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TMI Blog2013 (11) TMI 838X X X X Extracts X X X X X X X X Extracts X X X X ..... ndry Expenses – Contention of Revenue that amount in question was in nature of advance to suppliers, that no actual purchases were made – Held that:- Assessee had not routed the said transaction to P & L Account, that it had claimed that amount in question could not be recovered - He had given details of sundry debtors/creditors balance written to the AO - AO has not taken into consideration the submissions made by the assessee in this regard – Proper opportunity of being heard was not provided to the Assessee - In the interest of justice matter needs to be restored to the file of the AO for fresh adjudication. Disallowance u/s 40(a)(ia) of the Income tax act - Addition on account of non-deduction of TDS as per the provisions of section 194C(1) of the Act – Addition of Rs. 10. 44 lacs - Assessee had paid Rs. 10, 44, 010/- to contractor, and he did not deduct tax at source – Held that:- As per the provisions of the Act individuals and HUFs, who were subject to mandatory audit, had to deduct tax at sources from AY. 2003 -04. While introducing the amendment to section w. e. f. , 01. 06. 2002, if legislature in its wisdom did not include the individuals and HUFs, who had not to get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mainly for himself and his family members, that the entire payment had been made from the personal bank account, that element of utilisation of facilities for himself and the family members could not be ruled out, that no documentary evidence was produced to prove the facilities of the Club were utilised wholly and exclusively for the purposes of entertaining the business customers only. As a result, he made disallowance of Rs. 2 lacs (50%) out of the total expendi - ture claimed by the assessee. 2. 1. Assessee preferred an appeal before the First Appellate Authority(FAA). After considering the submission of the assessee and the assessment order he held that assessee was not a corporate entity, that cases cited by the Authorised Representative(AR) of the assessee were not applicable, that there was no evidence as club membership had been used only for business purposes. As a result, he uphold the order of the AO. 2. 2. Before us, Authorised Representative(AR) of the assessee submitted that assessee had incurred revenue expenditure, that payment made by the assessee was allowable u/s 37(1) of the Act. He referred the judgment of Hon'ble Bombay High Court delivered in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as business expenditure not falling under section 40(a)(v). Similarly, the house rent allowance being a cash amount paid was not a perquisite. " Thus, the facts of the case decided by the Hon'ble Bombay High Court are not applicable to the facts of the matter under consideration. The issue before us not the revenue/capital nature of the expenditure. We are aware that in certain cases issue regarding membership of clubs has been decided, but all such cases are of corporate assessee unlike the present case where assessee is proprietor of a concern. FAA had endorsed the views of the AO that element of utilisation of facilities for himself and the family members could not be ruled out. But, neither AO nor FAA had found as what was the facilities provided by the Club and what facilities were availed by the assessee for himself or his family members during the year under consideration. In our opinion matter needs further investigation. So, in the interest of justice we are restoring the issue back to the file of the AO for fresh adjudication. He is directed to afford reasonable opportunity of hearing to the assessee. Ground no. 1 is decided in favour of the assessee in part. 3. Nex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudication. He is directed to issue a fresh opportunity of hearing to the assessee while passing fresh order. He should consider the submissions made at page 67 to 69 of paper book. Ground no. 2 is allowed, in part, in favour of the assessee. 4. Last ground of appeal is about addition of Rs. 10. 44 lacs on account of non-deduction of TDS as per the provisions of section 194C(1) of the Act, During the assessment proceedings, AO found that the assessee had paid Rs. 10, 44, 010/- to contractor, that he did not deduct tax at source. Assessee vide its letter dated 19. 12. 2008 submitted to the AO that individuals and HUFs were not liable to deduct tax as per section 194C(1)of the Act. But, AO was of the opinion that said section provided that any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contractor had to deduct tax for payment made by it. He made a disallowance of Rs. 10. 44 lacs. 4. 1. Assessee preferred an appeal before the FAA. After considering the submission of the assessee FAA held that provisions not requiring individuals to HUF not to deduct tax at source were applicable to a certain category of tax payers, that if th ..... 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