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2018 (3) TMI 1040 - AT - Income TaxAllowability of expenditure under the head of “Provision of Expenses” - contingent expenses or actual expenses - Held that:- CIT(A) observed that assessee has actually spent ₹ 20,68,120/- in the F.Y.2010-11 as against provision of ₹ 18,00,000/- made in the case of Nova Space. CIT(A) also observed that assessee has actually spent ₹ 66,51,354/-in subsequent years(Rs.38,48,253/- in A.Y. 11-12, ₹ 3,79,886 in A.Y. 2012-13 and ₹ 24,23,215/- in A.Y. 2013-14) out of the total provisions of ₹ 85,00,000/- and ₹ 18,48,646/- was written back and offered for taxation in the Assessment year 2013-14 in the project called “Vaishnavi Project in M/s Divya Development. Balance amount of ₹ 18,48,646/- which was not spent in the case of Divya Development had also been incorporated by the assessee as its income in the A.Y.2013-14. No infirmity in the order of CIT(A) for deleting the addition made on account of provision of expenses. We also found that similar issue has been dealt with by the Tribunal in assessee’s own case for immediately preceding year and decided in favour of the assessee. Invocation of provisions u/s. 40(a)(ia) entire provision so made was not liable for tax deduction at source because the expenditure were below the prescribed limits and were in the nature of purchase of raw materials and in some cases required TDS has been deducted at a different point of time i.e., either at the time of giving advance or at later point of time when the actual payee is identified. Detailed finding of CIT(A) has not been controverted by Department by bringing any positive material on record. No reason to interfere in the order of CIT(A). Purchases from the suspicion suppliers - CIT(A) has deleted the addition so made - Held that:- Considering the observation so made by the AO vis-à-vis, finding so recorded by the CIT(A), we are of the opinion that some disallowance is required to be made. Accordingly, we modify the order of lower authorities and direct the AO to restrict addition to the extent of 2% of such purchases. We direct accordingly.
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