2021 (10) TMI 112 - AT - Income Tax

Non disclosure of income from sale of prospectus - Onus to prove - substantial relief was granted by ld. CIT(A) - HELD THAT - On the touchstone of preponderance of human probabilities, it will be natural presumption that the assessee has sold these prospectus on the printed price to the students , who were interested in persuing the course and registering for studies, but the sale proceeds are not declared in the books of accounts and have escaped assessment. The onus is on the assessee to prove with cogent material/evidences that stock of prospectus held by it is duly accounted for by it and no income has escaped assessment viz. sold out of books of account. The assessee is not able to discharge its onus and the ld. CIT(A) has already given substantial relief. Thus on failure by assessee to discharge its primary onus, the assessee is not entitled for any further relief and the appellate order passed by ld. CIT(A) is upheld. The assessee fails in its appeal. Delay in deposit of TDS - Disallowance u/s 40(1)(ia) - expenditure incurred by the assessee on which admittedly income-tax was deducted at source under Chapter XVII-B by the assessee , which stood deposited late beyond the time prescribed u/s 200(1), but admittedly the same was deposited before the due date of filing of return of income u/s 139(1) - HELD THAT - Recently, Hon ble Madras High Court in the case of CIT v. Western Agencies (Madras) Private Limited, 2021 (4) TMI 1029 - MADRAS HIGH COURT has held by following the aforesaid decision of Hon ble Supreme Court in the case of Calcutta Export Company 2018 (5) TMI 356 - SUPREME COURT , that amendment made by Finance Act, 2010 to provisions of Section 40(a)(ia) is curative in nature and shall apply retrospectively since when Section 40(a)(ia) was inserted viz. ay 2005-06. Presently, we are concerned with ay 2005-06 , and Respectfully following aforesaid judgments, we hold that the assessee will be entitled for claiming deduction u/s 40(a)(ia) , in case income tax deducted at source under Chapter XVII-B during the year under consideration, was deposited by assessee to the credit of Central Government on or before the due date of filing of return of income u/s 139(1) of the 1961 Act. The assessee succeeds on this issue.

Summary

Issues Involved:
1. Non-disclosure of income from the sale of prospectus.
2. Disallowance under Section 40(a)(ia) due to late deposit of TDS.

Issue 1: Non-Disclosure of Income from Sale of Prospectus

The assessee, a firm engaged in distance education services with Allahabad Agricultural Institute (Deemed University), claimed an expenditure of ?29,03,200 on 'Prospectus A/c' while showing an income of ?5,84,300 from the sale of prospectus. The Assessing Officer (AO) questioned the differential amount, noting that the published cost of each prospectus was ?300. The AO taxed an additional income of ?8,48,800 from the sale of prospectus. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld an addition of ?50,000, granting substantial relief by observing that not every student who registered for the course must have purchased the prospectus and the AO did not verify this fact from any center. The tribunal upheld the CIT(A)'s order, emphasizing that the onus was on the assessee to prove that the income from the sale of prospectus was duly accounted for. The tribunal found that the assessee failed to discharge this onus and upheld the CIT(A)'s decision, denying further relief to the assessee.

Issue 2: Disallowance under Section 40(a)(ia) due to Late Deposit of TDS

The AO disallowed ?47,38,176 of various expenditures claimed by the assessee, as the TDS was deposited late, beyond the time prescribed under Section 200(1) but before the due date of filing the return of income under Section 139(1). The CIT(A) allowed the deduction for TDS deposited before the due date of filing the return, disallowing the rest to be claimed in the subsequent assessment year. The tribunal, referring to the Supreme Court's decision in CIT v. Calcutta Export Company, held that the amendment made by the Finance Act, 2010 to Section 40(a)(ia) was curative and should apply retrospectively from the date of insertion of Section 40(a)(ia) (i.e., AY 2005-06). Consequently, the tribunal allowed the deduction for the expenditure in the assessment year relevant to the previous year in which the TDS was deducted, provided it was deposited before the due date of filing the return. The tribunal followed the Supreme Court's decision and recent judgments, allowing the assessee's claim for deduction under Section 40(a)(ia).

Conclusion:

The appeal filed by the assessee was partly allowed. The tribunal upheld the CIT(A)'s order regarding the non-disclosure of income from the sale of prospectus and allowed the deduction under Section 40(a)(ia) for TDS deposited before the due date of filing the return, following the Supreme Court's decision. The order was pronounced on 30/09/2021 at Allahabad.