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TMI Blog2015 (9) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... submission in the case Arvind Murjani Brands (P) Ltd. vs. ITO (2012 (5) TMI 138 - ITAT MUMBAI) is fully applicable in the case of the assessee. Once the actual recipient of the income i.e. M/s. A. G. & Company has paid taxes on the rental income then it cannot be taxed twice by disallowing the TDS in the hands of the assessee company. Thus we find no reason to interfere in the order of the ld. CIT(A) which is sustained. - Decided in favour of assessee. Disallowance u/s 40(a)(ia) on advertisement expenses - short deduction of TDS - assessee submitted that the assessee made payment on account of advertisement expense incurring during the year which were paid during the year itself, therefore, it is not payable at the end of the year - Held that:- It is observed that judgement in the case of M/s. Merilyn Shipping & Transport vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) has been upheld by Hon'ble Allahabad High Court in the case of CIT vs. Vector Shipping Services (P) Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT]. Revenue’s SLP against the same has also been dismissed by the Hon'ble Supreme Court. Thus, the issue stands settled in favour of the assessee X X X X Extracts X X X X X X X X Extracts X X X X ..... of original vouchers. (ii) The AO observed that the assessee company is engaged in the construction of residential and commercial complexes at different locations in the city of Jaipur but he could not ascertain the position and value of stock sitewise/ locationwise for want of separate stock registers. (iii) The AO observed that the assessee company has shown ''Work in Progress' at ₹ 8,87,97,104/- but it could not explain the basis for this valuation of this 'work in progress' before the AO. It is observed that the assessee company has taken the valuation of the unsold goods on estimate basis where project is under construction. The AO did not accept the valuation of 'work in progress' as declared by the assessee company because the assessee company did not fulfill statutory requirement of Section 145 wherein it has been notified that AS2 shall be applied while valuing inventories including 'work in progress'. (iv) The AO observed that assessee company had incurred certain expense under different heads like labour payments etc. which were paid in cash and were supported by self made vouchers. Since the payments have been made through self made vouchers, therefore, the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o increased by more than 100% during the year. Therefore, there is no reason for invoking the provisions of Section 145 of the Act. The assessee has maintained complete books of account and they are audited u/s 44AB of the Act and also there is no defect in them. Thus there is no case for application of provision of Section 145 of the Act. However, the AO did not accept the above contentions of the assessee and invoked the provisions of Section 145(3) of the Act. The AO considering all the materials facts available on record, applied the gross profit rate of 16% on the gross turnover of ₹ 21,94,41,873 which comes to ₹ 3,51,10,700/- and it resulted into trading addition of ₹ 14,33,722/- after reducing the declared gross profit of the assessee company. 3.3 The assessee carried the matter before the ld. CIT(A) who deleted the addition by observing as under:- ''4.3 I have carefully perused the order of the AO and the submissions of the A. R. The appellant was engaged in the work of civil construction and the AO has primarily rejected the books of accounts of the assessee on the grounds that the assessee had not maintained stock register or sitewise stock register a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he real state of affairs. Absence of vouchers or the supporting evidence in respect of a particular item of expenditure could not by itself empower an Assessing Officer to invoke provisions of Section 145(3) for rejecting the books of account. The Hon'ble Amrtisar Tribunal held in the case of Ashok Kumar & Co. vs. ITO (2 SOT 518) that rejection of books could not be resorted to simply on the basis of some vouchers and failure to produce the same by the assessee. In other words, any situation should only warrant a specific addition by the Assessing Officer if he came to a conclusion that such expenditure had not been incurred or was not verifiable. Instead of adopting this accepted approach, if an Assessing Officer resorted to a convenient approach of rejecting the books of account in totality then such action would be illegal and against the tenets of law. Thus to reject the entire books of account on the basis of general comments cannot be countenanced. Non-maintenance of stock records or quantitative details could not by itself form a reason for the rejection of books of accounts but could only lead to a reason to suspect that the accounts may not be correct or complete, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt so transferred to M/s. A. G. & Company was not assessee's income, the TDS made on the same could not be claimed by the assessee. Therefore, the TDS of ₹ 6,89,845/- claimed by the assessee company was disallowed by the AO. 4.3 Being aggrieved, the assessee carried the matter before the ld. CIT(A) who allowed the claim of TDS amounting to ₹ 6,89,845/- by observing as under:- ''5.3 I have carefully perused the order of the AO and that the submissions of the A. R. alongwith the order of the Hon'ble ITAT Mumbai Bench in the case of Arvind Murjani Brands (P) Ltd. vs. ITO. I concur with the submissions of the A. R. The facts are that the property had been transferred to A. G. & Company and the rent received during the transit period was transferred to M/s. A. G. & Co. and the latter paid taxes on the same. Given the above facts, it is held that the findings of the Hon'ble ITAT Bench in the case of Arvind vs. ITO (supra) is totally logical to the facts of the case of the appellant. Moreover, even logically once the actual recipient of the income i.e. A. G. & Co. has paid taxes on the rental income, it cannot be taxed twice by disallowing the TDS in the hands o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was disallowed u/s 40(a)(ia) of the Act by the AO and the same was added back to the income of the assessee. 5.3 The assessee challenged this issue before the ld. CIT(A) who disallowed this ground of the assessee by observing as under:- ''6.2 I have carefully perused the order of the AO and submission of the A. R. I do not concur with the submissions of the A. R. The A. R. of the appellant has not rebutted the finding of fact by the AO that TDS was not deducted at prescribed rates and on payments which were subject to such deduction. His only contention was that since the payments had been made the case of the assessee was covered by the finding of Special Bench in the case of Meilyn Shipping & Transports vs. Addl. CIT (2012) 70 DTR 81 (Special Bench Decision- Vishakhapatnam). It is pertinent to note that the Hon'ble Andhra Pradesh High Court has granted interim suspension of this ITAT order vide its Order No. ITTA No. 384 of 2012. Therefore, the decision of the AO to disallow the amount of ₹ 2,33,735/- and 3,109/- u/s 40(a)(ia) is confirmed.'' 5.4 The assessee is now before us. The ld. AR of the assessee submitted that the assessee made payment on account of adve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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