2023 (1) TMI 90 - AT - Income Tax

Prior Period Expenditure disallowance of expenses (AMC) by considering the same as expenses , pertaining to F.Y. 2012-13 - HELD THAT - CIT(A) has confirmed the said addition on the ground that the assessee has not furnished the ledger account and has also not furnished the breakup of Rs.16,23,225/- under the head prepaid expenses under Schedule 13 as short term loans and advances. Even before us, the assessee has failed to furnish the required details to establish the claim that the impugned amount pertains to prepaid expenses (AMC) during the year under consideration. In view of the same, we find no infirmity in the order of the ld. CIT(A). Thus, ground no. 1 raised by the assessee is dismissed. Disallowance being Property Tax for Dock Yard Godown - assessee has failed to prove the business utilization of the said Dock Yard Godown - HELD THAT - Assessee has not furnished the copies of bank statement from which the payment was made to the said taxes before the lower authorities. As the copies of agreement for purchase of the said dockyard had the description that the said plot, the license for the said plot was issued for storing of grains and pulses and the assessee was unable to justify that the same was used for the assessee s business which is creation, production and development of programs and other software media which can be broadcasted through the audio visual medium vide television. Assessee has failed to substantiate that the said plot was not used for the purpose mentioned in the license. On this observation, the lower authorities has disallowed as alleged to be paid by the assessee towards property tax for the Dock Yard Godown. It is observed that the assessee has neither produced evidences before the lower authorities nor before us to substantiate its claim of expenses paid towards property taxes. We find no infirmity in the order of the ld. CIT(A) and, therefore, ground no.2 raised by the assessee is dismissed. Depreciation claimed on addition of new assets @ 15% flat and disallowing balance depreciation and depreciation on software restricted to 25% instead of 60% - HELD THAT - The assessee had claimed depreciation on addition of Rs.1,99,83,359/- for more than 180 days @ 60% and that the assessee has furnished bills for the addition of assets only to the tune of Rs.10,56,500/- and has furnished bills for depreciation claimed on addition of Rs.2,50,76,640/- which was less than 180 days @ 60%, amounting to Rs.46,06,684/-. It is also observed that the assessee has claimed depreciation on Sony 26 no. Monitors valued at Rs.30,37,108/- and it was found that the said monitors were not received during the year as per the details furnished by the assessee. As the assessee failed to substantiate that the said monitors were received during the assessment year in dispute, the ld. CIT(A) disallowed the claim of depreciation on the said monitors and added the same to the income of the assessee. Even before us, the assessee has failed to furnish the documents pertaining to its claim and in the absence of which, we find no infirmity in the order of the ld. CIT(A) and we hereby uphold the order of the ld. CIT(A). Hence, ground nos. 3 4 raised by the assessee are dismissed. Increasing disallowance on account of Travelling and Conveyance , on account of Electricity Charges, on account of Miscellaneous Expenses,on account of Manpower Deputation Charges and on account of Security charges - assessee has failed to furnish documentary evidences in supports of its claim that the above mentioned expenses were incurred wholly and exclusively for the purpose of business - HELD THAT - It is observed that the assessee has neither filed any evidences either by way of documentary evidence or otherwise neither before the lower authorities nor before us. On this observation, we find no reason to interfere with the order of the lower authorities. Hence, ground no. 6 raised by the assessee is dismissed. Addition being the import transaction from the Export Import Summary Data CBSE by considering the same as an unrecorded expenditure by inferring that there is no purchase as per the return of income filed by the assessee - A.O. had made the impugned addition on the ground that the assessee was unable to furnish any explanation pertaining to the import transaction for the impugned amount, which was appearing in Export Import Summary Data CBSE - HELD THAT - A.O. has disallowed the said expenditure in Note 26 foreign currency transactions, pertaining to purchase of shooting equipment. As the assessee was unable to furnish any documents or breakup of the said expenses, the A.O. rejected the assessee s submission that the import transaction has been disclosed in the books of accounts of the assessee and was, therefore, treated as unexplained expenditure . The assessee has failed to substantiate its claim, neither before the first appellate authority nor before us, there was no evidence produced by the assessee, pertaining to the breakup of the impugned expenses - no infirmity in the order of the ld. CIT(A). Hence, this ground of appeal raised by the assessee are dismissed.

Summary

Issues Involved:
1. Disallowance of prior period expenditure
2. Disallowance of property tax for Dock Yard Godown
3. Restriction of depreciation claimed on new assets
4. Restriction of depreciation rate on software
5. Disallowance of various expenses based on turnover
6. Failure to consider written submissions
7. Lack of proper opportunity of hearing

Issue 1: Disallowance of Prior Period Expenditure
The assessee challenged the disallowance of Rs.13,94,716 as prior period expenditure by the CIT(A). The assessee argued that the amount was not claimed as an expense in the relevant year but was shown as a current asset in the balance sheet. However, the CIT(A) upheld the disallowance as the assessee failed to provide necessary details to establish the claim that the amount pertained to prepaid expenses during the year under consideration. The ITAT agreed with the CIT(A)'s decision and dismissed the ground raised by the assessee.

Issue 2: Disallowance of Property Tax for Dock Yard Godown
The dispute involved the disallowance of Rs.1,90,302 as property tax for a Dock Yard Godown. The assessee contended that the godown was used for business purposes, but failed to provide sufficient evidence to support this claim. The ITAT found no error in the CIT(A)'s decision to dismiss the ground raised by the assessee due to lack of substantiating evidence.

Issue 3: Restriction of Depreciation on New Assets
The assessee contested the restriction of depreciation claimed on new assets and the depreciation rate on software. The ITAT noted discrepancies in the assessee's documentation and upheld the CIT(A)'s decision to disallow the balance depreciation claimed on new assets and restrict the depreciation rate on software to 25%.

Issue 4: Disallowance of Various Expenses Based on Turnover
The CIT(A) disallowed several expenses, including traveling, conveyance, electricity charges, and manpower deputation charges, as the assessee failed to substantiate that these expenses were incurred for business purposes. The ITAT upheld the CIT(A)'s decision due to the lack of documentary evidence provided by the assessee.

Issue 5: Failure to Consider Written Submissions
The assessee argued that the CIT(A) did not consider their written submissions properly. However, the ITAT found no reason to interfere with the lower authorities' decisions as the assessee failed to provide any additional evidence to support their claims.

Issue 6: Lack of Proper Opportunity of Hearing
The assessee raised concerns about not being given a proper opportunity of hearing before the assessment order was passed. The ITAT noted this as a general ground and did not adjudicate on it.

In conclusion, the ITAT dismissed the appeals filed by the assessee in both cases, upholding the decisions made by the CIT(A) regarding the various issues raised. The judgment was pronounced on 15.12.2022.