Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 1544 - ITAT AMRITSARAddition on account of payments in cash in violation of section 40A(3) - Held that:- The disallowance stands upheld by the ld. CIT(A), again, on the aspect of serviceability of the banks at the places where the expenditure stands paid. The said finding remains unrebutted. As, however, we have remitted the matter back to the file of the ld. CIT(A) for AY 2007-08, it is only considered proper that, like-wise, it be done for this year so as to ensure consistency of decision at his end; the facts being largely the same. We decide accordingly. Disallowance in respect of provision for gratuity - Held that:- The disallowance for both the years as well as its confirmation, is on the basis of section 40A(7) which bars deduction in respect of provision for gratuity expenditure. The assessee, though admitting the legal position, claims, albeit without any evidence, that the liability in respect of the impugned gratuity had, in fact, crystallized as at the year-end in-as-much as the relevant employee/s had superannuated during the relevant year/s. The assessee’s case, even as confirmed by the ld. AR during hearing, continues to be the same, so that its claim remains wholly unsubstantiated before us as well. Accordingly, we have no hesitation in upholding the impugned disallowance. Needless to add, the assessee shall be entitled to deduction in its respect u/s. 37(1), of course subject to the satisfaction of the AO with regard to the genuineness of the assessee’s claim, in the year of payment/s Disallowance of prior period expenses made - Held that:- The assessee admittedly following mercantile method of accounting, with each year being an independent unit of assessment, we find no reason not to uphold the impugned disallowance, even as fairly conceded to by the ld. AR during hearing. So, however, we consider it as incumbent upon us to state that while finalizing the assessment for AY 2009-10, prior period expenditure to the extent the same relate to AY 2007-08, subject to his examination and verification, be allowed by the AO. The onus to furnish the relevant details, as well as press any claim/s in its respect, would however be on the assessee. Disallowance u/s. 40(a)(ia) - amounts qua which tax deducted at source (TDS) had been deposited by the due date of filing of the return of income u/s. 139(1) - Held that:- We do not find anything wrong in the deletion as directed by the ld. CIT(A). We must though add that the AO shall verify that the assessee does not get a double deduction in respect of the amount/s deleted by the ld. CIT(A), i.e., in the year of payment, in-as-much as sec. 40(a)(ia) only introduces a timing difference. The amendment to section 40(a)(ia) being subsequent in time, it may well be that the assessee had, in terms of the provision as it stood for the relevant years, claimed and been allowed deduction for the year/s when the TDS stands deposited to the credit of the Central Government. The onus to satisfy the AO in this regard, i.e., that there is no double deduction qua the amount deleted by the ld. CIT(A), being ₹ 744.32 lacs and ₹ 1058.44 lacs for AYs 2007-08 and 2009-10 respectively, would be on the assessee. The returns for the respective years having been ostensibly furnished in the following years, i.e., the previous years relevant to AY 2008-09 and AY 2010- 11 respectively, all that is required, for the purpose, is to see if the assessee had made any claim qua the said sum for these years, i.e., with reference to its disallowance for the relevant years. Addition credited to the suspense account - inferred by the AO as an unexplained liability and, accordingly, added as income - Held that:- The subject matter of the assessee’s Gd. 6 for AY 2009-10 being the same, the same stands also confirmed at the impugned amount of ₹ 27,100. We may though add that the latter sum of ₹ 27,100 should not include – in whole or in part, the former sum of ₹ 21,750, else, to that extent, it would be a case of a double addition. We say so as it could well be that the excess credit as on 31.03.2007 continues to obtain (to whatever extent) as on 31.03.2009 as well, in which case it would amount to a double addition. The onus however to show that it is so would be on the assessee Addition on outstanding purchases - Held that:- explained that of the sum of ₹ 85.99 cr. outstanding at the year-end, ₹ 66.10 cr. represented the opening balance from the earlier years. Of the balance ₹ 19.89 cr., ₹ 19.85 cr. represented provisions in respect of bills payable, salary payable, etc., leaving a balance of ₹ 4.05 lacs, which was accordingly confirmed as unexplained credit. Very clearly, the assessee has no explanation for this sum, which represents neither an opening balance nor a provision was during the year. The confirmation of the addition to this extent is accordingly confirmed. Addition in respect of interest on FDRs - Held that:- The assessee is maintaining its accounts, disclosing business income, on mercantile basis. Section 145 obliges an assessee to maintain books either on cash or mercantile basis, so that hybrid system of accounting is impermissible w.e.f. AY 1997-98. The assessee has, we are sorry to state, at no stage, i.e., during the audit u/s. 142(2A); the assessment proceedings; the remand proceedings – the ld. CIT(A) calling for a remand report on quite a few issues, as well as in the appellate proceedings, made any effort to call for the relevant details, i.e., the interest accrued on its different FDRs as outstanding as at the relevant/s year-end. The Revenue is under the circumstances constrained to make an estimate of the interest accrued, and which is in our view quite reasonable as, clearly, the maturity period is apparently beyond 45 days. This is as a maturity period of upto 45 days yield a turnover much higher (i.e., at 8 times the average holding) than that obtains. We therefore have little hesitation in confirming the said addition. Non-allowance of the credit for TDS - Held that:- Though the AO has taken care to deduct the interest credited in accounts for the relevant years, the interest accrued for f.y. 2006-07 and f.y. 2008- 09 (corresponding to AYs. 2007-08 and 2009-10) may stand receive and, accordingly, credited in accounts during f.y. 2007-08 (AY 2008-09) or f.y. 2009- 10 and beyond (i.e., AY 2010-11 and/or subsequent years). The matter accordingly is restored back to the file of the AO to allow the assessee an opportunity to present its case in this regard, even as, we may clarify, that in principle we find no infirmity in the Revenues’ claim or the addition as made by the AO. Disallowance of depreciation - Held that:- audit report u/s. 142(2A) carried a disqualification in that the bills for addition to fixed assets were not produced for verification. Further, that the depreciation had been charged in excess by ₹ 1500. The AO accordingly called upon the assessee to produce the bills for the additions to the fixed assets during the year (to machinery and furniture and fixture). The same being not produced, he worked out the depreciation as per the relevant provision at ₹ 82,325 and, accordingly, made a disallowance for 83,825 (Rs.82325+1500). The same stood confirmed in appeal in the absence of any improvement in its case by the assessee. The position continues to be the same before us. Accordingly, we have no hesitation in confirming the same. Disallowance of claim for service-tax - Held that:- Revenue authorities have drawn the presumption of non-payment on the basis of non- production of the relevant challans. Even if the same are not forthcoming, if there is no outstanding liability to service tax, as otherwise there would be a demand raised by the concerned Department, and the assessee’s accounts reflect the payment thereof, the presumption would be that the same has been paid. And therefore, could be allowed on that basis. The AO could verify the payment/s – with reference to the date/s of payment, from the concerned department. The position, we may though clarify, would be different where the excess service tax stands collected, and credited to the income account, in which case there is admittedly no question of payment thereof, so that the same stands rightly accounted as income. The burden to prove its claim/s, it may be clarified, would be on the assessee, and which it may do at the time of the AO giving appeal effect to this order, for which he shall allow the assessee a reasonable opportunity. Disallowance u/s. 40(a)(ia) on the short deduction of tax at source - Held that:- there has been a short deduction of tax at source, i.e., at the rate of 3%, no disallowance u/s. 40(a)(ia) is called for in-as- much as the tax deducted at source is on the entire sum of ₹ 1000. At the same time, the same cannot be allowed to be used as a bogey, so that an actual non- deduction, i.e., in the absence of any confusion, is sought to be impressed with the character of a short deduction, as where there has been no deduction (on ₹ 400, going by our example). The orders by the authorities are silent on this aspect. What, for example is the nature of the confusion, i.e., the different sections under which the tax was actually deducted, and ought to have been. Further, the assessee’s accounts and TDS returns would itself bear this out. The ld. CIT(A) has, however, issued a finding of it being a case of short deduction. No contradicting material, contesting the same, has been brought on record or to our notice by the ld. CIT-DR Disallowance of depreciation on fixed assets - Held that:- The assessee failing to produce the bills/vouchers in respect of addition to the fixed assets during the year, the AO worked out the depreciation thereon as per the applicable rates and period, at ₹ 25,97,261. The assessee having made a claim for depreciation at ₹ 120.17 lacs, he effected a disallowance for the balance ₹ 94.20 lacs. In appeal, it was clarified by the assessee that the AO’s working fails to take into account the depreciation on the opening value of the different block of assets. The same was worked at ₹ 87.96 lacs, so that the ld. CIT(A) allowed relief to the assessee to that extent. We find no infirmity in the impugned order Deletion of disallowance on account of employee’s share paid to be deposited to the Employees Provident Fund confirmed - amount of employees share, payable to be deposited to Employees’ Provident Fund, if deposited before the due date of filing of the return of income u/s 139(1) of the Income Tax Act then the same cannot be liable for the disallowance.
|