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2016 (7) TMI 1551 - AT - Income TaxPenalty u/s 271B - failure to audit account under section 44AB - assessee was reimbursed various expenses incurred by it by clients/principles and should not have been considered and taken for determination for applicability of section 44AB - HELD THAT:- Turnover of the assessee as accounted for by the assessee was to the tune of ₹ 14,51,994/- whereas the total receipts as per TDS certificates on which TDS was deducted were ₹ 56,46,246/- which was inclusive of reimbursement of expenses to the tune of ₹ 26 lakhs and thus, if we subtract the amount reimbursement from the gross receipt as per TDS certificate which is ₹ 56,46,246/-, the turnover of the assessee would be less than ₹ 40 lakhs. As find merit in the case of assessee that the CBDT circular mentioned above provides that in case of agent who was placed as the kaccha arhatia, the turnover would be the commission service charges only and not gross receipt received by the assessee including the reimbursements. The case of the assessee is also supported by the decision of GA Road Carriers [2010 (5) TMI 513 - ITAT, HYDERABAD] wherein it has been held that the deduction of TDS cannot lead to conclusion that freight charges constituted assessee’s firm turnover or gross receipts. AO has not brought any material on record to prove that the amount received by the assessee as per the TDS certificates were actual turnover of the assessee and no net element of reimbursement included in the gross receipt. The purpose of applicability of provisions of section 44AB - We are of the considered view that the case of the assessee is squarely covered by the above decision. Accordingly, we set aside the order of ld. CIT(A) and direct the AO to delete the penalty. Appeal of the assessee stands allowed.
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