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2018 (7) TMI 359 - AT - Income TaxAddition on account of sundry creditors and Expenses Payable - assessee has adopted cash system of accounting for receipts and sub commission and other expenses were accounted on mercantile basis - Held that:- The earlier years expenses are allowed during the year under consideration and if the earlier years receipts are excluded from the income of the year under consideration, the whole exercise would be revenue neutral. There is no dispute that the receipts shown by the assessee are matching with Form No. 26AS filed by the deductor of TDS. In our considered opinion, income statement of the assessee does not give any distorted figure. In any case, the expenditure incurred by the assessee for earning income has to be allowed. In any case, legitimate expenses incurred by the assessee in earning income has to be allowed and once the income has been accepted as such, and taxed accordingly, the matching expenditure has to be allowed. TDS u/s 194C - payment to hotel - non deduction of tds - addition u/s 40(a)(ia) - Held that:- The facilities/amenities made available by a hotel to its customers do not constitute “work” within the meaning of section 194C of the Act, therefore, we do not find any reason to interfere with the finding of the CIT(A). Our view is fortified by the judgment of the Hon'ble High Court of Bombay in the case of The East India Hotels Ltd & Anr. Vs. CBDT [2009 (3) TMI 8 - BOMBAY HIGH COURT] Addition on account of capital gains - Held that:- As in case the capital gains in the hands of the assessee is enhanced, then the consequential capital gains in the hands of the co-owner has to be reduced and since both of them are taxed at the highest rate of tax, the exercise would be tax neutral. The CIT(A), correctly directed the AO to delete the addition Addition on account of personal expenses - Held that:- Since the AO has made adhoc disallowance and since the first appellate authority, in his wisdom, has directed the AO to restrict the disallowance to 50% of the total disallowance, we do not find any reason to interfere with the findings of the CIT(A) - Revenue appeal dismissed.
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