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TMI Blog2010 (10) TMI 1250X X X X Extracts X X X X X X X X Extracts X X X X ..... nvenience. 2. First we take up the revenue appeal i.e. ITA No. 1513/Kol/2010. In this appeal, the revenue is aggrieved by the order of the Ld. CIT(A) on the sole ground of deleting the addition of Rs.3,74,85,859/-. Briefly stated facts of the case as derived from the assessment order are that during the assessment proceedings, the Assessing Officer noted from the TDS certificates that the total receipts for the year works out to Rs.5,56,88,817/- whereas the total receipts admitted in the P L Account was only Rs.1,82,02,958/-. The assessee sought to explain that the difference of Rs.3,74,85,859/- represents re-imbursement of expenses by the clients of assessee or these expenses were met out of advance amounts received by the assessee. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the assessee is a firm of Advocates and Solicitors, carrying on legal profession since its inception. The accounting practice is being followed in keeping its account on cash system of accounting. It keeps the accounts separately for its own Income and Expenditure and separate account for the client s related with money receipt from them and expenses on their behalf is spent out. The expenses as used to have spent by the assessee for and on behalf of the clients is commonly known as out of pocket expenses. In course of its professional activities it raised bills on its clients for the professional services rendered. The expenses incurred by the assessee for dealing with the matters entrusted by the clients, such as counsel/a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT. Department has accepted in the past assessment years the out of pocket expenses reimbursed by the clients not as income of the assessee chargeable to tax. There has been no material changes in the activities of the assessee firm as compared to those past years. So, different view in respect of out of pocket expenses reimbursed by its clients of this assessment year should not be taken. He also placed reliance on the following case laws : (i) CIT Vs. ARJ Security Printers (2003) 264 ITR 276 (Del.), (ii) CIT FVs. Neo Poly Pack (P) Ltd. (2000) 245 ITR 492 (Del.), (iii) DIT (Exmp.) Anr. Vs. Apparal Export Promotion Council (No. 1) (2000) 244 ITR 734 (Del.), (iv) Radhasoami Satsang Vs. CIT (1992) 193 ITR 321 (SC) (v) CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant treated as out of pocket expenses . Further these out of pocket expenses were kept out of profit and loss account for the year. The Assessing Officer took the view that the appellant, by not bringing these receipts and expenses into Profit and loss account, had under stated the Business profit to that extent. This view of the AO is clearly incorrect. If these receipts are taken to the P L A/c, then the corresponding expenses also are required to be taken to the P L A/c which will nuentalise the effect. Further, the advances which are subjected to TDS can not be treated as incomes because the job is to be performed and bills are raised and income is recognized. Further it s not the AO s case that the expenses were not actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Ld. Counsel for the assessee while reiterating his same submissions as submitted before the lower authorities further submitted that the Ld. CIT(A) has erred in confirming the disallowances without taking into consideration the fact that the expenses on account of motor car, telephone, mobile phone and fax debited in firm s account after deducting the amount related to personal uses, from the gross bill amount. Thus the expenses related to personal use in these regards have duly been considered at the time of debiting the expenses under those heads in firm s account. Moreover, in respect of car expenses a resolution has been passed towards the probable fuel consumption may qualify for official use on the basis of which quantity of fue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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