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TMI Blog2012 (12) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure is payable as on 31st March of every year have already been paid during the previous year without deducting tax at source and accordingly redetermine the amount of expenditure - appeal decided in favour of assessee by way of remand. - ITA No.1650/Hyd/2010, ITA No.112/Hyd/2011 & ITA No.146/Hyd/2012 - - - Dated:- 19-7-2012 - SMT. ASHA VIJAYARAGHAVAN AND SHRI D.KARUNAKARA RAO, JJ. Appellant by : Shri C.Subrahmanyam Respondent by : Smt. Maya Maheswari ORDER Per D.Karunakara Rao, Accountant Member: These three appeals by the assessee are directed against separate orders of the CIT(A) V, Hyderabad dated 5.10.2010 for assessment year 2006-07, dated 23.12.2010 and dated 4.11.2011 for assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not eligible for deduction under S.80IB of the Act, the assessing officer proceeded to estimate the profit from manufacture of HDPE pipes which alone qualifies for relief under S.80IB of the Act, by excluding estimated profit from civil contract works and bank interest from the combined profit. In this process, AO noted from the Profit Loss Account, that the assessee disclosed the contract receipts at Rs.14,38,77,860. In the absence of separate books of account for contract income, 5% profit is estimated on the above receipts as contract income, which came to Rs.71,73,893. Rejecting the assessee s claim for relief under S.80IB on profit from civil contract works as well, the assessing officer, excluding the interest income of Rs.10,76,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout pointing out any defects in the books of account maintained by the assessee and without rejecting the same. He further submitted that while the assessing officer has estimated the profit from non-manufacturing division applying a rate of 5% on gross contract receipts. He submitted that there is no controversy about what has been estimated by assessing officer, and the same has been accepted by the assessee. However, the CIT(A), suo moto, without giving any opportunity to the assessee, and without any basis estimated the percentage of profit from civil contract works at 8% as against 5% estimated by the assessing officer and accepted by the assessee. The action of the CIT(A) in this behalf in enhancing the estimation is without any ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the CIT(A) and restore the matter to his file for readjudicating on this issue in view of our above observations and accordance with law and after giving reasonable opportunity of hearing to the assessee. 9. The next issue involved in this appeal relates to disallowance of expenditure invoking the provisions of S.40a(ia) of the Act. The relevant ground of appeal, being ground No.1.3, reads as underITA 1.3 The lower authorities erred in invoking the provisions of section 40a(ai) of the Income-tax Act, and disallowing the expenditure thereto when under the facts and circumstances and in law the case of the assessee is not falling within the mischief of the section. 10. At the outset, the learned counsel for the assessee menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propriate orders, in the above listed cases, in the light of the majority view of the Members consisting of the Special Bench. 13. In the light of the ratio of the above decision, we set aside the impugned order of the CIT(A) and restore the matter to the file of the CIT(A), with a direction to ascertain whether expenditure is payable as on 31st March of every year ..have already been paid during the previous year without deducting tax at source , and accordingly redetermine the amount of expenditure, if any, disallowable in terms of S.40(a)(ia) of the Act. We are restoring this issue to the file of the CIT(A), and not to the file of the assessing officer, who is actually the appropriate authority, because on the first issue relating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e I.T. Act do not apply to the facts of the case. 1.2 Even assuming but without conceding that the provisions of section 40(a)(ia) of I.T. Act do apply to the facts of the case, the learned CIT(A) ought to have taken note that if at all, if any disallowance is warranted the amount of Rs.1,74,47,730/- should be excluded from out of the addition made since amount to this extent has been paid during the asst. year under consideration. Effective grounds in the appeal for assessment year 2008-09 read as follows- 1.1 The learned Commissioner of Income-tax(Appeals) is not correct in disallowing expenditure when provisions of section 40(a)(ia) are attracted only when the amount is payable. Whereas in the present case since the amount has been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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