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TMI Blog2014 (4) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The assessee in the present case is a partnership firm of Chartered Accountants in practice. The return of income for the year under consideration i.e. A.Y. 2008-09 was filed by it on 30-9-2008 declaring total income of Rs. 1,98,85,990/-. In the P&L account file along with the said return, a sum of Rs. 1,01,463/- was debited by the assessee on account of membership fees paid to BTI. According to the A.O., the assessee was required to deduct tax at source from the said payment and since the same was not done by the assessee, he disallowed the membership fees of Rs. 1,01,463/- paid by the assessee to BTI by invoking the provisions of section 40(a)(ia) of the Act. On appeal, the ld. CIT(A) deleted the said disallowance. 5. At the time of hearing before us, the ld. Representatives of both the sides have agreed that this issue is squarely covered in favour of the assessee by the decision of the Tribunal rendered in assessee's own case for A.Y. 2005- 06 and followed in A.Y. 2006-07 & 2007-08 by a common order dated 19th June, 2013 passed in ITA No. 384/Mum/2009, 1271/Mum/2010 and 4930/Mum/2011 wherein a similar issue is decided in favour of the assessee for the following reasons giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year under consideration as well as all the material facts relevant thereto are similar to A.Y. 2005-06, 2006-07 & 2007- 08, we respectfully follow the order of the Tribunal in assessee's own case and we uphold the impugned order of the ld. CIT(A) deleting the disallowance made by the A.O. u/s 40(a)(ia) of the Act. Ground no. 1 is accordingly dismissed. 7. The next issue involved in ground No. 2 of the Revenue's appeal relates to the addition of Rs. 29,31,618/- made by the A.O. by way of disallowance u/s 40(a)(ia) of the Act on account of payment made to sub contractor and international affiliates for short deduction of tax at source which has been deleted by the ld. CIT(A). 8. During the course of assessment proceeding, it was noticed by the A.O. that the assessee has made payments on account of sub-contracting of audit work on which there was short deduction of tax. He, therefore, invoked the provisions of section 40(a)(ia) of the Act and disallowed the corresponding amount paid to the sub-contractor to the tune of Rs. 29,31,618/-. On appeal, the ld. CIT(A) deleted the said disallowance. 9. At the time of hearing before us, the ld. Representatives of both the sides have ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vered in favour of the assessee by the decision of the Tribunal rendered in assessee's own case for A.Y. 2005-06 and followed in A.Y. 2006-07 and 2007-08 vide its common order dated 19-06- 2013 (supra) wherein a similar issue was decided by the Tribunal in favour of the assessee for the following reasons given in para 53:- "53. We have heard the arguments and have perused the material on record and case cited before us. The issue, in so far as the assessee is concerned, can be said to in favour and covered by an order of the coordinate Bench in its own case in assessment year 1981-82. We also find that the AO has himself conceded that the Hon'ble Bombay High Court in the case of Mulla & Mulla has held that an overriding charge to have been created over the assessee, "where, by the obligation, income is diverted before it reaches the assessee, it is deductible". Since the payment has been made by the firm to the legal heir of its deceased partner, as per the clauses of the partnership deed dated 1.4.2000 having unequivocal covenants. In our opinion, the amount so paid to the legal heir of the deceased partner is an allowable expense." 14. As the issue involved in the year under co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same in A.Y. 2009-10. Keeping in view all the relevant facts of the case, we are of the view that some disallowance on account of personal use of the telephones and conveyance of the assessee firm by its partners is very much called for and it would be fair and reasonable to make such disallowance at 1/10th of the total expenses claimed by the assessee towards telephone and conveyance expenses. Accordingly, we modify the impugned order of the ld. CIT(A) and sustain the disallowance of 1/5th of the conveyance and telephone expenses to 1/10th. Ground no. 3 of the assessee's appeal is thus partly allowed. 18. Now, we shall take up the cross appeals for A.Y. 2009-10 which are directed against the order of ld. CIT(A)- 3, Mumbai dated 22-10-2012. 19. The first issue involved in ground No. 1 of the Revenue's appeal relates to the disallowance of Rs. 3,71,625/- made by the A.O. u/s 40(a)(ia) of the Income Tax Act, 1961 on account of subscription paid by the assessee to M/s Baker Tilley International (BTI) which has been deleted by the ld. CIT(A). 20. At the time of hearing before us, the ld. Representatives of both the sides have agreed that this issue is squarely covered in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e find that none of the conditions gets fulfilled herein, in which case, the case, as cited, is in effect, in favour of the assessee. 43. In these circumstances, we set aside the orders of both the revenue authorities and direct the AO to delete the disallowance of Rs. 2,17,594/- made to BTI." 21. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to A.Y. 2005-06, 2006-07 & 2007- 08, we respectfully follow the order of the Tribunal in assessee's own case and uphold the impugned order of the ld. CIT(A) deleting the disallowance made by the A.O. u/s 40(a)(ia) of the Act. 22. The next issue involved in ground No. 2 of the Revenue's appeal relates to the addition of Rs. 7,74,253/- made by the A.O. by way of disallowance u/s 40(a)(ia) of the Act on account of payment made to sub contractor and international affiliates for short deduction of tax at source which has been deleted by the ld. CIT(A). 23. At the time of hearing before us, the ld. Representatives of both the sides have agreed that this issue is squarely covered in favour of the assessee by the decision of Hon'ble Calcutta High Court in the case of CIT vs. S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide its common order dated 19-10- 2013 (supra) wherein a similar issue was decided by the Tribunal in favour of the assessee for the following reasons given in para 53:- "53. We have heard the arguments and have perused the material onrecord and case cited before us. The issue, in so far as the assessee is concerned, can be said to in favour and covered by an order of the coordinate Bench in its own case in assessment year 1981-82. We also find that the AO has himself conceded that the Hon'ble Bombay High Court in the case of Mulla & Mulla has held that an overriding charge to have been created over the assessee, "where, by the obligation, income is diverted before it reaches the assessee, it is deductible". Since the payment has been made by the firm to the legal heir of its deceased partner, as per the clauses of the partnership deed dated 1.4.2000 having unequivocal covenants. In our opinion, the amount so paid to the legal heir of the deceased partner is an allowable expense." 28. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to that of assessment years 2005- 06, 2006-07 and 2007-08, we respectfully follow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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