TMI Blog2015 (5) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... held that:- The expenses in relation to the membership fees of American Express Credit Card was disallowed in the absence of the details. With respect to the adhoc disallowance at 10% we find that the action of A.O was upheld by ld. CIT(A). Considering the totality of the facts and the type of business which the Assessee is into, we are of the view that the ends of justice shall be met by making a lump sum addition and in such circumstances we direct that the addition be restricted to ₹ 50,000/- on adhoc basis Decided partly in favour of assesse. Addition of suppression of contract receipts on adhoc basis - Held that:- In the present case, the addition between the contract receipts shown as per the TDS certificate and the amount credited by the Assessee in its Profit and Loss account was considered as income of the A.O. A.O had noted that the Assessee could not reconcile the difference between the TDS certificates and the Profit and Loss account. We also find that ld. CIT(A) has also noted that Assessee could not reconcile the difference either before A.O or before him. Before us, ld. A.R. has submitted that the difference was on account of mobilization advance which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rming disallowance of ₹ 1, 90, 622/- made by AO of gift and presentation expenses ignoring the submissions of the appellant that the expenses were laid out of commercial expediency in the ordinary course of business. Ld. CIT (A) ought to have deleted such disallowance of legitimate expenses. 3. Ld. CIT (A) erred in law and on facts in confirming addition made of membership fees of ₹ 29,925/- as well adhoc disallowance of 10% out of miscellaneous expenses by AO without appreciating various submissions, documentary evidence and arguments of the appellant that the expenses were incurred during the normal course of business and no disallowance on ad hoc basis was called for. This action of Ld. CIT (A) contrary to provision of law deserves to be quashed. 4. Ld. CIT (A) further erred in law and on facts in confirming addition made by AO of ₹ 66, 93, 121/- on account of alleged suppression of contract receipts. Both the lower authorities erred in not appreciating the fact that TDS affected on mobilization of advance leads to mismatch of income reflected in Profit Loss a/c vis a vis income reflecting in TDS certificates. Ld. CIT (A) ought to have reversed the find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt the contention of the Assessee were filed before him or before ld. CIT(A) and therefore the ratio of the decision of Hon ble Apex Court in the case of Madras Industrial Investment Corporation (supra) could not apply to the facts of the Assessee. Before us, also Assessee has not placed any material on record to support its contention of it satisfying the principle of matching concept nor could controvert the observations by ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus this ground of Assessee is dismissed. Ground no. 2 is with respect to disallowance made on account of gift and presentation expenses. 8. During the course of assessment proceedings, A.O noticed that Assessee has debited expenses on account of gift and presentation expenses. He further noticed that the expenses were incurred through credit cards at different sites and part of the expenses were in cash. He also noticed that the details of recipient and the gifts and presentation items were not furnished though Assessee was asked to furnish the same. He accordingly disallowed 20% of the expenses amounting to ₹ 38,124/-. Aggrieved by the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s ground of Assessee is partly allowed. 3rd ground is with respect to adhoc disallowance. 12. On perusing the details of miscellaneous expenses, A.O noticed that Assessee has incurred ₹ 74,420/- on account of advertisement and publicity expenses and from the details he noticed that the entire expenditure except ₹ 2,920/- was in the nature of donation and was not for advertisement and publicity. He accordingly disallowed ₹ 71,500/- He also noticed that Assessee has claimed 29,925/- towards membership and subscription expenses of American Express Credit Card of Shri N. Gopinath, the Managing Director of the Company. He was of the view that the aforesaid expenditure was of personal in nature and therefore not allowable. With respect to the other miscellaneous expenses in respect to the Engineering and Chemical Division, he noticed that though Assessee was asked to furnish the details of the expenses, the same were not furnished except for the monthly bifurcation and from the details submitted. he noticed that the majority of the expenses were incurred in cash. He accordingly considered 10% of the expenses amounting to ₹ 1,01,451/- as not allowable and disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business of the Assessee and in such circumstances, the membership fees for American Express Credit Card was for the purpose of business. With respect to other expenses it was submitted that the expenses have been incurred for the purpose of business and therefore the same is allowable. The ld. D.R. on the other hand supported the order of A.O and ld. CIT(A). 15. We have heard the rival submissions and perused the material on record. We find that the expenses in relation to the membership fees of American Express Credit Card was disallowed in the absence of the details. With respect to the adhoc disallowance at 10% we find that the action of A.O was upheld by ld. CIT(A). Considering the totality of the facts and the type of business which the Assessee is into, we are of the view that the ends of justice shall be met by making a lump sum addition and in such circumstances we direct that the addition be restricted to ₹ 50,000/- on adhoc basis. In the result, this ground of Assessee is partly allowed. 4th ground is with respect to addition of ₹ 66,93,121/- on account of suppression of contract receipts on adhoc basis. 16. On perusing the TDS certificate filed alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted out over a period of time when a particular contract is fully executed and accounts are duly adjusted and settled between the parties. Since the appellant had offered for taxation a higher amount of income viz a viz that reflected in the TDS certificates and as adjusted for the mobilization advances included, therein, hence , there appears to be no reason for the AO to make the addition of ₹ 66,93,121/- on account of suppression of contract receipts. In view of the above factual position, the appellant requested that A.O be directed to delete the addition. 12.2 I have gone through the facts of the case, as also the observation of the AO and the arguments advanced by the AR. It is true that the appellant has received an amount of ₹ 26,33,80,328/-on which TDS has been made by the payers and the entire TDS has been claimed by the assessee in the previous year relevant to assessment year under appeal. As per section 199 of the I.T. Act, as it stood for the relevant assessment year, the credit for TDS was allowable in the year in which the income subjected to such TDS was assessable. It was admitted by the AR vide order sheet noting dated 25.05.2011 that entire TDS on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount credited by the Assessee in its Profit and Loss account was considered as income of the A.O. A.O had noted that the Assessee could not reconcile the difference between the TDS certificates and the Profit and Loss account. We also find that ld. CIT(A) has also noted that Assessee could not reconcile the difference either before A.O or before him. Before us, ld. A.R. has submitted that the difference was on account of mobilization advance which has been offered to tax in subsequent years and it was further submitted that if the Assessee is granted one more opportunity it would be in a position to reconcile the difference. The ld. A.R. further submitted that aforesaid method of accounting has been consistently followed by the Assessee and has been accepted by the Revenue authorities. Considering the aforesaid submissions of the Assessee, we are of the view that in the interest of justice one more opportunity be granted to the Assessee so that the Assessee could reconcile the contract receipts before A.O. We therefore remit the issue to the file of A.O to decide the issue afresh after considering the submissions of the Assessee and in accordance with law. The Assessee is also d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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