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TMI Blog2018 (9) TMI 1801X X X X Extracts X X X X X X X X Extracts X X X X ..... and Service tax liability - whether assessee should have credited these amounts to the P&L account and should have claimed deduction u/s 43B? - Held that:- The findings of the Ld. CIT (A) are based on the evidence on record. Since, the assessee has not debited the profit and loss account, the assessee has not claimed the same as expenditure. Therefore, the said amount cannot be added back u/s 43B of the Act. Hence, we do not find any legal or factual infirmity in the findings of the Ld. CIT (A) to interfere with. Hence, we uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenue. Disallowance under the provisions of section 36(1)(va) read with section 2(24)(x) - payment of Employees contribution to the Provident Funds beyond the prescribed date under the PF Act - Held that:- We notice that the AO has admitted in its report that the assessee had paid the amount of contribution in question before the due date of filing of return. Since, the findings of the Ld. CIT (A) are based on the evidence on record and the report submitted by the AO, we do not find any infirmity in the said findings to interfere with the same. We accordingly uphold the findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils were brought on record during assessment proceedings, the assessment was reopened u/s 147 of the Act. Accordingly, notice u/s 148 of the Act was issued and the assessee submitted that the original return filed by the assessee may be treated as return filed in response to notice u/s 148 of the Act. Thereafter, the AO issued notice u/s 143 (2) and 142(1) and fixed the date for hearing. Since, the assessee did not appear on the date of hearing the AO adjourned the case fixed for two/three occasions, but the assessee did not turn up nor submitted any reply, the AO proceeded ex-parte and passed assessment order u/s 144 read with section 147 of the Act and determined the total income of the assessee at ₹ 1,81,23,437/- after inter alia making addition of ₹ 1,24,60,804/- on account of disallowance of rent expenses, ₹ 53,67,633/- u/s 43B, on account of CST/ VAT and work contract tax and ₹ 1,48,296/- on account of disallowance u/s 36(1)(va) read with section 2(24)(x). 3. The assessee challenged the assessment order before the Ld. CIT (A). The Ld. CIT (A) after hearing the assessee partly allowed the appeal filed by the assessee and deleted the aforesaid addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions and gone through the orders passed by the authorities below and the order of the coordinate Bench passed in the case of M/s Murjani Retail P. Ltd.(supra). The Ld. CIT (A) has decided the said issue in favour of the assessee and directed the AO to delete the addition. The findings of the Ld. CIT (A) are as under:- "Ground No. 2 relates to a disallowance of a sum of ₹ 1,24,60,804/- on account of Rent payment to M/s Tag Enterprises. 8. In the written submissions, it is stated by the appellant that the aforesaid office space was shared between the appellant and its group affiliates and this understanding was specifically covered under clause 14 of the Agreement on 'Assignment' , under this clause, there is an express permission given by the Licensor to the Licensee to assign it's (Licensee's) rights to the listed specific affiliates which includes the appellant i.e. MC Retail Private Limited- copy of this Agreement is placed on record. 8.1 Since the office space was also utilized for the business purpose of the appellant, which is not disputed by the AO, the appellant, pursuant to the Agreement, made payment of ₹ 1,24,60,804/- to the licensor after due ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company of the appellant, the same issue was decided in favour of the appellant vide order No. CIT (A)-2/249/2014-15 DTD. 15.06.2016. The AR of the appellant has explained that the premises Metro Dome, 4th Floor, Metro Theatre, M G Road, Mumbai 400020 is shared by the above two group companies alongwith the appellant and the rent and amenities were also equally shared and hence it is a allowable expenditure and the AO is directed to the delete the addition of ₹ 1,24,60,804/-. Hence, this ground of appeal is allowed". 8. As pointed out by the Ld. CIT (A), AO has not disputed the fact that the office space was utilized by the assessee for business purpose. It is also not disputed that the assessee has paid ₹ 1,24,60,804/-. We further notice that the Ld.CIT (A) has relied on the case of M/s Murjani Retails Pvt. Ltd. a group company of the assessee in which the Ld. CIT (A) has decided the identical issue in favour of the assessee. The assessee has explained during the appellate proceedings that the premises Metro Dome, 4th Floor, Metro Theatre, M.G. Road, Mumbai was shared by the group company aforesaid and the rent and amenities were also equally shared. The coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence cannot be added back under section 43B of the I.T. Act. This fact has also been expressly B)(i) & (ii). 9.2 In this case, fact that the aforesaid amounts, not being debited to the Profit and Loss account were not claimed as expenditure itself and hence cannot be added back while computing taxable income of the appellant cannot be ignored. 9.3 To demonstrate the above, the appellant has submitted Journal Vouchers which give the scheme of entries for the statutory liabilities, break-up of other liabilities in the Balance Sheet as at 31 March 2009 which shows the amounts of Central Sales Tax, Delhi VAT, Haryana VAT, Maharashtra VAT and Maharashtra Works Contract. 9.4 The above submissions and the Tax Audit Report, where the independent Auditor has mentioned that the amounts have not passed through the P&LO Account are taken note of. 9.5 Clearly, what has not been claimed as expense, it being a Balance Sheet item, cannot be added back to income of the appellant. 9.6 In this regard, the remand report sent by the AO dated 21.10.2016 is as under:- "On perusal of the Tax Audit Report, it is seen in Annexure-VII, it is mentioned that the liabilities 'VAT payable' and & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of filing the return of income under the provisions of Section 43B. 10.1 In this regard, the remand report sent by the AO dated 29.08.2016 is as under:- "Disallowance u/s 36(1)(va) r.w.s 2(24)(x)- In the assessment order u/s 143 (3) r.w.s. 147, the AO had made a disallowance u/s 36(1)(va) r.w.s 2(24)(x)- for payments of ₹ 1,29,788/- which were paid beyond the due date. From the Tax Audit report, it can be ascertained the above contributions were paid before due date of filing of return" 10.2 As per the remand report, the AO has accepted that the contributions were paid before due date of filing of return, hence the AO is directed to delete the addition of ₹ 1,48,296/- and hence this ground of appeal is allowed." 14. We notice that the AO has admitted in its report that the assessee had paid the amount of contribution in question before the due date of filing of return. Since, the findings of the Ld. CIT (A) are based on the evidence on record and the report submitted by the AO, we do not find any infirmity in the said findings to interfere with the same. We accordingly uphold the findings of the Ld. CIT (A) and dismiss this ground of appeal of the revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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