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2015 (5) TMI 716 - ITAT AHMEDABAD

2015 (5) TMI 716 - ITAT AHMEDABAD - TMI - Disallowance of deferred revenue expenses - Held that:- 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 - Decided against assesse.

Disallowance made on account of gift and presen .....

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justice as against 20% made by the A.O. - Decided partly in favour of assesse.

Adhoc disallowance of miscellaneous expenses - 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 en .....

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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 reco .....

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ed:- 7-5-2015 - Shri Shailendra Kr. Yadav, J.M. And Shri Anil Chaturvedi, A.M.,JJ. For the Appellant : Smt. Urvashi Sodhan, A.R. For the Respondent : Smt. Sonia Kumar, Sr. D.R. ORDER Per Shri Anil Chaturvedi, A. M. 1. This appeal filed by the Assessee is against the order of CIT(A)-III, Baroda dated 13.06.2011 for A.Y. 2003-04. 2. The relevant facts as culled out from the material on record are as under. 3. Assessee is a company stated to be engaged in the business of construction activity under .....

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he Assessee. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following grounds;- 1. Ld. CIT (A) grossly erred in law and on facts in confirming disallowance of ₹ 2, 97, 284/- made by AO out of deferred revenue expenses claimed by the appellant. Both the lower authorities have erred in not appreciating the contention of the appellant that the modification expenses that is neither capital or personal was amortized and spread over the per .....

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IT (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 .....

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expenses. 4. During the course of assessment proceedings, A.O noticed that Assessee has debited ₹ 2,97,284 as deferred revenue expenditure which was on account of modification expenses incurred to improve productivity and quality of the products and therefore it was treated as deferred revenue expenditure and was written off over a period of 5 years. A.O was of the view that since he expenditure did not pertain to the year under consideration it was not allowable as business expenses. He .....

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im the expenses incurred in a particular year to ensuing years if the benefit is expected to be derived over a period of years. But no such facts have been brought by the appellant in the present case either before the A.O or during the appellate proceedings except the notes of account attached to the return. In the absence of details of such facts, contentions of assessee are not acceptable. Hence this ground of appeal is dismissed. 5. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is .....

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s incurred nor submitted the details of the expenses. She thus supported the order of A.O and ld. CIT(A). 7. We have heard the rival submissions and perused the material on record. We find that ld. CIT(A) while upholding the action of A.O has noted that no details to support 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 f .....

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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 order of A.O., Assessee carried the .....

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rder of ld. CIT(A), Assessee is now in appeal before us. 10. Before us ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that the expenses were incurred in the normal course of business and were incurred to facilitate to increase its business. It was further submitted that the assessee s accounts are regularly audited under the Companies Act and no adverse comments have been made by the auditors so as to warrant an adhoc disallowance. She further pointed to .....

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see has not submitted the details except for furnishing the copy of the ledger account which according to the ld. A.R. contains the entire details. On perusing the details placed at page 66 to 68 of the paper book , we find that it is a copy of the ledger account of Gift and Presentation articles. On perusing the ledger account it is seen that the amount mainly paid to Mr. N. Gopinath for the purpose of gift. Apart from the narration of the entry, no details as called for by the A.O has been pla .....

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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 w .....

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ing to ₹ 1,01,451/- as not allowable and disallowed the same. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who upheld the order of A.O by holding as under:- 9.2…So far as the addition of ₹ 71,500/- is concerned, from the Ledger copy filed by the assessee, it is seen that these have been paid for publishing of advertisements in souvenirs of puja mandals, Vadodara Telephone directory etc. Hence, following the decision in ground No.5 above, it is .....

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rsonal purposes too. Under section 37(1) of the Act, only an expenditure laid out or expended wholly and exclusively for purposes of business is allowable. In absence of details, this expenditure of ₹ 29,925/- cannot be held to be wholly and exclusively for purposes of business. Hence, the AO's action of disallowing this expenditure is upheld. So far as ad hoc disallowance of 10% out of miscellaneous expenses of ₹ 10,15,024/-( ₹ 8,13,463/- + ₹ 2,01,556/-) is concerned .....

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cie not allowable. Hence the A.O s action of adding of ₹ 1,01,451/- is upheld. 13. Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us. 14. Before us ld. A.R. reiterated the submissions made before A.O and ld. CIT(A). She further submitted that the Managing Director was required to travel to various places in connection with the business of the Assessee and was required to incur expenses for the purpose of the business of the Assessee and in such circumstanc .....

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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 t .....

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per TDS certificates and the amount credited in the Profit and Loss account. In the absence of any reconciliation or details furnished by the Assessee, A.O considered the difference of ₹ 66,93,121/- as income of the Assessee. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who upheld the order of A.O by holding as under:- 12.1 Before me, it has been argued that the appellant company is engaged in the business of erection, fabrication, installation and commiss .....

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e to tax and subject to TDS and accordingly, TDS has been effected on the mobilization of advance received by the appellant as also on the payments related to the periodic/running invoices. The said mobilization advance is reflected as a liability and hence not credited as income of the appellant reflected in the profit and loss account whereas the periodic /running invoices raised are credited to income account and get reflected in the profit and loss account. As the customers/clients effect TD .....

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orary difference automatically gets sorted 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 receip .....

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, 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 payments received during the ( F.Y. 2002-03 has been claimed by the assessee in its return of income for A.Y. 2003-04. Thus, assessee has itself held the entire receipt taxable in the current year. 12.3 Moreover, the appellant could not reconcile the difference o .....

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ggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us. 18. Before us ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that Assessee had received mobilization advance of ₹ 1,06,47,370/- during the year which was subjected to TDS by the customers and which was credited to the Profit and Loss account in a phased manner upon completion of the contract and in subsequent financial years. It was further submitted that Assessee r .....

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in the case of CIT vs. Narayansingh Gulabsinghji and G.J. Vijapura & Co. Tax Appeal No. 775/AHD/2009 order dated 28.03.2015. She therefore submitted that the addition which has been made by the Assessee be deleted. In the alternate, she submitted that Assessee be granted one more opportunity so that Assessee can reconcile the difference before the lower authorities. The ld. D.R. on the other hand supported the order of A.O and ld. CIT(A). 19. We have heard the rival submissions and perused .....

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