/-:

The assessee disputed the addition of ?1,64,490/- as short contract receipts. The CIT(A) relegated this issue to the AO since the assessee had filed a rectification application under section 154. The Tribunal agreed with the CIT(A) that this factual issue required verification by the AO and upheld the decision.

6. Charging of Interest under Section 234D and Granting of Interest under Section 244:

The assessee challenged the charging of interest under section 234D and the granting of interest under section 244. The Tribunal found these issues to be consequential and noted that the CIT(A) had already treated them as such. Hence, the Tribunal rejected the appeal on these grounds.

Conclusion:

The Tribunal partly allowed the appeals, providing relief on certain issues while upholding the decisions of the CIT(A) on others. The Tribunal's order emphasized the importance of past judgments, factual verification, and adherence to the principles of accrual and actual expenditure.