2021 (1) TMI 44 - AT - Income Tax

Applying the percentage criteria for disallowing the provision for expenditure - HELD THAT - As pursued material on record including the decision of the co-ordinate bench of the Tribunal in 2019 (9) TMI 1134 - ITAT MUMBAI A.Y. 2005-06 ors. There is no dispute between the parties with regard to the basic facts relating to the disputed addition. Since the issue before us is identical to one as decided by the co-ordinate bench of the Tribunal as stated hereinabove, we are therefore inclined to hold that part disallowance sustained by the Ld. CIT(A) is also to be deleted. Accordingly, this ground of appeal is allowed. Disallowance of renovation expenses for office premises - HELD THAT - As decided in own case 2019 (9) TMI 1134 - ITAT MUMBAI the nature of expenditure incurred by the assessee in respect of the leased premises and more particularly the premises at Hyderabad and Bangalore are not of the nature of constructing new structure, extension or improvement of building. Therefore, Explanation 1 to section 32(1) of the Act would not be applicable to the facts of the present case.the nature of expenditure incurred by the assessee with reference to facts of each case would decide whether it is capital or revenue in nature. In the facts of the present case, after examining the details of expenditure incurred by the assessee, we are of the view that it is of revenue nature, hence, has to be allowed. Addition on account of change in revenue recognition policy - HELD THAT - As decided in own case 2019 (9) TMI 1134 - ITAT MUMBAI issue requires further examination by the Assessing Officer as the assessee needs to establish with cogent material and evidence that the change in revenue recognition policy is for bona fide reasons and necessary for carrying on its business activities in a more efficient manner - assessee has to establish that the change in revenue recognition policy is in conformity with the provisions contained under section 145(1) and (2). We are inclined to restore the issue to the Assessing Officer for de novo adjudication. Addition of dividend distribution tax - HELD THAT - CIT(A) has given a direction to the AO to verify the computation of dividend distribution tax after verifying the claim of the assessee from records. It appears that AO has not complied with the direction. Therefore we direct the AO to verify the claim of the assessee and compute the dividend distribution tax payable applying the correct rate of surcharge thereon. The ground is allowed for statistical purpose. Short credit of TDS deducted at source - HELD THAT - We are of the considered view that the issue is required to be examined at the level of AO. Accordingly, the same is restored to the file of the AO with the direction to verify the records of the assessee and take a decision as per the facts and law.

Summary

Issues involved:
1. Disallowance of provision for expenditure
2. Disallowance of renovation expenses for office premises
3. Addition on account of change in revenue recognition policy
4. Addition of dividend distribution tax
5. Short credit of TDS deducted at source
6. Initiation of penalty proceedings under section 271(c) of the Act

Issue 1 - Disallowance of provision for expenditure:
The appeal involved a dispute regarding the disallowance of provision for expenditure. The assessee challenged the order of the Commissioner of Income Tax (Appeals) regarding the disallowance of a specific amount. The Tribunal, after considering the arguments and referring to a previous decision in favor of the assessee, held that the part disallowance sustained by the Commissioner of Income Tax (Appeals) should be deleted. The Tribunal allowed this ground of appeal in favor of the assessee.

Issue 2 - Disallowance of renovation expenses for office premises:
The issue centered around the disallowance of renovation expenses for office premises. The assessee contended that the expenses were of revenue nature based on a previous decision by the Tribunal. The Tribunal, following the decision in the earlier case, allowed the ground raised by the assessee, stating that the nature of the expenditure was of revenue nature and thus should be allowed. The Tribunal dismissed the ground raised by the Revenue in this regard.

Issue 3 - Addition on account of change in revenue recognition policy:
The issue involved an addition made by the Assessing Officer due to a change in the revenue recognition policy of the assessee. The Tribunal referred to a previous decision and found that the issue was squarely covered in favor of the assessee. The Tribunal restored the issue to the file of the Assessing Officer to decide in accordance with the order of the co-ordinate bench of the Tribunal. The ground was allowed for statistical purposes.

Issue 4 - Addition of dividend distribution tax:
Regarding the addition of dividend distribution tax, the Tribunal directed the Assessing Officer to verify the computation of dividend distribution tax after verifying the claim of the assessee from records. The Tribunal allowed this ground for statistical purposes.

Issue 5 - Short credit of TDS deducted at source:
The issue pertained to the short credit of TDS deducted at source. The Tribunal decided to restore the issue to the file of the Assessing Officer for further examination and directed verification of the records of the assessee. The Tribunal allowed this ground for statistical purposes.

Issue 6 - Initiation of penalty proceedings under section 271(c) of the Act:
The Tribunal dismissed the ground raised by the Revenue against the initiation of penalty proceedings under section 271(c) of the Act, deeming it premature. The appeal of the assessee was partly allowed for statistical purposes, while the appeal of the Revenue was dismissed.

Overall, the Tribunal provided detailed analysis and rulings on each issue raised in the appeals, considering legal precedents and relevant facts to arrive at its decisions.