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2015 (8) TMI 50 - ITAT AHMEDABAD

2015 (8) TMI 50 - ITAT AHMEDABAD - TMI - Disallowance u/s.40(a)(ia) - assessee had neither deducted TDS nor paid the TDS in the current year - Held that:- As before the lower authorities it was claimed that the expenditure were in the nature of reimbursement for the goods that were exported by the assessee. During the course of hearing a question was put to the Ld. A.R. and he was asked to demonstrate the crystallization of liability vis-à-vis the date of exports of goods as it was claimed that .....

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able on facts and in view of the aforesaid facts, we find no reason to interfere with the order of the Ld. CIT (A) in conforming disallowance - Decided against assessee.

Addition on account of non deduction of TDS for the payments for purchasing calendars - Held that:- CIT (A) while upholding the disallowance has held that the contract for purchase of calendars was a works contract and therefore, the assessee was liable to deduct TDS. On the other hand before us Ld. A.R. submitted tha .....

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nd if no disallowance of similar expenditure has been made in earlier years and or subsequent years, the addition made by the A.O.in the year under consideration be deleted. - Decided in favour of assessee for statistical purposes.

Addition on account of prior period expenses - Held that:- CIT (A) while upholding the disallowance has noted that the assessee has not been able to prove that the liability of the expenses which has been claimed has crystallized during the year under consi .....

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contrary to the fact and is not correct because on perusing the computation of income that has been placed on record at page-2 of the paper book, it is seen that assessee has claimed expenses of ₹ 5,53,979/- as “prior period expenses crystallized during the year” - Decided against assessee.

Addition u/s. 40A(3) - Held that:- Before us it is assessee’s submission that the payment was made to the representative of the foreign company, who was a foreigner and was not having Bank ac .....

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diture be allowed. - Decided in favour of assessee - I.T.A. NO.2686/AHD/2011 - Dated:- 30-7-2015 - Shri Shailendra Yadav and Anil Chaturvedi, JJ. For the Petitioner : Shri Gyan Pipara For the Respondent : Shri Dinesh Singh, Sr. D.R. ORDER PER ANIL CHATURVEDI ACCOUNTANT MEMBER: This appeal is filed by the assessee against the order of Ld. CIT (A)-XIV, Ahmedabad dated 26-08-2011 for Assessment Year 2008-09. 2. The relevant facts as culled out from the material on record are as under. 3. The assess .....

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matter before the CIT (A), who vide order dated 26-8-2011 granted partial relief to the assessee. 4. Aggrieved by the order of CIT (A), the assessee is now in appeal before us and raised following grounds of appeal:- 1. The Ld. CIT (A) has erred in law and on facts in confirming the addition of ₹ 15,94,765/- on account of disallowance u/s.40(a)(ia) of the Act without proper appreciation of the facts, submissions and legal position as well as arguments put forth in the written submissions f .....

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works contract, the provisions of Section 194C do not apply and accordingly the impugned addition ought to have been deleted keeping in view the legal position in this respect. 3. The Ld. CIT (A) has erred in law and on facts in confirming the addition of ₹ 1,69,023/- made by the A.O. in respect of expenses under various account heads on the ground that they are prior period expenses. In view of facts and submissions filed and more particularly the fact that the liability for the sad expen .....

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oceedings A.O. noticed that assessee has claimed deduction of ₹ 15,94,765/- of non TDS expenses that were disallowed in earlier years. Before the A.O. it was submitted that the Tax Auditor reported in the Tax Audit Report in A.Y. 2007-08 about the disallowance and therefore, the expenses was disallowed in A.Y. 2007-08 though it was not required to be disallowed as it was in the nature of reimbursement and the assessee therefore claimed the expenses in A.Y. 2008-09. The submission of the as .....

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arefully perused the findings of the Assessing Officer and submissions made by Ld. A.R. The facts are that the appellant incurred an expenditure of ₹ 15,94,765/- during the F.Y. 2006-07 on account of reimbursement to clearing and forwarding agents. Since the appellant company did not deduct TDS u/s. 194C in that year, the expenses were disallowed by the appellant himself u/s. 40(a)(ia) of the Act. Now, in the present year, the appellant has claimed the deduction on account of this expendit .....

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the appellant that no TDS was required to be deducted and, therefore, disallowance of expenditure was not warranted is not relevant. The relevant point is that the expenditure pertains to earlier year and the appellant in that year had himself made a disallowance for some reason in the return. The appellant has also claimed in his written submission that the first appellate authority can consider the claim of expenditure where the same was not entertained during the assessment proceedings or wa .....

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assessee is now in appeal before us. Before us the Ld. A.R. reiterated the submissions made before the A.O. and the Ld. CIT (A) and further submitted that the expenditure in question pertains to reimbursement of expenses which were incurred on behalf of the assessee by clearing and forwarding agents and the expenditure was incurred during A.Y. 2007-08 and was wrongly disallowed in the computation of total income on the basis of incorrect report of the Tax Auditor on account of non-deduction of T .....

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. and CIT (A) and further submitted that the assessee is following mercantile system of accounting and therefore, it should claim the expenditure in the year in which the liability crystallized. He further submitted that no evidence of the liability crystallization in the year under consideration has been placed on record by the Ld. A.R. He thus supported the order of the A.O. and CIT (A). 9. We have heard rival submissions and perused the material available on record. We find that before the lo .....

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under consideration or even at the fag end of F.Y. 2006-07. Before us the Ld., A.R. has also not placed any material on record to demonstrate that the liability crystallized during the year nor has placed any material on record to controvert the findings of Ld.CIT (A). Further the case laws relied upon by Ld. A.R. are also distinguishable on facts and in view of the aforesaid facts, we find no reason to interfere with the order of the Ld. CIT (A) and thus this ground of the assessee is dismissed .....

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S. The submission of the assessee was not found acceptable to the A.O. for the reason that according to him the contract was given by the assessee for printing of calendars and there was no separate contract for material and /or labour work and A.O. was therefore, of the view that the assessee was liable to deduct TDS u/s. 194C of the Act and since assessee has failed to deduct TDS he disallowed ₹ 1,04,669/-. 12. Aggrieved by the order of A.O. assessee carried the matter before the CIT (A) .....

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n of the appellant is not acceptable as the appellant has purchased calendars from the parties which have been printed according to the specifications given by the appellant. It was not a readymade product which was available off the shelf in the market and purchased by the appellant. Therefore, it is clearly a works contract that has been executed on behalf of the appellant company. Therefore, the appellant was liable to deduct tax on the payment made to the agency. The disallowance made by the .....

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was provided and it was not a contract for work. He further submitted that assessee had incurred similar expenditure in earlier years and subsequent years and for non deduction of TDS no disallowance was made. He therefore, submitted that the addition made by the A.O. and confirmed by Ld.CIT (A) be deleted. He also placed reliance on the decision in the case of Associated Cement Company v/s. CIT reported in 201 ITR 435. Ld. D.R. on the other hand, supported the order of A.O. and the CIT (A). 15. .....

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has been made by the Revenue Authorities. We however find that to support the contention of allowing the expenses in earlier and subsequent years, the relevant assessment orders are not on record. We therefore, are of the view that in the interest of justice, the issue needs to be re-examined at the end of A.O. and if no disallowance of similar expenditure has been made in earlier years and or subsequent years, the addition made by the A.O.in the year under consideration be deleted. We therefor .....

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the assessee to prove that the expenses crystallized during the year, the claim of expenses cannot be allowed in the year under consideration and accordingly, worked out the disallowance of ₹ 1,69,023/-. 18. Aggrieved by the order of A.O. the assessee carried the matter before the CIT (A) who upheld the order of A.O. by holding as under:- 8.3 I have carefully perused the findings of the Assessing Officer and submissions made by the Ld. A.R. The appellant has submitted that the invoices in .....

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ppellant that it has been consistently following the practice of accounting such expenditure in this manner. The appellant has also relied on various judicial pronouncements related to the issue but the same are not applicable as in all the decisions the issue of crystallization of liability was involved. Whereas in the present case the appellant has not been able to prove that the liability has crystallized in the present year. It has not submitted any evidence in this regard, either before the .....

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e income for A.Y. 2008-09 as it was below the line adjustment in the profit and loss account. He therefore, submitted that since the assessee has not claimed the expenditure, the question of any disallowance does not arise at all. He further submitted that the said expenses crystallized during the year is not in dispute because the invoices were received during the year and for which he pointed to Annexure F of Tax Audit Report placed at page 56 of the paper book and submitted that the auditor h .....

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sent case is about the disallowability of prior period expenses. We find that the Ld. CIT (A) while upholding the disallowance has noted that the assessee has not been able to prove that the liability of the expenses which has been claimed has crystallized during the year under consideration and the claim of assessee is not supported by documentary evidence and that there was no evidence to that effect was either placed before the A.O. or before Ld.CIT (A). Before us also the assessee has not pl .....

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prior period expenses crystallized during the year . In view of the aforesaid facts we find no reason to interfere with the order of the CIT (A) and thus this ground of assessee is dismissed. 22. Ground No.4 is with respect to the addition of ₹ 45,375/- u/s. 40A(3) of the Act:- 23. The A.O. noticed that the assessee had paid ₹ 45,375/- for expenses other than by account payee cheque or bank draft. He noticed that the assessee has given cash to Bank and obtained 1000$ and these 1000$ .....

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ng the previous year. The payment was made for some repair and the representative asked for payment in US dollar in order to facilitate his travelling. The submission of the appellant may be factually correct but the same cannot be accepted as a reason for making the payment in cash. The fact remains that the appellant has made the payment in cash for the repair of the machinery and the payment was in violation to the provisions of Sec. 40A(3) of the Act. The appellant has not been able to give .....

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