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TMI Blog2024 (11) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. We therefore, in view of the facts of the case, do not find it fit to interfere with the finding of the CIT(A). This ground thus stands dismissed. Taxability of sundry creditor - AR contended that the section 41(1) of the Act did not empower the AO to write off the sundry creditors - HELD THAT:- The sundry creditors are in the nature of credits in the Books of account and it is the duty of the appellant/assessee to explain and demonstrate the genuineness of sundry creditors, if questioned. The appellant/assessee is further required to controvert the finding of the CIT(A). It cannot be ruled out that these liabilities had not been disposed of earlier through cash or otherwise. The idle/unaltered/static sundry creditors, in particular, require verification/investigation. Appellant/assessee deserves reasonable opportunity of being heard to make shortcomings or non-compliances. In view thereof, without offering any comment on merit of this issue, we deem it fit to set aside the finding of the CIT(A) in this regard and remit this matter back to the file of the AO for de-novo consideration. Appellant/assessee should ensure compliances during the set-aside proceeding before the AO. AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... balances amounting to Rs. 10,89,145, completely disregarding the submissions duly placed on record by the Appellant and disregarding the fact that in subsequent years, when such creditors were actually written off, the same was duly offered to tax by Appellant. 4. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) on erroneous and insufficient grounds and disregarding factual submissions and copy of TDS certificates furnished by the Appellant, has erred in upholding the disallowance of Rs. 1,77,450, disallowed in earlier years in terms of the provisions of Section 40(a)(ia) of the Act and claimed as deduction during relevant AY on deposit of TDS. 3. Briefly, the facts of the case, relevant for deciding this appeal are that the appellant/assessee, engaged in providing all helicopter support requirements, such as; maintenance, repair, overhauling and guidance for leasing, operating and selling of helicopters, etc., filed its Income Tax Return (hereinafter, the ITR ) on 28.11.2014 declaring loss of Rs. 6,66,72,506/-. The case was picked up for scrutiny. The consequential assessment was completed at income of Rs. 14,45,709/-vide order dated 29.12.2016 pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Account. Admittedly, the appellant/assessee had claimed this expenditure in the ITR in the computation of income statement. In support of the argument, the Ld. AR, placing reliance on the decisions of the Hon'ble Supreme Court in the case of Kedarnath Jute Mills Ltd. (82 ITR 363), the Delhi ITAT in the case of Ernst Young Ltd. (order dated 31.05.2018 in the ITA Nos.6561 6562/Del/2016) and the Mumbai Bench of the Tribunal in the case of British Bank of Middle East (Order dated 19.10.2016 in the ITA No.3925 /Mum /1999), submitted that as long as the expenditure was actually incurred and was otherwise deductible, the deduction could not be declined by the AO on the reasoning that the same was not debited in the books of account. 5. The second issue is in respect of disallowance of bogus conveyance telephone expenses. The AO disallowed Rs. 19,68,712/- out of conveyance telephone expenses, which was restricted to Rs. 9,84,356/- by the CIT(A). The Ld. AR contended that the appellant/assessee keeping in view the designation and nature of work of employees, had reimbursed them lump-sum amount per month of conveyance telephone expenses or actual expenditure whichever was lower. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e vouchers submitted by the appellant. Most of the vouchers produced/submitted are of purchase of petrol/diesel at petrol pump. Very few vouchers of telephone expenses are produced/submitted. I agree with the AO that these vouchers do not mention the name of the employees. In some of the vouchers of petrol from petrol pump, the amount is Rs. 4,000/- dated 26.05.2013, Rs. 3,000/- dated 25.12.2011 another bill of Rs. 3,000/- dated 27.05.2013. There are many vouchers like this. It is not believable that a vehicle of an employee, at one point, on a single day filled up with petrol/diesel worth of Rs. 4,000/- and Rs. 3,000/-. Mostly payments are made in cash. This fact is asked to the Ld. AR who could not able to explain. Very few telephone vouchers are produced. Although the Ld. AR submitted bank remittance transactions sheet through which the appellant direct the bank to pay the employee in their respective bank account. Therefore in absence complete documentary evidences and I am of the view that the appellant failed to substantiate the entire claim on account of these reimbursements. However entire expenses on this account cannot be said as non-genuine. Therefore to be fair I restri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce beginning and the payment details if any in subsequent years. Nothing has been brought on record by the Ld. AR. The Ld. AR submitted that the appellant still had legal liability to pay these creditors in its books of account. It is also admitted by the Ld. AR that no payment have been made to the parties till date. In the light of these facts I am inclined to agree with the conclusion by the AO that these liabilities are no more payable. The appellant has not taken any step to make even part payment to these parties even as on the date of hearing. The action of the AO is therefore confirmed. Hence this ground of appeal is dismissed. [Emphasis supplied] 10.1 The Ld. Sr. DR submitted that the facts of the case of the appellant/assessee were quite different than the facts of the cases relied upon by the Ld. AR; hence these decisions were of no help to the appellant/assessee. The Ld. Sr. DR contended that the sundry creditors had been taxed under section 41(1) of the Act in all cases relied upon by the Ld. AR; whereas in the case in hand, the CIT(A) s finding was that the sundry creditors were no more payable ; i.e. non-genuine liabilities. It was submitted that the sundry creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Income Tax Officer, the assesses will lose the right of claiming or will be debarred from being allowed that deduction. Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter. The assessee who was maintaining accounts on the mercantile system was fully justified in claiming deduction of the sum of Rs. 1,49,776/being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. it may be added that the liability remained intact even after the assessee had taken appeals to higher authorities or Courts which failed. The appeal is consequently allowed and the judgment of the High Court is set aside. The question which was referred is answered in favour of the assessee and against the Revenue. The assessee will be entitled to costs in this Court and in the High Court. Following the ratio laid down by the Hon ble Supreme Court in the case of Kedarnath Jute Mills Ltd. (supra), we are of the considered view that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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