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2015 (5) TMI 418 - ITAT LUCKNOW

2015 (5) TMI 418 - ITAT LUCKNOW - TMI - Accrual of Income - Advance of Fees Receipts - CIT(A) deleted the addition - Held that:- Gone through the tribunal order in assessee’s own case for A.Y. 2007 - 08 and find that the assertion of the assessee is correct. The issue involved in Ground No. 1 here was decided by the tribunal on this basis that the assessee was following cash system of accounting till A.Y. 2006 - 07 and the same was changed to mercantile system from A.Y. 2007 - 08. In that year, .....

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ion - Held that:- Similar disallowance was made in A.Y. 2007 - 08 by making similar observations by the A.O. and were deleted in that year by learned CIT (A) with a clear finding that simply because the name of a doctor is missing from the list submitted to DCI/MCI, salary paid cannot be disallowed. This order of learned CIT (A) in that year was confirmed by the tribunal. In the present year also, the basis of disallowance by the A.O. and deletion by CIT (A) is same. In the present year also, Le .....

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ontroverted by learned DR of the revenue - Decided against revenue.

Disallowance of traveling expenses - difference in payment of salary - CIT(A) deleted the addition - Held that:- Finding is given by CIT (A) that the assessee had explained before the A.O. that there is a mistake in the auditor’s report regarding figure of salary to Shri Anurag Singhal. He has also observed that it was requested by the assessee to the A.O. that necessary reconciliation be sought from the auditors. He .....

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dition was made by the A.O. on this basis that sufficient supporting are not available - Held that:- Finding is given by CIT (A) that the assessee had explained that looking to the nature of expenses, its magnitude and volume and the nature of charitable activities in which the assessee is engaged, some vouchers may not be available. Learned CIT (A) has given a categorical finding that for expenses such as Mess, Generator, Staff Welfare and travelling etc., self made vouchers are also sufficient .....

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gnitude and volume and the nature of charitable activities in which the assessee is engaged, some vouchers may not be available. Learned CIT (A) has given a categorical finding that for expenses such as Mess, Generator, Staff Welfare and travelling etc., self made vouchers are also sufficient if the volume is small of such self made vouchers. Thereafter, he deleted this addition by observing that since no claim of bogus expenditure has been found by the A.O., addition is not justified. We do not .....

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. In the present year also, the basis of disallowance by the A.O. and deletion by CIT (A) is same. In the present year also, Learned DR of the revenue could not point out any specific defect in the order of learned CIT (A) on this issue and no difference in facts could be pointed out by him - Decided against revenue.

Loss on sale of Maruti - CIT(A) deleted addition - Held that:- The same was deleted by earned CIT (A) by observing that since the loss is suffered on a business asset, th .....

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pleted and put to use. In fact, this is stated by learned CIT (A) on page 21 of his order that for allowing depreciation, ownership and use of asset for business purpose is essential. Thereafter, he observed that none of these have been challenged by the A.O. but this is not correct because the A.O. asked for date of completion but no reply was given by the assessee. Neither before any of the authorities below nor before us, any evidence is brought on record regarding date of completion of build .....

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Cross Objections are filed by the assessee and these are directed against three separate orders of Learned CIT (A) Bareilly all Dated 28.02.2014 for A.Y. 2004 - 2005 to 2005 - 2007. 2. First, we take up the appeal for A.Y. 2004 - 05 in ITA No. 343/LKW/2014. The grounds are as under:- (1) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 5,77,000/- made by the Assessing Officer on account of Advance of Fees Receipts. (2) That .....

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#8377; 9,60,236/- out of expenditure incurred by assessee without considering needs, exigencies and reasonableness of payments, ₹ 53,850/- on account of capital expenditure debited by the assessee to profit & loss account. (4) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 1,25,707/- u/s 40A(3) without taking into consideration the real facts and documentary evidence as mentioned by the assessing officer in the .....

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), Bareilly has erred in law and on facts in deleting the addition of ₹ 36,350/- rightly made by the assessing officer on account of loss on sale of Maruti. (8) That the Commissioner of Income Tax (Appeals), Bareilly has erred in law and on facts in deleting the disallowance of ₹ 46,00,092/- rightly made by the assessing officer on account of Depreciation. (9) That the order of the Commissioner of Income Tax (Appeals), Bareilly is erroneous in law and on facts may be cancelled and th .....

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ssions, it is submitted by the learned AR of the assessee that all these issues are covered in favour of the assessee by the tribunal order in assessee s own case for A.Y. 2007 - 08 in ITA No. 178/LKW/2013, & 339 to 341/ LKW/2012 dated 12.11.2013. He submitted a copy of this tribunal order along with written submissions. 4. We have considered the rival submissions. We find that in the written submissions, a chart is submitted pointing out relevant Para of the Tribunal Order for A.Y. 2007 - 0 .....

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to 48, Page 30 4 u/s 40A(3) 1,25,707 Para 16 to 17, Pages 10 to 11 5 Surplus/Deficit as per Cash System 5,11,227 Para 33 to 35, Pages 25 to 27 6 Capital Expenditure u/s 40A(3) 21,480 Para 16 to 17, Pages 10 to 11 5. We have gone through the tribunal order in assessee s own case for A.Y. 2007 - 08 and find that the assertion of the assessee is correct. The issue involved in Ground No. 1 here was decided by the tribunal on this basis that the assessee was following cash system of accounting till A .....

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ordingly, Ground No. 1 is rejected. 6. Regarding Ground No. 2 also, we find that similar disallowance was made in A.Y. 2007 - 08 by making similar observations by the A.O. and were deleted in that year by learned CIT (A) with a clear finding that simply because the name of a doctor is missing from the list submitted to DCI/MCI, salary paid cannot be disallowed. This order of learned CIT (A) in that year was confirmed by the tribunal. In the present year also, the basis of disallowance by the A.O .....

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to Dr. A. K. Gaekwad as reimbursement of travelling expenses. Disallowance was made by the A.O. as there was no TDS from these payments. A clear finding is given by CIT (A) that no TDS was to be deducted in these two cases because in the first case, the income was below taxable limit and in the second case, TDS is not required to be deducted from reimbursement of expenses. This finding of learned CIT (A) could not be controverted by learned DR of the revenue. Hence, we do not find any reason to .....

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also observed that the assessee had produced books of account supporting this contention but no independent enquiry was made by the A.O. and no clarification was sought by the A.O. from the auditors. Thereafter, he deleted this addition by observing that since the A.O. has not brought on record any adverse evidence, addition is not justified. We do not find any infirmity in the order of learned CIT (A) on this issue. Hence, we do not find any reason to interfere in the order of learned CIT (A) o .....

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has given a categorical finding that for expenses such as Mess, Generator, Staff Welfare and travelling etc., self made vouchers are also sufficient if the volume is small of such self made vouchers. Thereafter, he deleted this addition by observing that since no claim of bogus expenditure has been found by the A.O., addition is not justified. We do not find any infirmity in the order of learned CIT (A) on this issue in the facts of the present case because the activities of the assessee are ch .....

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to the nature of expenses, its magnitude and volume and the nature of charitable activities in which the assessee is engaged, some vouchers may not be available. Learned CIT (A) has given a categorical finding that for expenses such as Mess, Generator, Staff Welfare and travelling etc., self made vouchers are also sufficient if the volume is small of such self made vouchers. Thereafter, he deleted this addition by observing that since no claim of bogus expenditure has been found by the A.O., add .....

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observations by the A.O. and were deleted in that year by learned CIT (A). This order of learned CIT (A) in that year was confirmed by the tribunal. In the present year also, the basis of disallowance by the A.O. and deletion by CIT (A) is same. In the present year also, Learned DR of the revenue could not point out any specific defect in the order of learned CIT (A) on this issue and no difference in facts could be pointed out by him. Hence, we do not find any reason to take a contrary view in .....

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s decided by the tribunal in that year on this basis that the assessee was following cash system of accounting till A.Y. 2006 - 07 and the same was changed to mercantile system from A.Y. 2007 - 08. In that year, the tribunal approved the change in accounting system. In the present year, it is observed by the learned CIT (A) that this addition is on hypothetical basis as there is no change in accounting system in the present year. This finding of learned CIT (A) could not be controverted by the l .....

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) is same. In the present year also, Learned DR of the revenue could not point out any specific defect in the order of learned CIT (A) on this issue and no difference in facts could be pointed out by him. Hence, we do not find any reason to take a contrary view in the present year. Accordingly, Ground No. 6 is also rejected. 14. Regarding Ground No. 7, we find that this disallowance is in respect of loss on sale of Maruti Car. The same was deleted by earned CIT (A) by observing that since the lo .....

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Lacs was made in the present year. The A.O. asked the assessee to furnish date of completion of building. The A.O. noted that no explanation was furnished and therefore, the A.O. disallowed the depreciation. The same was deleted by earned CIT (A) without giving a finding that the building was completed and put to use. In fact, this is stated by learned CIT (A) on page 21 of his order that for allowing depreciation, ownership and use of asset for business purpose is essential. Thereafter, he obs .....

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In the result, the appeal of the revenue is partly allowed. 16. Now, we take up the appeal of the revenue for A.Y. 2005 - 06 in ITA No. 344/LKW/2014. The grounds are as under:- (1) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 1,77,957/- without taking into consideration the real facts and documentary evidence. The addition was rightly made by the assessing officer on account of disallowance of expenses u/s 40A(3) of I.T .....

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12,76,355 on account of salary expenses. (4) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 8,000 on account of unexplained waive off. (5) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 35,464/- made by the assessing officer on account of Surplus/Deficit as per Cash System Accounting. (6) That the Commissioner of Income Tax (Appeals), Bareilly has .....

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made by the assessing officer on account of salary made without deducting TDS. (9) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 27,800/- made by the assessing officer on account of difference in payment of salary and in Form No. 16 issued by the assessee. (10) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 4,53,596/- made by the assessing officer .....

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are already sent by the Learned A.R. of the assessee by registered post on 08.01.2015 and these appeals and Cross Objections may be decided by considering these written submissions. In the written submissions, it is submitted by the learned AR of the assessee that all these issues are covered in favour of the assessee by the tribunal order in assessee s own case for A.Y. 2007 - 08 in ITA No. 178/LKW/2013, & 339 to 341/ LKW/2012 dated 12.11.2013. He submitted a copy of this tribunal order al .....

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450 Para 36 to 37, Pages 27 3 Salary expenses 12,76,355 Para 18 to 19 & 36 to 37, Pages 11 to 12 & 27 4 Unexplained Written Off 8,000 Para 43 to 46, Pages 29 to 30 5 Surplus/Deficit as per Cash System Accounting. 35,464 Para 33 to 35, Pages 25 to 26 6 Revenue Expenses in Cash having no supporting 54,40,659 Para 47 to 48, Page 30 7 Written Off Bad Debts 82,481 8 Salary paid without TDS 2,09,703 Para 18 to 19 & 36 to 37, Pages 11 to 12 & 27 9 Difference in Salary & Form 16 27,8 .....

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esent year on any of the issues. 20. In the result, the appeal of the revenue is dismissed. 21. Now, we take up the appeal of the revenue for A.Y. 2006 - 07 in ITA No. 345/LKW/2014. The grounds are as under:- (1) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 38,032/- u/s 40A(3) of I.T. Act, 1961 without taking into consideration the real facts and documentary evidence. The addition was rightly made by the assessing offic .....

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law in deleting the addition made by the assessing officer at ₹ 9,65,000 on account of payment of salary. (4) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 10,52,351/- on account of Salary Expenses. (5) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 3,44,804/- made by the assessing officer on account of Payments made to Doctors not reflecte .....

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That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the disallowance of ₹ 28,68,829/- made by the assessing officer on account of expenditure in cash without vouchers. (9) That the Commissioner of Income Tax (Appeals), Bareilly has erred on facts and in law in deleting the addition of ₹ 1,89,340/- made by the assessing officer on account of capital expenses disallowed without voucher or evidence. (10) That the Commissioner of Income Tax .....

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