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2013 (11) TMI 1276 - AT - Income TaxDisallowance on account of Revenue Recognition - Held that:- The finding of the CIT (A) is that the assessing officer simply by rejecting the method of accounting followed by the assessee is not proper since assessments have been completed in other group cases based on the same accounting method - there was force in the finding of the CIT (A) for the reason that since the assessing officer rejected the method of accounting followed by the assessee but he accepted the same method of accounting followed by group companies of the assessee, which is contrary as per law - The assessing officer has not given a clear finding mandated under section 145(3) of the Act and yet re-computed the profit from the projects done by the assessee company - The additions made by the assessing officer are not supported by any facts and figures which can demonstrate that the method of accounting policy adopted by the assessee company resulted in under estimation of profit - The assessing officer has taken estimated revenue from the projects without considering the fact that whether the units are sold or not - In other words, profit is being estimated on unsold stock also - the method followed by the assessee company cannot be called as an unreasonable method and any change in the method would only be tax neutral - Thus there was no infirmity in the order of the CIT (A) as the same has been passed by the CIT (A) after analyzing and examining the issue elaborately. Disallowance of Reimbursed Expenditure u/s 40(a)(ia) of Income Tax Act, 1961 – Held that:- In case of reimbursement of common expenses incurred by the parent company for the benefit of group concerns, there is no need to deduct tax at source, and disallowance could not be made by invoking the provisions of S.40(a)(ia) – Following Linklaters LLP V/s. ITO [2010 (7) TMI 535 - ITAT, MUMBAI ] – from the details of the expenditure incurred, which were reimbursed by the assessee to M/s. Ambience Properties P. Ltd., it is seen that the expenses related to various items like office rent, electricity charges, salaries, staff welfare, conveyance, telephone charges, vehicle maintenance, printing and stationery, computer expenses etc. Therefore, the expenditure incurred cannot be treated as rent alone to bring it within the ambit of S.194I of the Act – also the assessee has produced sufficient material to prove that the amount represented reimbursement of the expenditure incurred by M/s. Ambience Properties Ltd. - there was no reason to interfere with the order of the CIT(A) – Decided against Revenue.
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