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2021 (12) TMI 49 - ITAT MUMBAIDisallowance on account of an expenditure incurred with respect to leave encashment - As submitted that since the learned CIT(A) remitted this issue back to the file of the Assessing Officer to verify the claim of the assessee and he directed only payment made by kochi unit - HELD THAT:- This issue has already remitted back to Assessing Officer and this issue requires factual verification, we direct the Assessing Officer to verify the payments made by the assessee for all the units during this year. Needless to say that an opportunity may be granted to the assessee to submit in detail and we direct the Assessing Officer to allow the payments made during this assessment year including Rasayani and Kochi Unit. If found credible, proper deduction may be allowed. Accordingly, the ground raised by the assessee is allowed for statistical purposes. Disallowance u/s 40(a)(ia) - As submitted said amount is nothing but the reimbursement made to the bank - HELD THAT:- It is clear that no doubt the charges were ultimately collected from the assessee but the services were provided exclusively for the purpose of securing the mortgage property assigned to the bank. The services were assigned and respective payments were made by the bank directly. Since, the assessee is neither appointed the consultant nor paid the consultancy charges to them. Therefore, the TDS provisions will be applicable only when the services are utilized, respective payments made directly to the service provider. In this case, assessee is only the observer and the respective payments were made by the bank and recovered from the assessee. Therefore, provisions of section 40(a)(ia) of the Act is not applicable in the present case. Accordingly, the ground raised by the assessee is allowed. Disallowance being interest expenditure treating the same as prior period expenses - HELD THAT:- We find that in similar situation in the case of Saurashtra Cement & Chemical Industries Ltd [1994 (10) TMI 30 - GUJARAT HIGH COURT] as decided the issue in favour of the assessee as held that the true profit and gain of a previous year are required to be computed for the purpose of determining tax liability. The basis of taxing income is accrual of income as well as actual receipt. If for want of necessary material crystallizing the expenditure is not in existence in respect of which such income or expenses relates, the mercantile system does not call for an adjustment in the books of account on estimate basis. It is actually known income or expenses, right to receive or liability to pay which has come to be crystallized is to be taken into account under mercantile system of maintaining books of account. An estimated income or liability, which is yet to be crystallized, can only be adjusted as contingency item but not as an accrued income or liability of that year. Thus, the Tribunal was not justified in holding that the impugned expenditure was not allowable in the relevant previous year on the ground that the liability had arisen in the earlier year. Addition on account of repairs and maintenance - AO observed that assessee has not submitted any evidence to prove that these are of current year consumption, accordingly, he made addition - CIT(A) sustained the additions made by the Assessing Officer - HELD THAT:-. Even before us, the learned AR has not submitted any relevant document to prove that material consumption relates to current assessment year. Accordingly, these grounds of appeal are dismissed.
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