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2019 (1) TMI 270 - AT - Income TaxDeduction u/s 37 - Provision for exepenses - Treatment made by the assessee in respect of estimated expenditures, like, Exp.on minor/miscellaneous work, in its books of accounts - method of accounting - Held that:- Since in project completion method, the entire expenses and entire sales should be shown, therefore, it is necessary for the assessee to make provision for estimated expenditures which are to be incurred in subsequent years on account of minor/miscellaneous work. If the assessee does not make provision for estimated expenditures, like, exp. on minor/miscellaneous work, then in that case assessee will not able to show true profit and loss, in its profit and loss account. In project completion method, the assessee prepares profit and loss account and other financial statements once in life of a project, therefore, these estimated expenditures, like, exp. on minor/miscellaneous work, can not be shown next year. Another important point is that in project completion method, the assessee has shown entire sales/Revenue therefore he is entitled to record the entire expenses which had incurred by him or to be incurred to earn the said entire sales/Revenue. Therefore, in order to derive the true net profit in project completion method it is necessary to show these estimated expenditures, like,Exp. on minor/miscellaneous work. Hence, we accept the treatment made by the assessee in respect of estimated expenditures, like, Exp.on minor/miscellaneous work, in its books of accounts. Deduction of TDS on the estimated expenditures, like, Exp. on minor/miscellaneous work - Held that:- So far the sum of ₹ 94,51,860/- is concerned, we note that the assessee has deducted TDS and paid before 31.09.2012 i.e. before the due date of submission of return of income for assessment year 2012-13, therefore by no any stretch of imagination, the disallowance should be attracted i.e. the disallowance made by the Assessing Officer is directed to be deleted based on the fact that the assessee made the compliance and paid TDS on or before submissions of the return of income. So far the balance amount of ₹ 2,15,30,312/- is concerned, as we have explained that since the assessee is following the project completion method and in project completion method the assessee prepares financial statement, profit and loss account and balance sheet once in life of project and some ancillary works which may remain pending will get completed in subsequent years. Since the assessee made provision for these expenses to compute the true net profit and the payee is not known, therefore, deduction of TDS is not possible, hence the disallowance is not attracted. We are unable to uphold the stand of the Revenue, therefore we direct the Assessing officer to delete the additions. We also uphold the order of the ld. CIT(A) in respect of deletion of amount of ₹ 1,69,36,702/-, since this amount pertains to purchase of raw materials therefore no TDS is attracted. Hence, we dismiss the appeal filed by the revenue
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