2015 (8) TMI 122 - AT - Income Tax

Disallowance of brought forward business loss/ unabsorbed deprecation - Assessee has filed the Application u/s. 154 - Held that - We are of the view that assessee has elaborately disclosed in the Application u/s. 154 of the I.T. Act to the AO regarding income assessed by the AO as well as the income declared by the assessee. In the Application, the Assessee s Authorised Representative has submitted that the assessee is in receipt of assessment order wherein income declared by the assessee (before adjustment of brought forward losses/unabsorbed deprecation claimed of ₹ 10,52,533/-) has been shown in the last page of the assessment order at ₹ 13,10,582/-. Whereas the income declared by the assessee before such adjustment. The Assessee has also enclosed the computation of income for the assessment years 2005-06, 2006-07, 2007-08 & 2008-09 with the said letter dated 25.8.2011 to the AO. The Assessing Officer and the Ld. First Appellate Authority has not appreciated the contention of the assessee. Thus the issue involved regarding the disallowances of brought forward business loss/ unabsorbed deprecation are required to be reexamined at the level of the AO. Therefore, we set aside the issue involved to the file of the AO to decide the same afresh, under the law, after giving adequate opportunity of being heard to the assessee. - Decided in favour of assessee for statistical purposes. Adhoc disallowance on account of telephone expenses and vehicle expenses - Held that - The issue involved are covered in favor of the assessee, in view of the decision of SGS India Private Limited vs. Addl. CIT 2012 (8) TMI 255 - ITAT, MUMBAI . We also find that this issue has already been decided by the Ld. CIT(A) in the case of the assessee in assessee s own case for the assessment year 2007-08 and 2008-09 which have attained finality. Thus we are of the view that the adhoc addition on account of telephone expenses and vehicle maintenance expenses are not required in the case of the assessee - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of brought forward unabsorbed business loss and depreciation
2. Income assessment discrepancy
3. Adhoc disallowance of telephone expenses
4. Adhoc disallowance of vehicle maintenance expenses
5. Interest charged under sections 234B and 234D

Issue 1: Disallowance of Brought Forward Unabsorbed Business Loss and Depreciation:
The assessee appealed against the order disallowing brought forward unabsorbed business loss and depreciation. The AO treated bread dealer discounts as commission, disallowing payments under section 40(a)(ia). The AO also disallowed part of vehicle and telephone expenses and completed the assessment under section 143(3) of the I.T. Act. The CIT(A) partly allowed the appeal. The representative argued that the disallowances were unjust and contrary to facts and law. The Tribunal found that the AO and CIT(A) did not appreciate the evidence submitted by the assessee. The issue was remanded to the AO for reexamination.

Issue 2: Income Assessment Discrepancy:
The assessee contended that the income from business should be assessed at a lower amount as per the revised return. The Tribunal noted discrepancies in the income declared before and after adjustments. The issue was remanded to the AO for reconsideration based on the evidence provided by the assessee.

Issue 3: Adhoc Disallowance of Telephone Expenses:
The representative argued that the adhoc disallowance of telephone expenses was unwarranted, citing a favorable decision from the ITAT, Mumbai Bench. The Tribunal agreed and deleted the adhoc addition, deciding in favor of the assessee.

Issue 4: Adhoc Disallowance of Vehicle Maintenance Expenses:
Similar to the telephone expenses, the representative contended that the adhoc disallowance of vehicle maintenance expenses was unjust. Referring to previous decisions, the Tribunal ruled in favor of the assessee and deleted the adhoc addition.

Issue 5: Interest Charged under Sections 234B and 234D:
The interest charged under sections 234B and 234D was deemed consequential in nature. No specific arguments were presented, and the Tribunal did not find any discrepancies in this regard.

In conclusion, the Tribunal partly allowed the appeal for statistical purposes, remanding certain issues back to the AO for reexamination based on the evidence provided by the assessee. The adhoc disallowances of telephone and vehicle maintenance expenses were deleted in favor of the assessee, following precedents and decisions from previous cases.