TMI Blog2015 (3) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... d in favour of assessee for statistical purposes. Deduction u/s. 43B of municipal taxes - CIT(A) allowed the claim - Held that:- CIT(A) has allowed the impugned payment on the basis of provisions of section 43B of the I.T Act 1961. The said section mandates that the statutory dues should be allowed if they are paid during the year or subsequently prior to the due date of filing of return irrespective to the year to which they pertain. In this case, the ld. CIT(A) has given a finding that liability of municipal tax though pertaining to earlier year crystallized during the year as necessary bill was raised during the year. This was paid before the due date of filing of return. Hence, the amount involved is allowable as per provisions of section 43B of the Act. It is not the case of the revenue that the concerned payment has not been made before the due date of filing of return. The revenue has taken the ground that the said amount should not be allowed if it was paid in subsequent financial year. We find that this ground is not sustainable as section 43B itself mandates that the amount involved can be allowed if the same is paid after the close of the financial year, but before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. There is no basis for such observation of the AO. By no stretch of imagination, it can be inferred that since the assessee has paid management fees, hence, services of the directors and salary to the staff are not required. In this respect, we also refer to the case of CIT Vs. Walchand & Co. Pvt. Ltd reported in (1967 (3) TMI 2 - SUPREME Court). In this case, it was held that in applying the test of commercial expediency for determining whether the expenditure was wholly and exclusively made out for business reasonableness has to be judged from the point of view of businessman. - Decided against revenue. - ITA No. 964/Kol/2011 , ITA No. 954/Kol/2011 - - - Dated:- 5-3-2015 - Shri Mahavir Singh And Shri Shamim Yahya JJ For the Appellant : Shri TKS Biswas, FCA, ld.AR For the Respondent : Shri Pinaki Mukherjee, JCIT/ld.DR ORDER Shri Shamim Yahya, Accountant Member These cross appeals are filed by the assessee and revenue emanate out of the order of the ld.CIT(A) dated 09.02.2011 pertaining to assessment year 2003-04. ITA No. 964/Kol/2011 A.Y 2003-04 (by the asessee) 2. The grounds of appeal raised by the assessee read as under :- 1. Whether on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he earlier expression any debt or part thereof, which is established to have become a bad debt in the previous year has been conspicuously omitted by the amendment and substituted by the expression written off as irrecoverable . The words of the law are clear and the intent and purpose of the amendment are manifest. The earlier rate of establishing that the debt has become bad is omitted from the provisions of the law. Therefore there is no occasion or provocation to consider whether the assessee has again to establish that the debt has become bad. In fact, there is no provocation at all to go to that extent of discussion because the amendment has omitted the expression the debt which is established to have become bad debt . When the amendment has been brought to cure a defect and the amendment has omitted the expression which has made way for such defect, there is no reason to ponder over the past and to decide the matter still under the law as stood prior to amendment. 03. The aforesaid decision of the Mumbai Bench of the Tribunal has been approved by Bombay High Court in the case of Director of Income Tax (International Taxation) Vs. Oman International Bank (2009) 313 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been produced by the assessee before us. The ld. CIT(A) has given finding that the assessee has not proved that the amount of bad debts was taken into income of the assessee in the earlier years. We find that there is contradiction between the submissions of the assessee and the finding of the ld.CIT(A) as to whether the details were furnished that the income relating to bad debts were offered for taxation in the earlier years. In this view of the matter, in our considered opinion the issue needs to be remitted to the file of the AO to make factual examination of the assessee s claim after giving the assessee adequate opportunity of being heard. This issue of assessee s appeal is allowed for statistical purpose. 7. This appeal of assessee in ITA No.964/Kol/2011 stands allowed for statistical purpose. ITA No. 954/Kol/2011 A.Y 2003-04 (by the revenue) 8. The grounds of appeal raised by the revenue read as under :- 1. That on the facts and circumstances of the case and in law, the ld.CIT(A) erred in allowing deduction u/s. 43B of the Income-tax, 1961 of municipal taxes aggregating to ₹ 34,91,315/- pertaining to the previous years 1997-98 to 2001- 02 and actually pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the current financial year. Any delayed payment which was not added back u/s. 43B earlier is not allowability deduction even on payment basis, if it is not proved that the liability arose during the year. Since the assessee company could not produce any evidence in support of its claim, expenses of ₹ 54,17,874/- relating to earlier years on account of rates taxes is being disallowed. 10. Upon assessee s appeal in this regard the ld.CIT(A) considering the submissions of the assessee held as under:- I have carefully perused the assessment order and the submissions of the assessee. The demand regarding Municipal taxes was raised by the Kolkata Municipal Corporation in August 2002, even though the same pertained to 1st quarter of the year 1994-95. Being statutory payment, the same is allowable on payment basis under section 43B of the Act. The AO has not considered such pertinent fact. Furthermore, the tenancy arrangement under which the assessee is occupying the building and carrying on business of Peerless Inn at Kolkata evidences that Municipal Taxes will have to be paid by the assessee. Furthermore, similar payments have not been disallowed by the AO in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on various expenses. On this issue the assessee had debited ₹ 55,80,075/- on account of expenses on apartment and board. The AO asked the assessee to furnish details and supporting. In response to AO s requisition regarding the details the assessee furnished the details for only of ₹ 14,92,721/-. Since no explanation was offered regarding the difference of ₹ 40,87,354/-, the AO added the same as unexplained. 14. In the appellate proceedings, the assessee submitted the details which were remanded by the ld.CIT(A) to the AO. Ld. CIT(A) observed as under:- The details furnished by the assessee were sent to the AO for his comments. The AO in his remand report dated 24.05.2007 stated that though the details of the expenses have been furnished during the appellate proceedings but no names, addresses or bills of suppliers, etc. are furnished, therefore, expenditure remained unverifiable. From the details of the impugned expenditure filed by the assessee in respect of its Kolkata unit, it is observed that the expenses incurred are directly related to the operation of assessee s hotel business in the sense that the expenditure was incurred for providing better ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the relevant year. The AO also noted that employee s cost was also borne by the assessee. Therefore, the AO formed the view that the Operating Agency did not carry out the agreement and also for the reason that the assessee had not produced copy of the Operating Agreement, the AO disallowed the sum of ₹ 2317827/- being Management Fees paid to Sarovar Park Plaza Hotels Resorts Pvt. Ltd by treating the same to be unverifiable. 19. During the appellate proceedings the ld.CIT(A) noted that during the assessment proceedings, copy of agreement entered into with Sarovar Park Plaza Hotels and Resorts Pvt. Ltd was furnished and copy thereof was also furnished during the appellate proceedings. The ld.CIT(A) reproduced the submissions of the assessee in this regard and concluded as under :- The assessee has explained that the Agreement with Sarovar Park Plaza Hotels and Resorts Pvt. Ltd entails that responsibility for operation of hotel Peerless Inn, Kolkata and also to render supervisory services. The agreement provides that the operator shall operate the Hotel and shall also render supervisory services. The operator apart from exclusive operation and supervision is also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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