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2017 (8) TMI 229 - AT - Income TaxAddition on account of sub-contract work - additional evidence - Held that - The additional evidences furnished by the assessee before the ld. CIT (A) were not available to the AO, therefore, he had no occasion to examine the same during the course of assessment proceedings. However, the said additional evidences were forwarded to the AO for his comments by the ld. CIT(A) but AO did not comment and furnish the remand report. The ld. CIT (A) also did not appreciate the facts in the right perspective, particularly this submission of the assessee that the net provision shown was already included in the gross value of VWD which was credited in the profit and loss account. We, therefore,remand this issue back to the file of the AO for re-adjudication. Disallowance u/s 40(a)(ia) - TDS figures brought forward from earlier years - Held that - CIT (A) after proper verification of the details furnished by the assessee came to the conclusion that the assessee could not explain the deposit of TDS of ₹ 54,867/- in respect of Durgapur unit, so disallowance of ₹ 54,86,700/- was justified on account of non-deposit of TDS. He also observed that the assessee did not press for disallowance of ₹ 56,96,440/-. In our opinion, the ld. CIT (A) was justified in sustaining the disallowance to the extent of ₹ 1,11,83,140/- (Rs.54,86,700/- ₹ 56,96,440/-). The ld. CIT (A) also directed the AO to verify as to whether TDS of ₹ 4,07,901/- was deposited in the Government Account before the due date of the filing of the return. Disallowance u/s 43B - CIT-A reduced the addition - Held that - In the present case, it appears that the ld. CIT (A), after proper verification, accepted the claim of the assessee, the ld. DR could not rebut the aforesaid findings of the ld. CIT (A). We, therefore, do not see any valid ground to interfere with the findings given by the ld. CIT (A).
Issues Involved:
1. Confirmation of addition of ?3,66,61,812/- on account of sub-contract work. 2. Reduction in disallowance under section 40(a)(ia) of the Income-tax Act from ?20,69,74,740/- to ?1,11,83,140/-. 3. Reduction in disallowance under section 43B of the Income-tax Act from ?23,06,980/- to ?56,037/-. Detailed Analysis: 1. Confirmation of Addition of ?3,66,61,812/- on Account of Sub-Contract Work The assessee filed its return of income showing a loss, which was later revised. During scrutiny, the AO noticed that the assessee made a provision for sub-contract work amounting to ?3,66,61,812/- but did not deduct it while computing taxable income. The AO disallowed this amount and added it to the income of the assessee, as the assessee failed to furnish required details. On appeal, the assessee argued that the provision was for actual work done, and the liability was incurred in the normal course of business. The CIT (A) admitted additional evidence but upheld the AO's addition, stating the liability did not crystallize during the relevant year. The Tribunal found that the additional evidence was not properly considered by the AO and remanded the issue back to the AO for re-adjudication after considering the reconciliation statement provided by the assessee. 2. Reduction in Disallowance under Section 40(a)(ia) from ?20,69,74,740/- to ?1,11,83,140/- The AO noticed that the assessee failed to deposit TDS on sub-contract expenses totaling ?20,69,74,740/-. The CIT (A) reduced this disallowance to ?1,11,83,140/- after verifying that some TDS amounts pertained to earlier years and some were deposited before the due date of filing the return. The Tribunal upheld the CIT (A)'s decision, finding no valid ground to interfere with the reduction in disallowance. The Tribunal also directed the AO to verify the correctness of the claim that TDS was deposited before the due date of the return. 3. Reduction in Disallowance under Section 43B from ?23,06,980/- to ?56,037/- The AO disallowed ?23,06,980/- under section 43B for unpaid tax liabilities. The CIT (A) reduced this disallowance to ?56,037/-, accepting the assessee's claim that certain liabilities pertained to earlier years and some were deposited before the due date of filing the return. The Tribunal found that the CIT (A) had properly verified the details and accepted the assessee's claims. The Tribunal upheld the CIT (A)'s decision, finding no valid ground to interfere with the reduction in disallowance. Conclusion: - The appeal of the assessee regarding the addition of ?3,66,61,812/- on account of sub-contract work was remanded back to the AO for re-adjudication. - The department's appeal regarding the reduction in disallowance under section 40(a)(ia) was dismissed. - The department's appeal regarding the reduction in disallowance under section 43B was dismissed. - The cross-objection filed by the assessee was dismissed as not pressed.
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