9911796707
TMI Blog2017 (5) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... ined credits u/s 68 of the Act. The CIT(A) after considering relevant submissions of the assessee and also analyzing the ledger extracts, rightly directed the A.O. to delete the additions made towards sundry creditors for others shown under the head current liabilities. We do not find any error in the order of the CIT(A). - Decided against revenue. Disallowance of 10% expenditure incurred under the head Arogya Shree schemes - Held that:- Since the expenditure incurred under the head Arogya Shree schemes mostly remains payable at the end of the year, it is very difficult to ascertain the genuineness of expenditure and also mode of payment, whether the same has been paid by cheque or cash. The A.O. has identified the cash payments and disallowed 10% of such expenditure. In case of the remaining expenditures, because the entire expenditure has been treated as unexplained credits, the A.O. would not have gone into the genuineness of expenditure. The CIT(A) after considering the nature of expenditure and also fact that most of the expenditure are supported by self-made vouchers rightly directed the A.O. to disallow 10% of total expenditure incurred under the head Arogya Shree scheme. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f running hospital, filed its return of income for the assessment year 2011-12 on 20.9.2011 declaring total income of ₹ 99,51,387/-. The case has been selected for scrutiny as per the guidelines of CBDT and hence, notices u/s 143(2) 142(1) of the Income Tax Act, 1961 (hereinafter called as the Act ) were issued. In response to notices, the authorized representative of the assessee appeared from time to time and produced the relevant details as called for. During the course of assessment proceedings, the A.O. noticed from the balance sheet filed for the year that the assessee has shown an amount of ₹ 1,17,53,802/- under the head current liabilities as sundry creditors for others. The A.O., to ascertain the nature of liability issued a show cause notice and asked to explain the assessee to furnish details of creditors like partywise breakup of all the creditors, confirmations duly attested in the account copy and bank account of the creditor from whom the credits are shown as outstanding. In response to notice, the assessee vide its reply dated 17.1.2014 submitted that during the financial years 2009-10 to 2011-12, the assessee has participated with the Rajiv Arogya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minimal and the explanation of the assessee in the absence of supported evidence cannot be relied upon and accordingly sundry creditors of ₹ 1,70,53,802/- shown as outstanding is added as unexplained credits. Similarly, the A.O. has made additions of adhoc disallowance of 10% towards Arogya Shree expenses for the reason that out of total expenditure of ₹ 1,49,63,563/-, a sum of ₹ 32,09,761/- was incurred in cash for which the assessee failed to furnish necessary bills and vouchers. Similarly, the A.O. made additions of ₹ 16,62,503/- u/s 40(a)(ia) of the Act, towards professional charges paid to Doctors for failure to deduct tax at source u/s 194J of the Act. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made before the A.O. The CIT(A) after considering explanations of the assessee, observed that the amount shown under sundry creditors for others represents outstanding expenditure payable in respect of Arogya Shree expenses because of delay in realization of bills from the Government. The CIT(A) further observed that the assessee has furnished details of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r our consideration from the assessee, as well as the revenue appeal is addition towards sundry creditors for others u/s 68 of the Act and disallowance of 10% expenditure incurred under the head Arogya Shree schemes. The A.O. made additions of ₹ 1,17,53,802/- u/s 68 of the Act, on the ground that the assessee failed to furnish details of creditors, confirmation from the parties and also bank account details of the creditors proving the identity and genuineness of the transactions. The A.O. was of the opinion that the assessee failed to prove the identity of the creditors, therefore, the question of verification of genuineness of the transactions does not arise, hence, disallowed the entire creditors shown under the head creditors for others. It is the claim of the assessee that the creditors for others shown under the head current liabilities is expenses payable towards reimbursement of expenditure incurred towards Arogya Shree expenses. The assessee further contended that it had incurred various expenditures towards the scheme for conducting medical camps through marketing agents and the same has been reimbursed subsequently as and when the bills are received from the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7. In so far as adhoc disallowance of expenditure, the A.O. disallowed 10% expenditure incurred under the head Arogya Shree schemes on the ground that out of the total expenditure of ₹ 1,49,63,563/-, a sum of ₹ 32,09,761/- was incurred in cash, which was not supported by proper bills and vouchers. The CIT(A) enhanced the disallowance of expenditure to the extent of 10% adhoc disallowance of total expenditure incurred under the head Arogya Shree schemes as against the disallowance made by the A.O. towards expenditure incurred in cash. The assessee claims that the CIT(A) ought not to have directed the A.O. to disallow 10% expenditure incurred under Arogya Shree schemes, as the assessee has filed necessary bills and vouchers in support of expenditure. We do not find any merits in the arguments of the assessee, for the reason that since the expenditure incurred under the head Arogya Shree schemes mostly remains payable at the end of the year, it is very difficult to ascertain the genuineness of expenditure and also mode of payment, whether the same has been paid by cheque or cash. The A.O. has identified the cash payments and disallowed 10% of such expenditure. In case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed a ledger extract of professional charges paid to doctors. On perusal of the ledger extract filed by the assessee, we noticed that the assessee has paid professional charges to visiting consultants on day to day basis, which is much below the threshold limit provided u/s 194J of the Act for deduction of tax at source. Therefore, we are of the view that the assessee not obliged to deduct tax at source on such professional charges. The A.O. without appreciating the facts simply made additions u/s 40(a)(ia) of the Act. 10. In so far as alternative plea of the assessee that expenditure incurred towards professional charges to doctors has been paid on or before 31st March of the financial year, therefore, no disallowance can be made u/s 40(a)(ia) of the Act, if expenditure has been paid before the end of the financial year. We find that the coordinate bench of ITAT, in the case of Merilyn Shipping and Transporters Vs. ACIT (supra) has considered the issue and after considering the relevant provisions of the Act, observed that no disallowance can be made u/s 40(a)(ia) of the Act, if expenditure has been paid on or before 31st March of the financial year. In this case, the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
