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TMI Blog2016 (5) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... ly to the Government Audit Charges - Decided against revenue Disallowance on account of provision for interest - Held that:- We feel that when the provision for interest does not relate to this year then the ld. CIT(A) has rightly deleted the addition made by the AO.- Decided against revenue Disallowance of proposed commission in the absence of payment details - Held that:- It is observed from the record that the assessee society as per its constitution and guidelines have to pay 1.5% procurement overhead expenses (proposed commission) to its member cooperative societies and proposed cooperative societies and such expenses are debited to trading and profit and loss account and credited to individual cooperative societies / proposed cooperative societies account. This amount is paid to its member cooperative societies and proposed cooperative societies as and when required as per the bye laws of assessee society. We find that the ld. CIT(A) has rightly deleted the addition made by the AO as to overhead expenses which is paid to the respective societies on passing a Resolution.- Decided against revenue Addition on account of unutilized subsidy which was treated as cessation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity u/s 41. 5.1 Brief facts of the case are that the assessee company is a cooperative society engaged in procurement of milk from milk producers/ farmers and after processing the same, manufactures of different milk products and supplies the same in the market. The assessee company filed its return of income for the assessment year 2009-10 on 30-09-2009 declaring total income of ₹ 1,35,99,290/-.The return of the assessee was processed u/s 143(1) of the Act on 23-07-2010 and the case of the assessee company was selected for scrutiny through CASS (Computer Assisted Scrutiny system) on AST . Accordingly the notice u/s 143(2) and 142(1) were was issued on 25-05-2011 to the assessee company for hearing on 6-06-2011. Thereafter a questionnaire alongwith notice u/s 142(1) of the Act dated 30-06-2011 was issued by the Department for fixing the case of hearing on 7-07-2011 and the books of account maintained alongwith bills and vouchers by the assessee company were produced before the assessing authority for verification of the same who made total addition of ₹ 1,22,23,801/- under various heads and added the same to the income of the assessee amounting to ₹ 2,58,22,37 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r liability and provision of the same has to be made. In the case of salary, there is no provision of law to disallow the expenses, if the same is not paid. The Assessing Officer is therefore, directed to delete the addition of ₹ 89,25,724/- . 6.3 Now the Revenue is before us wherein the ld. DR relied on the order of the AO. 6.4 We have heard the ld. DR and perused the materials available on record. We find from the records that the notification was issued by the Finance Department, Govt.of Rajasthan to pay the arrear of Sixth Pay Commission to the Govt. employees in two equal instalments and the sanction was also accorded by the Registrar of Cooperative Society, Govt. of Rajasthan, Jaipur also vide its order dated 5-07-2011 in the assessee company s employees. We find that the ld. CIT(A) has rightly deleted the addition of ₹ 89,25,724/- made by the AO. Hence, Ground No. 1 of the Revenue is dismissed. 7.1 In Ground No. 2, the Revenue is aggrieved that the ld. CIT(A) has deleted the disallowance of provision for audit fees amounting to ₹ 5,59,294 wherein the AO observed that the assessee as per details filed has shown provision for audit fees at S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture referred to by the Supreme Court in the case of Amar Chandra Chakraborty, AIR 1972 SC 1863. It is an expenditure which the assessee has incurred wholly and exclusively for the purpose of business and is an allowable expenditure. The provisions of section 43B do not apply to the Government audit charges. Thus, disallowance of ₹ 1,63,925 on account of outstanding Government audit fees could not have been done by the Assessing Officer nor the same could have been affirmed by the Commissioner of Income-tax (Appeals). As such the Tribunal rightly allowed the same. In view of the decision of Hon'ble Bombay High Court in the case of CIT vs. Shree Warna Sahakari Sakhar Karkhana (supra) and the order of the ld. CIT(A) on the issue of Audit Fee, the Ground No. 2 of the Revenue is dismissed. 8.1 In Ground No. 3, the Revenue is aggrieved that the ld. CIT(A) has erred in deleting the disallowance of ₹ 2,05,000/- on account of provision for interest wherein the AO observed that the assessee as per details filed has shown provision for interest on Government loan amounting to ₹ 2.05 lacs. The AO observed that the assessee has not filed the details of payment made u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. This amount is paid to its member cooperative societies and proposed cooperative societies as and when required as per the bye laws of assessee society. We find that the ld. CIT(A) has rightly deleted the addition made by the AO as to overhead expenses which is paid to the respective societies on passing a Resolution. In view of these deliberations, the Ground No. 4 of the Revenue is dismissed. 10.1 In Ground No. 5, the Revenue is aggrieved that the ld. CIT(A) has erred in deleting the addition of ₹ 8,73,729/- on account of unutilized subsidy which was treated as cessation of liability u/s 41 of the Act. In this case, the AO observed that the assessee has shown ₹ 8,73,729/- for subsidy unutilized in the balance sheet for which the AO required the assessee vide order sheet entry dated 01-11-2011 to file the details and justify the claim and the assessee filed the reply vide letter dated 29-12- 2011 as under:- Credit balance of ₹ 8.73 lacs has been shown as subsidy unutilized. Even the history of receipt of this subsidy has not been explained. This is an old subsidy amount received from Govt. of Rajasthan which will be adjusted on receipt of adjustment o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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