2021 (4) TMI 807 - AT - Income Tax

Addition on account of difference between gross receipts as per Form 26AS vis- -vis turnover as per profit and loss a/c - whether difference represents the reimbursement of expenditure recovered on cost to cost basis by the Appellant, and hence shall not form part of the turnover? - Admission of additional evidence - HELD THAT - Having gone through the additional evidence filed by the assessee, we find that the assessee has tried to reconcile the difference between the gross receipts and the TDS certificates and in support thereof, has filed the relevant documents before us. We therefore, deem it fit and proper to admit the same and set aside the issue to the file of the Assessing Officer for denovo consideration in accordance with law. This ground of appeal is accordingly treated as allowed for statistical purposes. Disallowance of advance and debit balance written off - Assessee submitted that the assessee is producing the details for the balance of the bad debts written off in the form of additional evidence - HELD THAT - Since the additional evidence filed is in support of assessee s contentions and is likely to prove that the debits have been written off, we deem it fit and proper to admit the same and remand the issue to the file of the Assessing Officer for denovo consideration in accordance with law. Needless to mention that the assessee shall be given a fair opportunity of hearing. Assessee s appeals partly allowed for statistical purposes.

Summary

Issues:
1. Discrepancy in turnover reported by the assessee and as per Form 26AS for A.Y 2009-10.
2. Disallowance of interest expenditure claimed under section 36(1)(iii) for A.Y 2009-10.
3. Disallowance of deduction claimed for write off of advances and debit balances under section 36(1)(vii) for A.Y 2011-12.

Analysis:
1. For A.Y 2009-10, the Assessing Officer noted a difference in turnover between the assessee's reported figures and Form 26AS. The assessee explained that the difference was due to reimbursement of expenditure from clients like Bharati Airtel and Idea Cellular, which was not considered as income. The CIT (A) partially confirmed the addition, treating the expenditure as capital in nature but allowing depreciation. The ITAT Hyderabad admitted additional evidence filed by the assessee and remanded the issue to the Assessing Officer for further consideration, allowing the appeal partly for statistical purposes.

2. The disallowance of interest expenditure claimed under section 36(1)(iii) for A.Y 2009-10 was contested by the assessee. The CIT (A) upheld the disallowance, considering the interest expenditure as related to the acquisition of assets for business expansion. The ITAT Hyderabad noted that since depreciation on the interest capitalized was already granted, this ground became academic and was rejected, leading to the partial allowance of the appeal for statistical purposes.

3. Regarding A.Y 2011-12, the Assessing Officer disallowed a deduction claimed for write off of advances and debit balances as the assessee failed to provide sufficient details. The CIT (A) partially allowed the deduction based on the details submitted but disallowed the balance. The ITAT Hyderabad allowed the additional evidence filed by the assessee and remanded the issue to the Assessing Officer for reconsideration, granting partial relief and allowing the appeal partly for statistical purposes.

In conclusion, the ITAT Hyderabad's judgments for both A.Ys 2009-10 and 2011-12 involved discrepancies in turnover, disallowance of interest expenditure, and deduction claimed for write off of advances and debit balances. The tribunal admitted additional evidence and remanded the issues to the Assessing Officer for further consideration, partially allowing the appeals for statistical purposes in both cases.