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TMI Blog2012 (11) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Hussain – assessee submitted that due to clerical error at the time of making data entry the period mentioned in the ledger was F.Y. 2006-07 instead of F.Y. 2007-08 – Held that:- Payment was made during the current year and TDS was also deducted before making the payment - expenses pertains to the assessment year under consideration and the same should accordingly be allowed - addition deleted – In favor of assessee Disallowance of expenses - addition made on account of electricity charges, generator hire charges, maintenance charges for bus shelters and salary to staff of Hyderabad – Held that:- Method of accounting adopted by the assessee is undisputed and its acceptance by the department is also undisputed - assessee has been consistently following the method of accounting of debiting the expenses from March to February. It is not the case of the Revenue that by following this method the profits are understated. All these expenses are of routine in nature and is paid month after month - disallowance is not called for Disallowance of municipal taxes – alleged that expense was for the period upto July, 2008 – Held that:- Amount was paid towards Municipal taxes and was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT (A) has erred in law as well as on facts in disallowing Salary to Hyderabad Office for Rs.52,000/- on the ground that they are related to the month of March, 2007 but accounted in the month of April, 2007. 8. Ld. CIT (A) has erred in law as well as on facts in disallowing Consultancy charges of Rs. 12,50,000/- paid to Advocates, Mulla and Mulla Carriage vide their letter dated 25-10-2008 treating the same as pre-paid expenses. 9. Ld. CIT (A) has erred in law as well as on facts in disallowing Municipal Tax of Rs.27,206/- out of Municipal Tax of Rs.81,619/- payable to Panvel Municipal Corporation upto July, 2008, proportionate amount for months from April, 2008. 10. Ld. CIT (A) has erred in law as well as on facts in disallowing cash payment of Rs.23,840/- to Shamim Choudhary for maintenance of Kiosk Metal Box. 3. The assessee is a firm engaged in the business of advertising agency, it filed its e-return of income on 29-9-2008 showing total income of Rs.5,16,24,500/-. The case was selected for scrutiny. During the course of assessment proceedings the A.O. made various disallowances and the income was finally determined at Rs.5,46,62,140/-. Aggrieved by the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eard the rival contentions, perused the records. The undisputed facts are that the assessee is engaged in the business of advertising agency. The assessee has incurred the expenses is not in dispute. The fact that the expenditure is 0.25% of the turnover is also not disputed. It is a fact that it is customary to incur expenses of gifts during festivals. In view of those facts, we are of the view that since the expenses have been incurred for the purpose of business the expenses should be allowed as deduction. However, as the assessee could not produce the list of recipients, we feel that in fairness and to meet the ends of justice, the issue for verification be remitted back to the file of the A.O. We accordingly direct the A.O. to verify and allow the expenses if the list is produced before him and is satisfied after its verification. The A.O. should give reasonable and proper opportunity of hearing to the assessee. We accordingly set aside this ground of appeal to the file of A.O. 13. Ground No.2 is with respect to the disallowance of Prior Period Expenses for commission of Rs.5,30,233/-. 14. The fact is that the assessee paid commission to one Shri Ravindra Raja vide his d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the material on record. It is an undisputed fact that commission of Rs.1,26,000/- has been paid to Shri Hussain in the current year and the TDS has also been deducted. In view of these facts we are of the considered opinion that the commission expenses amounting to Rs.1,26,000/- are allowable. We accordingly direct the A.O. to delete addition of Rs.1,26,000/-. Accordingly this ground of appeal of the assessee is allowed. 22. Ground No.4 (disallowance of electricity expenses), Ground No.5 (disallowance of Generator Hire charges), Ground No.6 (maintenance charges) and Ground No.7 (Salary paid to Hyderabad staff) As the addition on all the above 4 grounds were made for identical reasons, the same are decided together. 23. The A.O. had disallowed all these expenses for the similar reason that they pertained to the period March, 2007 and therefore, should have been treated as expenditure in F.Y. 2006-07. The CIT (A) had upheld the order of A.O. 24. Before us it was submitted that the assessee was following the consistent accounting policy of booking the expenses for the period March to February each year. This method of accounting was regularly followed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars. Amount (Rs.) 18-8-2007 Roy Associates. Cash memo dt. 18-8-07for Weilding Rods. 2,220 18-8-2007 Roy Associates. Cash memo dt. 18-8-07 for Gurder. 880 26-8-2007 Roy Associates Cash Memo dt. 26-8-2007. 2,220 28-8-2007 Shamim Choudhary Labour charges 18,520 TOTAL 23,840 32. A.O. disallowed the same for the reason that the amount has been paid in cash in contravention of the provision of Section 40A (3). CIT (A) upheld the disallowance. 33. Before us it was submitted that the aforesaid amount was paid to Shri Shamim Choudhary and Roy Associates for the purchase of material and the labour charges. The assessee furnished copy of the vouchers and cash memos at page 26 to 29 of the paper book. Since the labour charges were less than the prescribed limit Rs.20,000/- u/s. 40A(3) the same should have been considered as allowable. 34. The Ld. D.R. relied on the order of A.O. 35. It is an undisputed fact that the aggregate payment of Rs.23,840/- comprises of purchase of items of Rs.5,320/- for which cash memos are attac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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