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2019 (9) TMI 896 - ITAT DELHIAddition u/s 41(1) - AO noted that there are static creditors which have neither been written off nor the amount have been paid in the subsequent period - HELD THAT:- As during the assessment proceedings, the assessee has submitted a list of sundry creditors more than three years consisting of 15 parties, out of which 11 parties have been paid in the financial year 2013-14 and amount pertaining to one party namely, ICRA has been written off as not payable. Regarding the four parties disputed before us, the assessee has transferred these amounts to OSV claim payable as on 31.03.2014 which means that the company has filed its claim statement for the OSV Contract which is reflected in claim receivable. The matter is still under settlement by the OEC appointed by Company and ONGCL. The creditors represent amount payable to be paid only against the amount recoverable from ONGCL on settlement. These creditors are for various material/services rendered by them during the contract which is also a matter of dispute raised by ONGCL, and hence the company will pay them only once its claims are settled with ONGCL. The record also shows that the confirmations have not been filed before the Revenue authorities whereas it was vehemently argued by the ld. AR that the confirmations were made available before the Revenue authorities. Hence the matter is remanded back to the file of the Assessing Officer for the limited purpose of examining the settlement by the OEC and ONGCL by taking the confirmations filed on record and take a view in accordance with the provisions of law. Disallowance on account of Festival expenditure - HELD THAT:- Revenue authorities disallowed is the “increase” in expenses without any iota of evidence or cogent reason. Keeping in view, the judgments of Hon’ble Apex Court in the case of Dhakeswari Cotton Mills Ltd. Vs CIT [1954 (10) TMI 12 - SUPREME COURT] , Sayaji Iron & Engg. Co. Vs CIT [2001 (7) TMI 70 - GUJARAT HIGH COURT] and DCIT Vs Haryana Oxygen Ltd. [2001 (7) TMI 70 - GUJARAT HIGH COURT] , we hereby hold that the disallowance made by the Assessing Officer cannot be legally sustained. TDS u/s 194J - Disallowance on account of legal and professional expenses - HELD THAT:- The dispute will be decided by one or more persons the "arbitrators", "arbiters" or "arbitral tribunal", which renders the "arbitration award". The arbitral Tribunal is not a court in the traditional sense but provides services to resolve disputes that arise out of agreements between members, organizations or private parties. The arbitrators are empanelled and are choosen by the mutual consent of the parties. The arbitration fee is also determined by and paid by both the parties were availing the arbitration award. The fee is paid to arbitrators who perform the legal functions. Hence, it cannot be said that the company is not getting the services of the arbitrators and dealing with their disputes regarding the contracts etc. Since, the amount is in the nature of professional services sought by the legal professionals involved in the profession/occupation/vocation of arbitration, the amount is liable to TDS as per the provisions of Section 194J Disallowance on account of vessel repair & maintenance u/s 40(a)(ia) - HELD THAT:- A concurrent reading of Section 195, 44BB, 40(a)(ia) of the Act and the Circular 3/2015 of CBDT pertaining to “other some chargeable under this Act” give rise to the sum chargeable of ₹ 295,287/-. Hence, the disallowance is limited to the extent of ₹ 295,287/- being the 10% of the deemed profits of the recipient company. Difference between depreciation as per Companies Act and Income Tax Act while calculating total income as per section 115JB on the ground that assessee had adopted the rate of depreciation as per Income Tax Act instead of Companies Act in Profit & Loss Account - HELD THAT:- According to the first proviso to section 115JB(2), the accounting policies, the accounting standards adopted for preparing such accounts, the method and rates of depreciation which have been adopted for preparation of the profit and loss account laid before the annual general meeting, should be followed while preparing profit and loss account for the purpose of computing book profit under section 115JB. Based on the direct provisions of the Income Tax Act and judgments in the case of Malayala Manorama Co. Ltd. vs. CIT [2008 (4) TMI 20 - SUPREME COURT] and CIT vs. Prakash Industries Ltd. [2010 (4) TMI 238 - PUNJAB & HARYANA HIGH COURT] the addition made by the Assessing Officer on account of adjustment in computation u/s 115JB is hereby deleted.
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