Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (4) TMI 1142 - AT - Income TaxReopening of assessment - Non-deduction of tax at the time of payment - omission to disclose correct fact in the report prepared under Section 44AB - Held that:- The entire TDS certificates, opening stock, gross receipts from contractors, details of purchase, list of shareholders, copy of current account, copy of sales tax, general expenses claimed by the assessee, vehicle hire charges were available before the Assessing Officer. Preparation of audit report is the exclusive function of auditor, therefore, if at all there was any negligence and omission to disclose correct fact in the report prepared under Section 44AB of the Act, this Tribunal is of the considered opinion that the assessee cannot be found fault. If the assessee suppresses any material either before the auditor or before the Assessing Officer, then we may say there was negligence on the part of the assessee. In this case, the Assessing Officer himself called upon the entire details of gross receipts, TDS certificates, details of opening stock, work in progress, payment of wages, payment of interest, payment of vehicle hire and machinery charges, copy of sales tax order, etc. Therefore, when the assessee has furnished all the details which are required in completing assessments, this Tribunal is of the considered opinion that mere omission of auditor to mention certain items in the audit report prepared under Section 44AB of the Act, that alone cannot be a reason to say that there was negligence on the part of the assessee. This Tribunal is of the considered opinion that when the assessees furnished all the details, there was no negligence on the part of the assessees, hence, proviso to Section 147 of the Act would come into operation. In view of the above, the order passed by the Assessing Officer is barred by limitation. Therefore, it cannot stand in the eye of law. - Decided in favour of assessee. Disallowance of travel expenses - Held that:- The expenditure said to be incurred by the assessee for travelling to Singapore, USA, etc. Even though the assessee claims that the Managing Director’s travel to Singapore was for purchase of machinery, no material was produced either before the lower authorities or before this Tribunal. The travel of Shri Devarajan, MD along with his wife for a holiday cannot be construed as business expenditure at all. The claim of expenditure on Shri Surendra P. Shah cannot be construed as business expenditure at all. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against assessee. Disallowance of electricity charges - Held that:- The assessee now claims that the intimation of adjustment of electricity charges against the deposit was received during the year, therefore, the liability crystalized during the year. This Tribunal is of the considered opinion that the liability was for the year 2010. Merely because it was adjusted during the year under consideration, it cannot be said that the liability accrued during this year. This Tribunal is of the considered opinion that the same cannot be allowed during the year under consideration. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer.- Decided against assessee. Disallowance of expenditure incurred for higher education of the employee - Held that:- It is not in dispute that one Shri S. Kathirvel joined the assessee-company on 03.08.2011 and he was sponsored for higher education for the academic year 2012-14. The assessee could not produce any material to show that the said Shri Kathirvel agreed to work for the company even after completion of higher education. No bond was produced either before the Assessing Officer or before the CIT(Appeals) or before this Tribunal and no agreement was also produced. Therefore, as rightly observed by the Assessing Officer, the expenditure incurred by the assessee in the higher education of Shri S. Kathirvel was not for business purpose. When there was no compulsion on the part of Shri S. Kathirvel to serve the assessee after completing higher education, this Tribunal is of the considered opinion that the expenditure cannot be construed as revenue expenditure. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer. - Decided against assessee. Disallowance towards marriage reception of son of Managing Director - Held that:- We have heard Sh. Philip George, the Ld.counsel for the assessee and Dr. Milind Madhukar Bhusari, the Ld. Departmental Representative. The assessee admittedly incurred ₹ 7,79,899- towards setting up of subsidiary in Oman. Expenditure for setting up of subsidiary is capital expenditure. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer.- Decided against assessee. Disallowance for setting up of subsidiary - Held that:- The assessee admittedly incurred ₹ 7,79,899- towards setting up of subsidiary in Oman. Expenditure for setting up of subsidiary is capital expenditure. Therefore, the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer. - Decided against assessee. Expenditure incurred on water connection - Held that:- In the absence of any material evidence / receipt for payment for getting water connection for new office at Bangalore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. This Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.- Decided against assessee. Disallowance towards higher education of Vice President (Operations) of the company - allowable business expenditure - Held that:- Even though the assessee claims that the Managing Director’s son Shri P. Ramprasad was working as Vice President of the assessee- company, during the relevant period, he was not allowed to continue as employee of the assessee-company. The matter may stand differently in case Shri P. Ramprasad was granted study leave and salary was being paid during the study period. In this case, admittedly, no salary was paid to him and he was not treated as employee of the assessee-company during that period. This Tribunal is of the considered opinion that it is the responsibility of the respective parent to provide education to his son. Therefore, the Managing Director of the company is personally responsible for meeting the expenditure of his son’s education. The expenditure incurred by the assessee for providing higher education to the Managing Director’s son cannot be considered as business expenditure. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.- Decided against assessee. Disallowance u/s 40A(3) - Held that:- AO disallowed the payment made by the assessee-company exceeding ₹ 20,000/-. However, the CIT(Appeals) restricted the claim of the assessee to 50%. This Tribunal is of the considered opinion that when the payment was made exceeding ₹ 20,000/- per day, the same has to be disallowed. However, the CIT(Appeals) restricted it to 50%. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - Decided against assessee.
|