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2021 (2) TMI 1229 - ITAT LUCKNOWAddition on account of expenses of labour Cess - HELD THAT:- As relying on assessee's own case [2019 (5) TMI 1669 - ITAT LUCKNOW] assessee is correct in contending that the addition, if any, is maintainable only in the hands of the client of the assessee Corporation and not in the hands of the assessee. The provisions made for labour cess, do not stand debited to the profit & loss account and the profitability of the Corporation in the form of centage earned as gross profit, is not affected. The assessee Corporation is only a collecting agency for the purposes of the labour cess and deposit thereof with the Government account. Thus, the action of the ld. CIT(A) in confirming the addition for the provisions for labour cess, is reversed and the addition is deleted. The sole ground raised by the assessee in its appeal is allowed. Difference in valuation of stock - HELD THAT:- CIT(A) in his finding has clearly held that the difference was due to typographical error and he has further observed that books of accounts of assessee were audited by statutory auditor as well as by CAG and such inventory was physically verified therefore he has rightly allowed relief to the assessee and we do not find any reason to interfere with his finding and therefore Ground No.1 of the appeal is dismissed. Addition on account of prior period items - HELD THAT:- This issue is covered in favour of the assessee in the case of assessee itself in [2019 (5) TMI 1669 - ITAT LUCKNOW] and in [2019 (8) TMI 46 - ITAT LUCKNOW] . Addition on account of provision of gratuity - HELD THAT:- The written back provision has been taken in the P&L account under the head other non operating income, which is apparent from paper book Pg. 52 where such schedule forming part of balance sheet is placed. The AO has wrongly made the addition of outstanding balance of provision for gratuity which the ld. CIT(A) has rightly deleted. Accrual of income - Addition on account of interest income earned on unutilized fund by holding that the assessee was claiming TDS relating to FDRs of unutilized fund - HELD THAT:- CIT(A) has held that the interest on unutilized funds which belonged to clients of the assessee were required to be credited to their account and therefore, this income cannot be said to have accrued to the assessee. The Hon'ble Tribunal in own case [2019 (5) TMI 1669 - ITAT LUCKNOW] for AY 2010-11 and [2019 (8) TMI 46 - ITAT LUCKNOW] in AY 2011-12 has allowed relief to the assessee under similar facts and circumstances. Addition on account of profit on sale of assets which the assessee had declared under head other income in schedule 12 forming part of balance sheet - assessee had claimed depreciation as per income tax rules on block of assets and therefore, the block of assets was arrived at after reducing the sale value of assets sold and depreciation as per Income Tax Rules was claimed as per Income Tax Rules - HELD THAT:- AO , on the one hand, allowed depreciation as per Income tax Rules but again added ₹ 98,01,151 being profit on sale of assets without appreciating the fact that no such addition was to be made as depreciation was allowed on block of assets as per Income Tax Rules where the sale consideration of assets was already reduced from the block of assets of depreciation was claimed on net block. The copy of computation sheet is placed at paper book Pg.42 where the computation of income is placed and where the assessee had reduced depreciation as per income tax rules and added back the depreciation debited in the P&L account. We find that ld. CIT(A) has made a finding of fact that assessee has claimed depreciation as per I.T. Rules on block of assets and has reduced the sale consideration of assets from gross block of assets and had claimed depreciation on net block therefore, he has rightly allowed relief to the assessee and we do not find any infirmity in the same and therefore, Ground No.5 is also dismissed. Addition on account of interest on unlisted machinery - HELD THAT:- CIT(A) has made a finding of fact that interest on unlisted machinery is in the nature of notional interest being charged by assessee on the machinery used in the construction work undertaken by it and the notional interest chart on unlisted machinery being used in the work. The ld. CIT(A) further made a finding of fact that such amount has been debited in the contract account and therefore, the assessee had earned centage on this amount as specified by the Government and the centage so earned was taken in the P&L account - The findings of ld. CIT(A) are quite exhaustive and such addition is covered in favour of assessee by the Tribunal order in the case of assessee itself. Therefore, we do not find any reason to interfere in the same and therefore, Ground No.6 is also dismissed. Addition on account of gratuity which the assessee had written back as no longer required - HELD THAT:- The assessee by writing back the excess provision of gratuity credited the other receipts and declared it as income and simultaneously the assessee reduced the same in the computation chart in computing net taxable income. The assessee had claimed that it never claimed the gratuity expenses and added back the same in computing of income and therefore, the addition was not justified. The Assessing Officer had wrongly made the addition, which the ld. CIT(A) has deleted by appreciating the facts correctly. The ld. CIT(A) has already dealt this issue and has rightly deleted the addition. Additions on account of interest accrued on investment and other income which was shown in the balance sheet under the head current assets - HELD THAT:- As under the head other current assets declares interest accrued on investment at ₹ 299543067 and other income accrued but not received at ₹ 54497865. When the assessee passed this entry and declared the income as receivable naturally credit would have been given to the income which would have gone to the P&L account. The system of accounting adopted by assessee is that the income is arrived at by first adding interest received during the year less opening balance of interest accrued considered income in earlier years and then by adding accrued interest of the year not received. The ld. CIT(A) has deleted this addition rightly. Disallowing depreciation in P&L account under the head operating expenses which was added back while computing allowable depreciation as per I.T. Rules - HELD THAT:- There is no justification in the addition made by the AO as the correct depreciation has been claimed by the appellant as per Rules after adding back the depreciation debited to the contract account and profit and loss account. The addition of ₹ 1,19,55,313/- made by the AO is deleted giving relief to the appellant. - Appeal of revenue dismissed.
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