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TMI Blog2014 (1) TMI 1485X X X X Extracts X X X X X X X X Extracts X X X X ..... intenance expenses and depreciation. But at the time of hearing Ld. counsel for the assessee fairly stated that the issue of TDS and disallowance of car maintenance expenses and depreciation, assessee is not interested in prosecuting. On the other hand, Ld. Sr. DR has not objected to the same. 3. After hearing both the sides, we permit the withdrawal and dismiss the same as not pressed. 4. Coming to ground no. 2B, the issue is as regards to allowance of depreciation on books and periodicals for an amount of Rs.1,07,428/-. Briefly stated facts are that the AO disallowed a sum of Rs.1,42,416/- as cost of books and periodicals and allowed a sum of Rs.95,617/- as depreciation on such assets. The relevant computation in the assessment order is as under: Assets WDV as on 01.04.2003 as per Order u/s. 143(3) for AY 03- 04 Cost of assets used for more than 180 days Cost of assets used for less than 180 days Total cost of assets Depreciation for the year WDV of Books Periodicals Rs.31,104 Rs.3,140 Rs.41,133 Rs.17,913 Rs.53,735 Rs.29,605 Rs.94,868 Rs.47,518 Rs.59,462 Rs.36,155 Rs.95,617 Rs.66,510 Rs.14,803 The Ld. counsel for the assessee drew our attention to the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by invoking the provisions of Section 40(a)(ia) of the Income Tax Act, 1961 on the payment made to the advocates by the clients of the appellat. 2B. The Ld. AO & CIT(A) failed to appreciate the fact the impugned payment to the advocates by the appellant was neither made from his own income nor did he claim the said amount as a deduction in the Profit & Loss Account warranting the invocation of Section 40(a)(ia) of the Income Tax Act, 1961. 2C. The Ld. CIT(A) erred in adding Rs.19,20,785/- by invoking the provisions of Section 40(a)(ia) of the Income Tax Act, 1961 when the appellant had made the alleged payments on behalf of his clients in the capacity of an agent." 7. Briefly stated facts of the case are that during the course of assessment proceedings, the AO noted that the assessee has made certain payments during the year to Shri Abhrajit Mitra, Advocate and 20 other advocates for their service charges aggregating to Rs.19,20,785/-. According to AO, the assessee is liable to deduct TDS u/s. 194J of the Act on the above payments. As the assessee failed to deduct TDS, the AO disallowed the sum of Rs.19,20,785/- by invoking the provisions of section 40(a)(ia) of the Act. Aggriev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om his clients and in turn hired Advocates for dealing the cases assigned to the assessee by his clients. Now whether the assessee is to deduct TDS on the fees paid to the Advocates to whom he has assigned the cases for his clients u/s. 194J of the Act or not. This issue has been answered by a Coordinate Bench of this Tribunal in the case of Sharma Kajaria & Co. Vs. DCIT (2012) 145 TTJ (Kol) 1, wherein the bench has held as under: "Disalloance under section 40(a)(ia) can be made only in respect of an amount which is sought to be deducted under section 30 to 38 and not in respect of reimbursement simplicitor which is profit neutral and routed through the Profit & Loss Account: In view of the averment of the assessee, a firm of solicitors and advocates, that the amounts paid by it to the lawyers without deducting tax at source u/s. 194J were reimbursed by its clients and in the absence of any categorical finding to the effect that the said payments were claimed as deduction in the computation of profits, matter is remitted to AO for adjudication de novo in accordance with law." As in the present case also the assessee has been reimbursed by assessee's clients the amounts paid to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y stated facts leading to the above issue are that during the assessment proceedings, the AO noted that assessee has shown a sum of Rs.1,25,62,006/- as advances (liability) from the clients. According to AO, assessee is following cash system of accounting, hence, the advances are also in the nature of revenue receipt, therefore, he treated the same as income for the relevant AY 2005-06. Aggrieved, assessee preferred appeal before CIT(A), who restricted the income at 10% of advance as disclosed in the Balance Sheet and thereby restricted the addition at Rs.12,56,200/- as against the addition made by AO at Rs.1,25,62,005/- by observing as under: "On careful consideration of the above, I am also of the view that the receipt of advances does not automatically become income unless the recipient performs his/her part of the contract. Even if the assessee is following cash system of accounting, in my view, the receipt of advances does not automatically income. Similar issue, in the case of Solicitors, (where the assessee was engaged in the legal profession) came for consideration before the Hon'ble High Court of Kolkata in the case of Sandersons and Morgans referred to bove. The Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the A/R did not furnish detaìls to substantiate that the appellant did not resorted to any postponing of tax liability by raising bills in the next previous year, in respect of the services rendered during the previous year relevant for the assessment year 2005-06. Considering all, respectfully following the decision of the Hon'ble High Court of Kolkata in the case of M/s. Sandersons and Morgans and also considering the facts that the appellant did not furnish the complete details substantiating that no income actually arising in the previous year was postponed to the next year. I am of the view that treating 10% of the advances shown as liability in the balance sheet as on 31.03.2005 at Rs.1,25,62,005/- as income accrued in the previous year relevant for this assessment year would be fair. Accordingly, the AO is directed to restrict the addition to Rs.12,56,200/- in place of Rs.1,25,62,005/-." Aggrieved, both the assessee and revenue came in appeal before us. 12. We have heard rival submissions and gone through facts and circumstances of the case. The admitted facts are that the assessee is an advocate who maintains cash system of accounting. Further facts are that ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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