TMI Blog2014 (1) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that assessee has made payments to the Mandals etc under a contractual obligation - During the Utsav/festivals seasons the organizers provide space to various persons to put its banners and charge fee from them, not only that the purpose to advertise their products but for providing space to them - The said payment to the mandals could be treated towards rent for the space provided by them to the assessee for putting its hoarding and banners - TDS was required to be deducted u/s 194I of the Act - Decided in favour of assessee. Miscellaneous expenses for purchase of mobile phones - Held that:- The expenditure has been incurred on mobile phones and LCD on which assessee is entitled to claim depreciation - The expenditure are capital expenditure forming part of block of assets - Decided against assessee. - I.T.A.No.794/Mum/2012 - - - Dated:- 15-1-2014 - Shri B. R. Mittal,(JM) And N. K. Billaiya (AM),JJ. For the Appellant : Ms. Bhumika Vora For the Respondent : Shri Pritam Singh ORDER Per B. R. Mittal, JM The assessee has filed this appeal for assessment year 2007-08 against order of ld. CIT(A) dated 30.11.2011 on following grounds: "1. On the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L, in his statement recorded u/s 132(4) admitted that he was not doing any real business in any of his concern and was providing accommodation entries to the various persons/concerns against the commission. Therefore, the AO did not accept the contention of the assessee and made an addition of Rs.35,07,500/- on the ground that the assessee company obtained accommodation bills on account of "professional fees" from NSCPL. Being aggrieved, assessee filed appeal before the First Appellate Authority. 3. Ld. CIT(A), after considering the submissions of the assessee has stated that the onus lies on the assessee to establish that the expenditure was laid out or expended wholly for the purpose of business. However, as per evidence gathered by department there is a failure to furnish requisite evidence and to establish that expenditure claimed was laid out for the purpose of earning business income. The Ld. CIT(A) confirmed the action of AO to make disallowance of Rs.35,07,500/-. Hence, this appeal by the assessee. 4. At the time of hearing, ld. AR submitted that the assessee in the return of income filed pursuant to the notice issued u/s 153A itself made disallowance of Rs.17,53,750/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of total income placed at pages 38 and 39 of the paper book viz computation u/s 153A of the Act. Therefore, assessee filed return of income disclosing income of Rs.6,12,66,572/- as against originally returned income file u/s 139(1) at Rs.5,95,12,822/-. Thus, the assessee admittedly made disallowance of Rs.17,53,750/- in respect of commission paid. We observe that the AO stated that the assessee made two payments of Rs.17,53,750/- on 1.11.2006 and 4.11.2006 to NSCPL. However, on perusal of the copies of the bills, and copies of ledger confirmation and also copy of the TDS certificate issued to NSPL, copy placed at page 31 of the paper book, it is observed that the assessee made a payment of Rs.17,53,750/- on 1.11.2006 to NSPL and another payment of Rs.17,53,750/- on 4.11.2006 to NSCPL. Hence, both the payments of Rs.17,54,750/-, it appears have not been made to the same party but to two different parties. The assessee in the paper book has given a certificate that all the documents placed in the paper book were also filed before the AO but were not placed before the ld. CIT(A). It is observed that the AO has not in the assessment order discussed about the payment to NSPL which was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Annexure-A to the assessment order and the total comes to Rs. 15,00,497/-. AO has stated that some of the expenses are not supported by vouchers. In view of above, the AO disallowed the entire amount of Rs.15,00,497/- and added to the income of the assessee. The assessee filed appeal before the First Appellate Authority. 9. On behalf of the assessee, it was contended that the assessee made payments towards festival seasons to promote its ongoing projects to various Ganesh Uttsav Mandals, Navrata Mandals, etc. The said mandals are trusts and did not operate for business purpose or profits. It was further contended that those mandals are not advertisement agencies or do not operate with a motive to make profits out of advertisement. That these mandals block different places of the public / private on payment of rent. That out of the same these mandals let out some places to individuals/companies to put their banners/hoardings and the payment is made as rent. The assessee also placed reliance on CBDT Circular No.715 dated 8.8.1995, that if a particular space has been taken on rent by a person who subsequently sub-let it for putting up a hoarding, the TDS liability is not under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onth at the fixed rate irrespective of the period for which the hoarding was put. Hence, the said Mandals, Navrata Mandals, had sub-let the spaces to the assessee for putting its banner. It was contended that the payment was in the nature of rent and therefore, the assessee did not deduct TDS u/s 194C of the Act on the payment made to these mandals, as the TDS was deductible u/s 194I of the Act. It was contended that none of the payments is exceeding Rs.1,20,000/- to an individual and therefore, no TDS was required to be deducted. Hence the disallowance as sustained by ld. CIT(A)l u/s 40(a)(ia) of the Act is not justified. 12. On the other hand, the ld. DR supported the orders of authorities below and submitted that the said payment was made by assessee for the purpose of its advertisement. Hence, TDS was required to be deducted as per section 194C of the Act. He submitted that the order of ld. CIT(A) be confirmed. 13. We have carefully considered the submissions of the ld. Representatives of the parties and orders of the authorities below. We have also considered the details of the payments as enclosed as annexure-A to the assessment order and also the disallowance restricted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... av/festivals seasons the organizers provide space to various persons to put its banners and charge fee from them, not only that the purpose to advertise their products but for providing space to them. We are of the considered view on the facts before us that the assessee hired space and made payments to those mandals to put its banners/hoardings during the said festive period. Hence the said payment to the mandals could be treated towards rent for the space provided by them to the assessee for putting its hoarding and banners. Therefore, we are of the considered view that in the facts and circumstances of the case, TDS was required to be deducted u/s 194I of the Act. Since admittedly none of the payment is exceeding to a person of Rs.1,20,000/-, we are of the considered view that the disallowance u/s 40(a)(ia) on account of non deduction of TDS is not justified. Hence Ground No.2 of the appeal of assessee is allowed by deleting the disallowance of Rs.5,50,000/- sustained by ld. CIT(A). 14. In respect of additional ground of appeal, the relevant facts are that the AO has given details of the expenses claimed by the assessee for purchase of chairs and mobiles etc as Annexure-B to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure is revenue in nature. 16. On the other hand, the ld. DR supported the orders of authorities below. 17. We have perused the details of expenditure, details given as in Annexure-B to the assessment order. We observe that the said expenditure has been incurred by assessee mainly for purchase of mobiles phones which includes blackberry mobile, Nokia and the same are expensive one. However, it is also observed that the assessee also purchased LCD costing Rs.75,990/-. Therefore, considering the details of the said expenditure and the price thereof, we agree with the ld. CIT(A) that the said mobiles phones etc. could not said to have been purchased by assessee for its site office for its staff but the said expenditure incurred is capital in nature and it forms part of block of assets of the assessee. Therefore, we agree with the ld. CIT(A) that the assessee is entitled to claim depreciation as per the provisions of Act. Hence, we confirm the order of ld. CIT(A) and reject addition of appeal taken by assessee. 18. In the result, the appeal of the assessee is allowed in part. Order pronounced in the open court on 15th day of January, 2014. - - TaxTMI - TMITax - Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
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