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2015 (5) TMI 391

Head Note / Extract:
Addition on account of difference in contract receipts shown by the appellant and accounted for by the customer M/s Uniproducts India Ltd. - Held that:- Assessee company is in the business of the building contract work and has followed AS-7 accounting standard, while finalizing account as per mercantile system. The ld CIT(A) and AO erred in not taking notice the working submitted by the assessee wherein the assessee has shown the working demonstrating that revenue earned from M/s Uniproduct Ltd, has been shown in the accounts on the percentage completion method. So viewed from this angle also the action of the authorities below is legally and factually untenable. So we find no justification to make the addition and so we allow the said ground of the assessee and direct the AO to delete the impugned addition made on this account. - Decided in favour of asseessee.

Disallowance on account of the purchase made from M/s. Amit Steel on the ground that the said party was not traceable - Held that:- assessee has purchased steel from M/s Amit Steel but it was wrongly shown in the account of M/s Dharam Steel, because both the concerns belonged to the same person. And the mistake was clerical in nature. The assessee has pointed out the mistake which has arisen and on perusal of the Remand Report of the AO in which the Inspector’s Report wherein the Inspector has clearly mentioned that the M/s Amit Steel and Dharam Steel belongs to one and the same person and the mistake made by the assessee accountant need not come in their way to saddle them with the liability. The explanation of the assessee has been corroborated by evidence on record, therefore, there is no justification for impugned disallowance. We find force in the contention of the assessee’s counsel regarding this factual aspect and the ld. DR could not point out anything contrary to the said fact so we are inclined to allow this ground and direct the AO to delete the addition in dispute made on this account. - Decided in favour of assessee.

Disallowance of the service tax payable under section 43B - Held that:- We find from the records that the Service Tax payable has not been claimed as deduction in the P&L account. We further find that assessee is following the mercantile system of accounting. Similar case was decided by the Hon’ble Jurisdictional High Court in the case CIT vs. Noble & Hewitt (I) P. Ltd. (2007 (9) TMI 238 - DELHI HIGH COURT ) has held “in our opinion, since the assessee did not debit the amount to the P&L account as an expenditure nor did the assessee claimed any deduction in respect of the amount and considering that the assessee is following the mercantile system of accounting the question of disallowance of deduction not claimed could not arise.” The aforesaid case is similar to that case in hand and therefore ratio laid down in that case is squarely applicable to the case in hand, therefore, we allow the claim of the assessee. - Decided in favour of assessee.

Disallowance under section 40(a)(ia) - Held that:- Amount given to Arjun Singh was 42,300, Krishan ₹ 12,000/- and NTS Scaffolding ₹ 15,000/- which total amounting to ₹ 69,320/- which is admittedly less than the threshold limit of ₹ 1,20,000/- given in section 194I of the Act. Hence, we find force in the contention of the Ld. AR in this regard, so we direct the deduction of ₹ 69,320/-, out of ₹ 18,03,690/- from the disallowance made under section 40(a)(ia) of the Act. - Decided in favour of assessee.


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