9911796707
TMI Blog2019 (9) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and thereafter adjudicate the same in accordance with law. Needless to add the assessee be granted due opportunity of hearing. Disallowance u/s 36(1)(iii) - amount of interest paid on bank loan taken for acquiring of assets not put to use in the year under reference - HELD THAT:- As decided on own case Admitting the additional evidences and thereafter restoring the matter back to the AO for verifying the facts of the case and adjudicating the issue afresh in accordance with law Addition of expenditure incurred by the appellant towards rent - the expenditure incurred related to earlier assessment year, the same could not be allowed in the year under reference as the appellant was following mercantile system of accounting whereas the liability to pay the same crystallized in the year under reference itself - HELD THAT:- As decided on own case Admitting the additional evidences and thereafter restoring the matter back to the AO for verifying the facts of the case and adjudicating the issue afresh in accordance with law Disallowance of foreign travel expenses of the Director of the assessee company - non business expenses - HELD THAT:- As decided on own case restri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to three years, the expenditure was spread over three years and the claim allowed accordingly. The Ld. DR has been unable to controvert the contention of the Ld.Counsel for the assessee that having treated the expenses as revenue, the same was allowable in the impugned year and could not be deferred in the next two years. The Revenue has been unable to draw our attention to any provision under the Income Tax Act for deferring revenue expenditure. We, therefore, agree with the Ld.Counsel for the assessee that the said revenue expenses were to be allowed in the impugned year itself. Allowance of depreciation on electric installation fittings - @ 15% OR 10% allowed by the revenue authorities - HELD THAT:- Assessee pleaded that its solitary prayer on the impugned issue was that the claim of depreciation be allowed at the enhanced WDV after allowing depreciation @ 10% on the impugned assets. In view of the above, we direct the AO to recompute the claim of depreciation on the impugned assets at the prescribed rate in accordance with law. The ground of appeal No.4 raised by the assessee is dismissed with the above directions. Non deduction of tax at source on certain payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] dated 26.4.2017, 7.3.2017 26.4.2017 ,relating to assessment years 2011-12 to 2013-14 respectively, passed u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as Act ). At the outset it was stated by both the parties that common issues were involved in all the appeals. All the appeals were therefore taken up together for hearing and are being disposed off by this common consolidated order. We shall first be dealing with the appeal of the assessee in ITA No.1014/Chd/2017 relating to A.Y 2011-12. ITA No.1014/Chd/2017(A.Y. 2011-12): 2. Ground Nos.1 and 9, it was stated by the Ld.Counsel for the assessee, were general in nature. The same therefore need no adjudication. 3. Ground No.2 raised by the assessee reads as under: 2. On the facts and circumstances of the case, the learned CIT(A) has erred , both on facts and in law in having confirmed the addition of ₹ 3,92,453/- made to the income of the appellant being the difference in the amounts of commission and interest received as per form No. 26AS and as accounted for in the books of accounts of the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayments inform No. 26AS and as shown in the books of the appellant was submitted during the course of assessment proceedings which forms Annexure 'B' of the assessment order itself. As per this statement there was a difference of ₹ 2,22,673/- in the payments received from M/s Priority Marketing Put. Ltd and ₹ 1,69,780 in the payments of M/s Mohan Clothing Co. Put Ltd. Subsequently, a revised statement (Annexure 'A' forming part of assessment order) was also furnished to the Assessing Officer showing the nil difference in the payments received from the above persons as reflected inform No. 26 and as per the books of the appellant. The reasons for filing the revised statement where no difference in the payments as per form No. 26AS and as per the books was shown in these two accounts was that the appellant was selling the goods of M/s Priority Marketing Put. Ltd. the on consignment basis. As per the arrangement with this company, the appellant was to receive commission on sales as also the vat paid on their behalf. A consolidated bill for the commission as well as vat charges was issued by the appellant to this supplier. However, instead of deducing TDS on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced in the order of the CIT(A) show that specific detailed submissions had been made and nowhere the assessee has expressed uncertainty about his explanation. Since the factual contentions of the assessee need verification, we consider it fit to restore the issue back to the AO to verify the contentions made by the assessee and thereafter adjudicate the same in accordance with law. Needless to add the assessee be granted due opportunity of hearing. The ground of appeal No.2 raised by the assessee is allowed for statistical purposes. 8. Ground No.3 raised by the assessee reads as under: 3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the disallowance of an amount of ₹ 4,01,065/- under section 36(1)(iii) being the amount of interest paid on bank loan taken for acquiring of assets not put to use in the year under reference. 9. Brief facts relating to the issue are that the AO noted that the assessee had opened eight new stores during the year and done renovation/alteration in them and also furnished them. He further noted that the term loan has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been dealt with at para 8 9 of the order ,admitting the additional evidences and thereafter restoring the matter back to the AO for verifying the facts of the case and adjudicating the issue afresh in accordance with law. The said decision will squarely apply to the present case also, following which we restore the issue back to the AO to be decided afresh in accordance with law, as per the directions given in the case of M/s Kapsons Agencies (supra) in ITA No.1010/Chd/2017 (supra). This ground of appeal No.3 is allowed for statistical purposes. 15. Ground of appeal No.4 raised by the assessee reads as under: 4. (I) On the facts and circumstances of the case, the CIT (Appeals) has erred in having confirmed additions of ₹ 1,59,572/- and ₹ 1,24,782/- being the amount of expenditure incurred by the appellant towards rent by holding that as the expenditure incurred related to earlier assessment year, the same could not be allowed in the year under reference as the appellant was following mercantile system of accounting whereas the liability to pay the same crystallized in the year under reference itself. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oring the matter back to the AO for verifying the facts of the case and adjudicating the issue afresh in accordance with law. The said decision will squarely apply to the present case also, following which we restore the issue back to the AO to be decided afresh in accordance with law, as per the directions given in the case of M/s Kapsons Agencies (supra) in ITA No.1011/Chd/2017 (supra). Ground of appeal No.4 raised by the assessee is allowed for statistical purposes. 22. Ground of appeal No.5 raised by the assessee reads as under: 5. On the facts and circumstances of the case, the learned CIT(Appeals) has erred in having confirmed disallowance of an amount of ₹ 1,18,825/- being the amount of expenditure incurred on foreign travel of the Directors by treating the same as non business expenditure. 23. The above ground raised relates to disallowance of foreign travel expenses of the Director of the assessee company Shri Vipin Kapoor being on account of visit to China for the reason that the assessee was not able to establish and prove that the said expenses were incurred in connection with the business of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the case, the learned CIT(Appeals) has erred in having confirmed disallowance of an amount of ₹ 8,53,062/- made by the Assessing officer by taking resort to the provisions of section 40(a)(ia) by holding that as no TDS was deducted out of the expenditure incurred on which TDS was deductable as per the provisions of the Act, the same was as such not an allowable expenditure. 30. Briefly stated, the AO had made disallowance of the following expenses on finding that the assessee had failed to deduct tax at source on the same: Head of Expenditure Name of party Advertisement Roshan Studios 32,450.00 Advertisement Wire Wireless 38,913.00 Advertisement Synergy Media Entertainment 174,384.00 AMC Cool Tech Corporation 35,394.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was incurred for business expediency and were actually paid in the year under reference. 33. Referring to the same it was contended that the assessee had pleaded before the Ld.CIT(A) that the payment made to hotel Mountview was for booking of hall charges for organizing fashion show and thus did not fall under the category of work contract and no TDS was required to be deducted on the same. Similarly, the Ld.Counsel for the assessee pointed out that it was pleaded before the Ld.CIT(A) that there was no single contract with Roshan Studios and Wire Wireless and the amount paid was below the prescribed limit on which TDS was required to be deducted as per section 194C of the Act. The Ld.Counsel for the assessee contended that the Ld.CIT(A) had failed to deal with the specific contention of the assessee and has summarily dismissed the same without giving any proper reasons. He drew our attention to the finding of the CIT(A) at para 8.2 of the order as under: 8.2 I have considered the reply of the appellant and perused the order of the Assessing Officer. The appellant has contested only 2 amounts and not given reply with respect to others. As r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng tickets for cricket match and food for staff during cricket match and was not paid to any single party and therefore, the provisions of section 40A(3) of the Act were not attracted. The Ld.Counsel for the assessee pointed out that the Ld.CIT(A) without appreciating the contentions made, had summarily upheld the addition by simply stating that the purchases in cash exceeded ₹ 20,000/-, the disallowance had been rightly made. 39. The Ld. DR, on the other hand, relied upon the orders of authorities below. 40. We have heard the rival contentions and perused the orders of authorities below. We do not find any merit in the contentions of the Ld.Counsel for the assessee. The assessee, we have noted, has consistently pleaded that the payment was made in cash for purchasing tickets of cricket match for its staff/customers and for providing food to them during cricket match and that the payment was made to different vendors at the spot where the cricket match was conducted for buying food items. But no evidence has been filed to substantiate the same. Therefore the fact remains that the assessee has incurred expenditure in cash exceeding ₹ 20,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to controvert the contention of the Ld.Counsel for the assessee that having treated the expenses as revenue, the same was allowable in the impugned year and could not be deferred in the next two years. The Revenue has been unable to draw our attention to any provision under the Income Tax Act for deferring revenue expenditure. We, therefore, agree with the Ld.Counsel for the assessee that the said revenue expenses were to be allowed in the impugned year itself. The claim of the assessee of ₹ 1,16,000/- is, therefore, allowed. The ground of appeal No.8 raised by the assessee is, therefore, allowed. 47. In effect, the appeal of the assessee is partly allowed for statistical purposes. We now take up the appeal of the assessee in ITA No.1015/Chd/2017 relating to A.Y 2012-13 ITA No.1015/Chd/2017(A.Y.2012-13): 48. Ground of appeal No.1 and 8, it was stated by the Ld.Counsel for the assessee, were general in nature. the same therefore need no adjudication. 49. Ground of appeal No.2 raised by the assessee reads as under: 2. On the facts and circumstances of the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in having confirmed the allowance of depreciation on electrical installations and fittings at 10% instead of 15% as claimed by the appellant thereby confirming an addition of ₹ 11,64,638/-to the income of the appellant. 56. The issue raised in the above ground relates to allowance of depreciation on electric installation fittings @ 15% as claimed by the assessee as against 10% allowed by the revenue authorities. 57. At the outset itself the Ld.Counsel for the assessee pleaded that its solitary prayer on the impugned issue was that the claim of depreciation be allowed at the enhanced WDV after allowing depreciation @ 10% on the impugned assets. In view of the above, we direct the AO to recompute the claim of depreciation on the impugned assets at the prescribed rate in accordance with law. The ground of appeal No.4 raised by the assessee is dismissed with the above directions. 58. Ground of appeal No.5 raised by the assessee reads as under: 5. On the facts and circumstances of the case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 64. Before us at the outset itself the Ld.Counsel for the assessee pleaded that the facts of the case are that the assessee had deducted tax at source on both the expenses and deposited the same also in the Government Treasury. The Ld.Counsel for the assessee stated that the challans evidencing the deduction of tax at source on these payments and the deposit thereof in the Government Treasury was available with the assessee and drew our attention to the same filed in the Paper Book placed before us at page 5. Our attention was also drawn to the acknowledgement of statement of TDS, evidencing tax deducted on the impugned payment and deposited in the Government Treasury. It was contended that these documents were very relevant for deciding the issue and the Ld.Counsel for the assessee pleaded that the same may be admitted for adjudication. An application for admission of the additional evidences was filed before us dated 15.10.2018. 65. The Ld. DR objected to the same. 66. We have considered the contentions of the Ld.Counsel for the assessee and we are in agreement with the same that the disallowance having been made on account of non ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 72. Ground No.3 raised by the assessee reads as under: 3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the disallowance of an amount of ₹ 6,95,680/- under section 36(1)(iii) being the amount of interest paid on bank loan taken for acquiring of assets not put to use in the year under reference. 73. The above ground relates to disallowance of an amount of 6,95,680/- u/s 36(1)(iii) of the Act being the amount of interest paid on bank loan taken for acquiring of asset not put to use in the year under reference. 74. It was common ground that the issue raised in the present ground was identical to that raised in ground No. 3 of assessee s appeal for A.Y 2011-12, in ITA No.1014/Chd/2017 . In view of the same, with the issue admittedly being identical to that raised in ground No.3 in ITA No.1014/Chd/2017, our decision rendered therein will squarely apply to the said ground also, following which we restore the issue back to the AO to decide the same afresh in accordance with our directions given at para 14 of our order above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (l)(iii) of the Act in as much as it is only the interest paid on capital borrowed for acquisition of assets not put to use in the year under reference which is required to be disallowed under the proviso and otherwise. As already submitted no capital was borrowed for the acquisition of these assets which were acquired by using its own funds which were available with the appellant by way of free reserves with it. Neither any term loan was raised from the bank nor any unsecured loan was raised by the appellant in the year under reference as will be evident from the copy of the balance sheet attached herewith. The accretion in the unsecured loans is only on account of interest payable to them on their loans. Copies of their accounts are also attached herewith for your ready reference and kind perusal. And at para 6.1 as under: 6.1 In appeal, the Ld. Counsel for the appellant made the following reply:- This ground of appeal relates to the disallowance of a sum of ₹ 5,26,052/- out of the interest paid by the assessee on loans raised by the appellant by taking resort to the proviso to section 36(l)(iii) being the amount of int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of ₹ 18,88,632/- to the income of the appellant. 82. The issue raised in the above ground relates to allowance of depreciation of electric installation of fittings @ 15% as claimed by the assessee as against 10% allowed by the revenue authorities. 83. It was common ground that the issue raised in the present ground was identical to that raised in ground No. 4 of assessee s appeal for A.Y 2012-13, in ITA No.1015/Chd/2017. In view of the same, with the issue admittedly being identical to that raised in ground No.4 in ITA No.1014/Chd/2017, our decision rendered therein will squarely apply to the said ground also, following which we dismiss the said ground in accordance with our directions given at para 57 of our order above. The ground of appeal No. 5 raised by the assessee is dismissed with the above directions. 84. Ground No.6 raised by the assessee reads as under: 6. On the facts and circumstances of the case, the learned CIT(Appeals) has erred in having confirmed disallowance of an amount of ₹ 2,24,097/- being the amount of expenditure incurred on foreign travel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t amounting to ₹ 25,159/- and of 1/4th of the expenditure towards running and maintenance of cars amounting to ₹ 6,37,708/-. The Ld.Counsel for the assessee thereafter took us through the order of the Ld.CIT(A) and pointed out that the Ld.CIT(A) had dealt with only up to ground No.6 and had left the issues raised in ground Nos. 7 8 unadjudicated. The Ld. DR agreed to the same. 89. In view of the above, these issues need to be adjudicated afresh but since we have restored certain issues raised in this appeal to the AO, we restore these issues also to the AO to deal with the same afresh. We direct the AO to deal with the issue of disallowance of expenses incurred on vehicle running and maintenance on account of personal usage of the same by the Directors of the company on a reasonable basis considering the past history of the assessee, number of directors in the company, number of vehicles owned by the assessee company, the nature of business carried out by the assessee and such other factors. The AO is directed to provide due opportunity of hearing to the assessee and thereafter decide the issue in accordance with law. Ground Nos.7 and 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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