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TMI Blog2022 (1) TMI 1365X X X X Extracts X X X X X X X X Extracts X X X X ..... which provides for the allowability of expenses in the year in which the TDS has been deducted and paid. In the instant case, it is a matter of record that the assessee has paid and accounted for these expenses in the books of accounts in the financial year relevant to the impugned assessment year and has deducted and deposited TDS in the financial year relevant to the impugned assessment year and not in the earlier assessment year. Therefore, even from the perspective of harmonious construction of all relevant provisions, the assessee deserves an allowance towards these expenses in the year under consideration. Decided in favour of assessee. TDS u/s 194C - assessee has not deducted TDS under the head Advertisement and publicity on certain transactions - Disallowance u/s 40(a)(ia) - HELD THAT:- Assessee has filed relevant invoices/documentation in support of its contentions before the ld CIT(A) and therefore,CIT(A) findings that the assessee has not filed any evidence in support of his contention that the said payment does not require any TDS, is not borne out from the records. Given that the material available on record has not been examined and no findings on merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ia) of the Income Tax Act on account of non deduction of TDS out of which the amount of Rs.2,73,503/- pertain to the purchase of material and not services as such these are not liable to TDS and the amount of Rs. 4,12,814 pertains to payments made through credit card for online advertisement which was in the nature of business prof it on which no TDS was deductible and more-so when Income could not even be deemed to accrue or arise in India. 4. That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in making disallowance of Rs. 2,82,317/- out of general charges on account of prior period expenses without considering the fact that the expense was incurred wholly and exclusively for the purposes of business of the company and the same is allowable u/s 30 and 37 of the Income tax Act, 1961. 2. Ground of appeal No.1 is general and does not require any specific adjudication. 3. In Ground of appeal No.2, the assessee has challenged the sustenance of disallowance of Rs.30,45,000/- as prior period expenses. In this regard, briefly, the facts of the case are that the AO observed that the assessee has debited a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee as well the Remand Report of the AO were considered by the Ld.CIT(A) . The Ld.CIT(A) thereafter returned a finding that the appellant has filed certain letters exchanged with JW Marriot and the appellant deferred the payment of rent on its own sweet will in financial year 2008-09. It was further held by the Ld.CIT(A) that since the assessee is following mercantile system of accounting, it shall not be allowed any expense which pertain to any previous year other than the concerned previous year except those expenses which are specifically allowed under the Act. Further reliance was placed on the decision of ITAT Chandigarh Benches in the case of M/s Haryana State Electronics Development Corporation Ltd. Vs. DCIT, 78 Taxmann.com 268 and addition made by the AO was confirmed. 5. Against the said findings, the assessee has come up in appeal before us. During the course of hearing, the Ld. AR reiterated the submissions made before the lower authorities and took us through various letters and communications exchanged with the landlord M/s Juhu Beach Resorts Limited, in particular, our reference was drawn to letter dated 12.8.2009 and 17.08.2009 wherein the particulars of the revise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings and thereafter, during the appellate proceedings has submitted that this expense pertains to rent payment for the stores at JW Marriot Hotel , Mumbai and pending negotiation with the landlord and the brand owners for a possible remission in rent due to poor performance of the store, the lease rent was not paid earlier and the final settlement was reached in August, 2009 and lease rent was thereafter paid as per the modified terms. The AO has not returned any specific finding as to why the submissions so filed by the assessee were not found acceptable besides merely reiterating that these are prior period expenses. No doubt the assessee didn t corroborate its submissions before the AO during the assessment proceedings, however, during the appellate proceedings, the relevant documentation in form of communications exchanged with M/s Juhu Beach Resorts as well as revised rent agreement were submitted and the AO had an occasion to examine the same. As submit ted by the ld AR, the AO in his remand report has acknowledged the fact that as per letter dated 17.8.2009 issued by M/s Juhu Beach Resorts, there is a reduction of licence fee from Rs.7 lacs to Rs.3 lacs which indicates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - is hereby directed to be deleted and ground no. 2 of assessee s appeal is allowed. 10. In ground of appeal No.3, the assessee has challenged the action of the Ld.CIT(A) in confirming the disallowance of Rs.6,86,317/- u/s 40(a)( ia) of the Act. In this regard, briefly, the facts of the case are that during the course of assessment proceedings, the AO observed that the assessee has not deducted TDS under the head Advertisement and publicity on certain transactions as required u/s 194C of the Act. The assessee was issued a show cause notice and after considering the submissions so filed by the assessee and not finding the same acceptable, the AO made a disallowance of Rs.8,90,551/- as no TDS has been deducted on such expenses u/s 40(a) (ia) of the Act r.w.s. 194C of the Act. 11. Being aggrieved, the assessee carried the matter in appeal before the Ld.CIT(A) . The submissions so filed by the assessee were considered and the Remand Report called for from the AO. Thereafter the Ld.CIT(A) has returned a finding that the AO in Remand Report has accepted the assessee s explanation for the payments of Rs.72,210/- , Rs.27,156/- and Rs.79,868/- as TDS is not deductible on these payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS, is not borne out from the records. Given that the material available on record has not been examined and no findings on merits of the additions have been recorded by the ld CIT(A) , we deem it appropriate that the matter be set-aside to the file of the ld CIT(A) to examine the same on merits after providing reasonable opportunity to the assessee. The contentions advanced on the merits have been left open and the assessee is free to advance the same before the ld CIT(A) as so advised. In the result, the ground no. 3 is allowed for statistical purposes. 15. In ground of appeal No.4, the assessee has challenged sustenance of disallowance of Rs.2,82,317/-. In this regard, briefly, the facts of the case are that during the course of assessment proceedings, the AO observed that the following expenses which have been debited under the head general charges , do not belong to the period under consideration and, therefore, he disallowed the same and added to the income in the hands of the assessee: Date Description Amount Narration of the Assessee 30.06.2009 Entertainment S M) exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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