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2019 (3) TMI 598 - ITAT PUNEAddition on account of “Prior year expenses” - HELD THAT:- Disallowance being, payment of Provident Fund. CIT(A) recorded that the deduction of provident fund was admissible on payment basis in terms of section 43B. He, therefore, directed the AO to delete the same after ascertaining if the assessee actually made the payment during the year. There is no fallacy in the reasoning given by the ld. first appellate authority. The impugned order is upheld on this score. Disallowance on account of “Export obligation payment” - HELD THAT:- CIT(A) recorded that it was actually a payment towards property tax payable to Talegaon Municipality on the properties owned by the assessee. Such taxes were paid in two instalments of ₹ 5 lakhs each on 31-01-2006 and 01-03-2006. CIT(A), therefore, held that these taxes were allowable expenses on payment basis u/s.43B. Nothing has been argued to controvert the correctness of the finding given in the first appeal. We do not find any reason to deviate from such a finding. Disallowance is payment of rent - CIT(A) after considering the remand report from the AO, that the assessee entered into an agreement on 26-11-1008 with M/s Atma Hatcheries for running their hatcheries plant - HELD THAT:- A Civil suit was filed by M/s Atma Hatcheries against the assessee company and the Hon’ble Civil Judge directed the assessee company to pay a sum of ₹ 16,59,740/-. An out of Court settlement for ₹ 9,82,000/- was made by M/s Shirdi Estate, a sister concern of the assessee, who paid this sum vide Demand Draft dated 28-03-2006. Since the settlement took place in the year relevant to the assessment year under consideration and the amount was actually paid, we hold that the CIT(A) was justified in treating this expenditure as not a prior period expenses and hence, eligible for deduction. Disallowance of interest - sister concern of the assessee, paid this sum to Bank of Maharashtra on 23-05- 2006 on behalf of the assessee - CIT(A) to hold that the amount was to be allowed as deduction on payment basis u/s.43B - HELD THAT:- Again, we are unable to find any infirmity in the impugned order on this score. The same is, therefore, countenanced. Disallowance on account of interest charges -- HELD THAT:- CIT(A) allowed deduction which was paid by the assessee’s sister concern during the year on entering into a MOU with M/s. M.J. Construction company and 3 other entities for settlement of their dues including interest. Since the interest was paid in the year under consideration, we hold that the view taken by the CIT(A) in deleting the addition to this extent is unexceptionable. Disallowance u/s.43B - assessee company debited as “Interest and bank charges” - AO made disallowance for the same as it was not paid - HELD THAT:- On perusal of the remand report from the AO, the CIT(A) noticed that payment of interest and bank charges totaling to ₹ 28.88 lakh was made by the assessee’s sister concern within the previous year relevant to the assessment year under consideration. CIT(A) was right in deleting the disallowance as it was a case of payment of interest by the sister concern for and on behalf of the assessee during the year in question. Disallowance of outstanding liabilities - cessation of trading liability - AO observed that there was outstanding liability mainly to creditors and customers etc., which was shown as outstanding since 31-03-2006 - HELD THAT:- AO has himself stated that the amount was outstanding since 31-03-2006. We fail to appreciate as to which event has happened in the year under consideration resulting into the “cessation of liability”. Further, since the assessee has himself admittedly offered this amount for taxation in its return for the A.Y. 2009-10, as was contended before the AO as well, we hold that the ld. CIT(A) was justified in deleting the addition.
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