9911796707
TMI Blog2014 (4) TMI 781X X X X Extracts X X X X X X X X Extracts X X X X ..... s be set aside and that of the Assessing Officer restored. 4.The appellant craves leave to amend or alter any ground or add a new ground which may be necessary. 1097/Mum/2011-AY.2007-08 "1.On the facts and in the circumstances of the case and in law, the Ld.CIT(A) Mumbai has erred in deleting the disal1owance of Rs.1, 00, 000/-made on account of unexplained investment u/s.69B of the Act. 2.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) Mumbai failed to appreciate the fact that the issue of deposit with M/s. Studio Gold remains un-reconciled and thus the aforesaid addition is correctly made. 3.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) Mumbai erred in deleting the addition of Rs.2, 09, 24, 075/-made on account of service tax, ignoring that these receipts form part of trading receipts and are covered by sec.43B. 4.On the facts and in the circumstances of the case and in law, the Ld. CIT(A) Mumbai failed to appreciate the fact that the assessee failed to show the difference of receipts declared and the receipts' as per TDS certificates relating to service tax in the profit and loss account. 5.The appellant prays th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A)(3), is applicable , the appellant being a company there is no personal element to the company, even in the course of survey no defects were found in the books of account maintained by the assessee, as the assessee has proved beyond reasonable doubt the genuineness of cash expenses considering the nature of assessee's business the ad hoc disallowance of 20% cash expenses may be directed to be deleted. B.Ad hoc disallowance of 20% wages Rs 17, 78.418/- and conveyance Rs 3, 16, 081/- (total of Rs. 20, 94, 499/-) i.e . Rs 4, 18, 900/- paid to set workers. 3.The learned CIT (A) erred in confirming the ad hoc disallowance of wages and conveyance of set workers without any basis hence the ad hoc disallowance may be directed to be deleted. 4.The leaned CIT (A) erred in observing that the vouchers are self made and part of the expenses were not supported by bills , which- are in correct, all the vouchers are signed by the recipients and authorised by the production in charge hence ad hoc disallowance confirmed by the CIT (A) may be directed to be deleted. 5.The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal. ITA/985/Mum/20 , AY.2006-2007: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), that it had not had not classified WIP as capital asset, that AO had designated WIP as capitalised WIP, that the copyright of the serials were held by the channels themselves and to that extent the WIP was not a capital asset of assessee, that no ownership rights were vested with the assessee, that the interest payment was not covered under the provisions of section 36 (1) (iii) of the Act, that the entire interest expense was for the business and profession of the assessee, that out of the total interest expense incurred by it interest expense on motorcar, could not be considered for purpose of disallowance, that the assessee had earned interests on the deposits given to Samta Sahakari bank, that it had received a waiver of over 18 lakhs from a party to whom payments were made, that the waiver was more than the amount of disallowance of interest expense considered by the AO, that the disallowance was arbitrary, illegal and unjustified 2.2.After considering the facts and material on record FAA held that the assessee had established utilisation of loans for its business purpose and explained why interest could not be capitalised, that the AO had furnished no reason for deviation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t if AO wants to capitalise any expenses he has to clearly mention the facts leading to his conclusion.Assessee has never capitalied expenditure.Considering the facts and circumstances of the case, we are of the opinion that the order of the FAA does not suffer from any legal infirmity.Therefore, we decide the effective ground of appeal against the AO.Appeal filed by the AO stands dismissed. 1097/Mum/2011-AY.2007-08 3.AO finalised the assessment for the year under appeal on 28.10.2010 u/s.143(3)r.w.w.144 of the Act determining the income of the assessee at Rs.4.22 Crores, as against the income of Rs.27.14 lakhs shown by the assessee in the return of income filed on 27.10.2007. 3.1.First ground of appeal for the year is about deleting the disal1owance of Rs.1, 00, 000/-made by the AO, on account of unexplained investment u/s.69B of the Act.During the assessment proceedings AO issued a notice u/s.133 (6) of the Act to M/s.Studio Gold (SG) and he found that SG had rented out one premises to the assessee for the period 01.01.07 to 31.03.07 for a total compensation of Rs.11.25 lakhs, that the assessee had paid Rs.20 lakhs to SG, that as per the details of loans and advances of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit and loss account under the head ST to the tune of Rs.2, 09, 24, 075/-.He further found that the assessee had debited Rs.1.42 Crores to its P&L account for ST.He held that the assessee was routing the ST through P&L account, that it should have debited and credited the P&L account with regard to the ST, that the assessee had only debited the amount of ST paid to the P&L account, that it did not credit the receipt, that the P&L account remained under credited by Rs.2.09 Crores.Finally, he made an addition of Rs.2.09 Crores to the income of the assessee. 4.1.During the appellate proceedings, FAA called for the remand report from the AO.FAA found that the remand report was silent on the fact whether assessee had actually debited the service tax in the P&L Account, that AO's report was incomelete, that assessee had made payment of ST after the end of the year under appeal, that it had furnished the said information in the audit report, that the P&L account did not reflect any payment of service tax or any debit of ST, that the observation of the AO that the assessee was routing ST through the P&L account was not based on facts. 4.2.Before us, DR submitted that the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed 20% of the total expenses and disallowed the balance 80% of the expenses. 5.1.In the appellate proceedings FAA held that the assessee had claimed direct expenses of Rs. 3, 57, 26, 324/-, that the assessee had claimed cash expense to the tune of Rs.71, 99, 877/-, that that a survey action was carried out in assessee's premises on wherein details with regard to huge cash withdrawals were found, that query was put across to the assessee-company to explain such huge cash withdrawals and corresponding expenses, that it had submitted that cash expenses were indispensable in the TV serial making industry and formed part of regular business activity, that the AO's order did not indicate as if a single bill or voucher pertaining to cash expenses was called for/verified, that assessment order did not reflect that the AO had identified bills or vouchers of cash expenses that could be disallowed, that AO did not find that the parties did not exist or that the bills/ vouchers were bogus, that there was no verification by the AO to indicate as to whether any payments had been made in excess of section 40A(3) of the Act, that the assessee had furnished a detailed explanation.FAA further he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for cross verification.As per the directions of the AO assessee filed further information on 24.11.2008.We find that AO did not fix the date for verifying the material submitted by the assessee, that his order also did not mention the enquiries made by him.It is not known as how did he arrive at the conclusion that 80% of the expenditure could not be allowed.As per his directions assessee had furnished all the necessary details, but he choose not to examine them.AO.s are not supposed to make disallowances without assigning reasons for rejecting the claim made by an assessee.It is duty of the AO not to mention as to why the explanation of the assessee is not acceptable. We find that in his order no reasons have been assigned for rejecting the claim made by the company.FAA has clearly mentioned that AO had not verified even a single bill or voucher that could be treated as bogus.He made a lump sum addition on ad hoc basis.In our view, such approach has been rightly rejected by the FAA. But, while granting relief, FAA restricted the disallowance to 20%.We find that FAA has also not identified the bills/vouchers that could be disallowed.FAA could have directed the AO to furnish a reman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple test check of the vouchers for the period 01.03.2007-10. 03.2007and held that claim of the AO that all vouchers were only self-made was factually incorrect.FAA further held that the payments pertaining to "set workers" wages (Rs. 17.78 lacs), payment to Art Director/Artists- subject to TDS (Rs. 22.83 lacs), disallowance u/s. 40A(ia) (Rs. 77083/-), Cash payment subject to FBT (Rs.27.1 lacs)Ssalary to staff and Directors (Rs. 3.23 lacs), loan distributed to staff(Rs. 32, 000/-) could not be considered for disallowance.With regard to balance expenses of Rs. 1.26 Crores(77.90 lacs +48.85 lacs), FAA held that expenditure included payment in cash which would invariably suffered from defects in respect of vouchers self-made. Finally, the disallowance under the head cash expenses was restricted to 20% to 'meet the ends of justice'. 6.2.Before us, AR made the said submissions which were made for the earlier year with regard to the cash expenses incurred by the assessee in that year.DR supported the order of the FAA.We have heard the rival submissions and perused the material before us.We find that FAA had carried out sample test check of the bills/vouchers and held that there was no de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance, that he did not question the genuineness of the material purchased by the assessee during remand proceedings, that without the labours construction of set was not possible, that FAA had not given any reason for restricting the disallowance to 20%. DR supported the order of the FAA. 7.3.We have heard the rival submissions and perused the material before us.We find that AO has followed a very strange path during the assessment as well as remand proceedings.From the books of accounts, it was cleared that assessee had claimed expenditure of Rs. 17.78 lacs only under the head wages to the set workers.If he wanted to make disallowance, he should have restricted it to the said amount only.But, he adopted the figure of Rs.1.06 Crores and made a disallowance during the assessment proceedings.Even during the remand proceedings, he did not verify the facts i.e.the amount involve and supported the earlier order.In our opinion FAA was correct in holding that disallowance should not be made for the material purchased.We find that FAA has restricted the disallowance to 20% of wages and conveyance expenditure. But she has not given any reason for sustaining the partial disallowance.We h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
