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2019 (4) TMI 1506 - AT - Income TaxAddition for work in progress - Year of assessment - consultancy services - unbilled portion of the work relating to various projects executed during the relevant previous year was required to be accounted for by the assessee as work in progress - HELD THAT - AR has furnished before us relevant documentary evidences which demonstrate that not only the assessee has offered the disputed amount as income in assessment year 2008 09, but has also claimed the corresponding TDS in the said assessment year. It is also a fact on record that the tax rate for assessment year 2007 08 and 2008 09 are the same. That being the case, whether the amount is taxed in the impugned assessment year or in assessment year 2008 09, will have no effect on the Revenue. If the amount is taxed in the impugned assessment year, it has to be excluded from the income of the assessee in assessment year 2008 09, since, it has already been assessed in that assessment year. This is due to the settled legal principle that the same income cannot be assessed in two assessment years. Taxability of reversal of professional fee - Failure on the part of the assessee to co relate the reversal of entries - HELD THAT - Assessee has filed fresh material reconciling the differences pointed out by the AO and the CIT(A) after considering the observations of the AO in the remand report, the submissions made by the assessee and evidences filed was satisfied that the assessee has properly reconciled / co related the reversal of entries. The learned Departmental Representative has not brought before us any material to controvert the factual finding of the CIT(A) insofar as it relates to the amount of ₹ 17,66,393. Therefore, to that extent we uphold the decision of CIT(A) Ground raised is dismissed. Admission of additional evidence - violation of rule 46A - HELD THAT - It is evident from the impugned order of the CIT(A), every single piece of evidence furnished by the assessee in the course of appeal proceedings were sent for verification / examination of the AO and the AO after verifying these evidences has furnished a remand report. The remand report furnished by the assessee was taken note of by the learned CIT(A) while disposing off the appeal of the assessee. CIT(A) has strictly complied to the provisions of rule 46A of the rules insofar as it relates to admission of additional evidence. Therefore, we do not find merit in the ground raised. Accordingly, it is dismissed. Disallowance of Deloitte Touche Tohmatsu (DTT) subscription - HELD THAT - The assessee has paid the subscription to run and manage its business activity more effectively, efficiently and profitably. Moreover, it is a fact on record that similar subscription was paid by the assessee in the preceding as well as succeeding assessment years. Notably, on verifying the scrutiny assessment orders passed u/s 143(3) for the assessment years 2006 07, 2009 10 and 2010 11 and 2011 12, copies of which have been submitted before us, it is observed that no such disallowance was made by the Assessing Officer in the aforesaid assessment years. There being no difference in facts brought to our notice in the impugned assessment year, applying the rule of consistency also, the expenditure claimed by the assessee has to be allowed, since, the nature of expenditure as revenue has been accepted by the Department in all other assessment years except the impugned assessment year. Disallowance of the professional fees - addition sustained by CIT(A) basically for the reason that the failed to lead proper evidence to reconcile the reversal of entries - HELD THAT - Assessee has enclosed in the paper book a credit note issued in favour of Ruchi Soya Industries ltd for ₹ 67,34,400 as well as bill raised subsequently for ₹ 6,73,440 to prove its claim. However, the assessee has not brought on record any account confirmation from Ruchi Soya Industries ltd. Therefore, in our view, the claim of the assessee has to be cross verified by making necessary enquiry with Ruchi Soya Industries ltd. That being the case, without expressing any opinion on the merits of the issue, we restore it to the Assessing Officer for fresh adjudication after providing due opportunity of being heard to the assessee. Grounds raised are allowed for statistical purposes.
Issues Involved:
1. Deletion of addition of ?47,92,500. 2. Deletion of addition of ?17,66,393. 3. Violation of Rule 46A of the Income Tax Rules, 1963. 4. Deletion of addition of ?72,34,000 on account of disallowance of Deloitte Touche Tohmatsu (DTT) subscription. 5. Disallowance of ?63,28,322 out of professional fees. Issue-wise Detailed Analysis: 1. Deletion of Addition of ?47,92,500: The Revenue challenged the deletion of an addition of ?47,92,500 made by the Assessing Officer (AO). The AO observed that the assessee raised a bill for ?47,92,500 on Diageo India Pvt. Ltd. on 13th April 2007, which should have been accounted for as work-in-progress for the assessment year 2007-08. The AO added this amount to the income of the assessee. However, the Commissioner (Appeals) deleted this addition, noting that the amount was billed and offered as income in the assessment year 2008-09, and taxing it in 2007-08 would lead to double taxation. The Tribunal upheld the Commissioner (Appeals) decision, emphasizing that the same income cannot be taxed in two assessment years and noting the consistent tax rate across the years. 2. Deletion of Addition of ?17,66,393: The Revenue contested the deletion of an addition of ?17,66,393 made by the AO due to unreconciled reversal entries. The Commissioner (Appeals) found that the assessee provided sufficient material to reconcile the differences, reducing the disallowance to ?63,28,322. The Tribunal upheld this decision, noting that the Department failed to provide evidence to counter the Commissioner (Appeals) findings. 3. Violation of Rule 46A of the Income Tax Rules, 1963: The Revenue alleged that the Commissioner (Appeals) violated Rule 46A by admitting additional evidence. However, the Tribunal found that the Commissioner (Appeals) had followed proper procedure by calling for a remand report from the AO, who verified the evidence. Thus, the Tribunal dismissed this ground. 4. Deletion of Addition of ?72,34,000 on Account of Disallowance of Deloitte Touche Tohmatsu (DTT) Subscription: The AO disallowed ?72,34,000 paid towards DTT subscription, considering it a capital expenditure. The Commissioner (Appeals) allowed the deduction, noting that the subscription was for business efficiency and not for acquiring an asset of enduring benefit. The Tribunal upheld this decision, also noting the consistency in allowing such expenses in other assessment years. 5. Disallowance of ?63,28,322 out of Professional Fees: The assessee appealed against the disallowance of ?63,28,322 out of professional fees. This amount represented a bill to Ruchi Soya Industries Ltd., which was allegedly a clerical error corrected by a credit note and a new bill. The Tribunal restored the issue to the AO for fresh adjudication, requiring verification with Ruchi Soya Industries Ltd. Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeal for statistical purposes, directing a fresh adjudication on the disallowance of ?63,28,322.
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