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2017 (5) TMI 1414 - ITAT KOLKATADisallowance u/s 43B on account of sales tax & central sale tax - Held that:- A similar view as taken by the Hon'ble Gauhati High Court on this issue in the case of India Carbon Ltd. (1992 (9) TMI 83 - GAUHATI High Court) has been taken by Hon'ble Calcutta jurisdictional High Court in the case of A.W. Figgis And Co. A.W. Figgis And Co. vs. CIT (2002 (4) TMI 40 - CALCUTTA High Court) by holding that Sec. 43B can be applied only on tax or duty which has been claimed as expenditure, but the same remains unpaid on the due date. While arriving at this decision, Hon'ble jurisdictional High Court has taken into consideration certain case laws relevant to the point including the decision of Hon'ble Supreme Court in the case of Chowringhee Sales Bureau (P) Ltd. Vs. CIT (1972 (10) TMI 4 - SUPREME Court)- Decided against revenue. Disallowance u/s 40(a)(i) on account of payment of consultancy charges made without deducting tax at source - Held that:- There was a mistake on the part of accountant of the assessee-company to show the said amount as consultancy charges and since the same was established by the assessee by bringing relevant and cogent evidence in the form of invoice issued by the supplier, we are of the view that the CIT(Appeals) was fully justified in accepting the claim of assessee on this issue and deleting the disallowance made by AO u/s 40(a)(i) by holding that tax at source was not required to be deducted by assessee from the payment of ₹ 60,92,457/- as the same was made towards supply of software and hardware. - Decided against revenue Addition on account of consultancy charges - failure to file the required documents in support of the claim for said consultancy charges - Held that:- The documentary evidence filed by the assessee for the first time before the CIT(Appeals) and since the said evidence was not filed by the assessee before the Assessing Officer during the course of assessment proceedings for the reason explained by the assessee, the CIT(Appeals) forwarded the same to the assessee for his verification and comments. In the remand report submitted to the CIT(Appeals), the AO however did not make any adverse comment on the additional evidence filed by the assessee in support of its case and keeping in view the same as well as all the other facts of the case, we find no infirmity in the impugned order of CIT(Appeals) deleting the disallowance made by the AO on this issue to the extent of ₹ 42,03,229/-. Moreover, as rightly pointed out by the assessee, the Revenue has challenged the relief given by the CIT(Appeals) on this issue in the ground raised with specific reference of 40(a)(i) of the Act for the failure of the assessee to deduct tax at source from the relevant payment whereas the provisions of Sec. 40(a)(i) of the Act introduced with effect from assessment year 2004-05 are actually not applicable to the year of A.Y. 2003-04. Disallowance u/s. 40A(3) - Held that:- It is observed that the expenditure incurred by the assessee in cash was partly covered by the exceptional circumstances as prescribed in Rule 6DD inasmuch as the said expenditure was incurred by the assessee at different sites situated in remote places where banking facilities were not available. A finding of fact in this regard has been recorded by CIT(Appeals) in his impugned order after verifying the relevant details and documents furnished by the assessee and after obtaining remand report from the AO wherein no adverse comments were offered. At the time of hearing before us, the Ld. DR has not been able to rebut or controvert these finding recorded by CIT(Appeals). We therefore find no justifiable reason to interfere with the impugned order of CIT(Appeals) Disallowance made by the AO out of various expenses - Held that:- No specific or material defects were pointed out by the AO to dispute or doubt the genuineness of the said expenditure incurred by the assessee or its business expediency. Keeping in view all these facts and circumstances, we are of the view that ad hoc disallowance made by the AO out of various expenses arbitrarily was excessive and unreasonable and CIT(Appeals) is fully justified to restrict the same to the reasonable extent. When the Ld. DR has sought to contend that the CIT(Appeals) has also not given any basis for the disallowance sustained by him out of various expenses, the Ld. counsel for the assessee has pointed out that the CIT(Appeals) has finally sustained disallowance to the extent 10% of the expenses claimed by the assessee under various heads and keeping in view that the net profit rate declared by assessee for the year under consideration was higher than that of the immediately preceding year, we find that the disallowance so sustained by CIT(Appeals) is quite tame and reasonable.
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