TMI Blog2015 (9) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of the assessee. Once the actual recipient of the income i.e. M/s. A. G. & Company has paid taxes on the rental income then it cannot be taxed twice by disallowing the TDS in the hands of the assessee company. Thus we find no reason to interfere in the order of the ld. CIT(A) which is sustained. - Decided in favour of assessee. Disallowance u/s 40(a)(ia) on advertisement expenses - short deduction of TDS - assessee submitted that the assessee made payment on account of advertisement expense incurring during the year which were paid during the year itself, therefore, it is not payable at the end of the year - Held that:- It is observed that judgement in the case of M/s. Merilyn Shipping & Transport vs. ACIT (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) has been upheld by Hon'ble Allahabad High Court in the case of CIT vs. Vector Shipping Services (P) Ltd. [2013 (7) TMI 622 - ALLAHABAD HIGH COURT]. Revenue’s SLP against the same has also been dismissed by the Hon'ble Supreme Court. Thus, the issue stands settled in favour of the assessee - ITA No. 304/JP/2013, C.O. No. 26/JP/2013 - - - Dated:- 11-8-2015 - SHRI R.P. TOLANI AND SHRI T.R. MEENA, JJ. For The Revenue : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company produced the supporting bills and vouchers before the AO who has observed as under:- (i) On examination of the vouchers in respect of construction expenses claimed at ₹ 1,46,99,999/-, the AO observed that certain payments have been made without supporting original bills and vouchers. Therefore, the AO could not verify such expenditure in the absence of original vouchers. (ii) The AO observed that the assessee company is engaged in the construction of residential and commercial complexes at different locations in the city of Jaipur but he could not ascertain the position and value of stock sitewise/ locationwise for want of separate stock registers. (iii) The AO observed that the assessee company has shown Work in Progress at ₹ 8,87,97,104/- but it could not explain the basis for this valuation of this work in progress before the AO. It is observed that the assessee company has taken the valuation of the unsold goods on estimate basis where project is under construction. The AO did not accept the valuation of work in progress as declared by the assessee company because the assessee company did not fulfill statutory requirement of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of such nature of construction business and it does not attract application of provisions of Section 145 of the Act. (iv) The assessee company submitted the details of the turnover, gross profit and net profit during the year as well as comparison of earlier two years. The assessee submitted that the gross profit rate and net profit rate is better than earlier years and the turnover is also increased by more than 100% during the year. Therefore, there is no reason for invoking the provisions of Section 145 of the Act. The assessee has maintained complete books of account and they are audited u/s 44AB of the Act and also there is no defect in them. Thus there is no case for application of provision of Section 145 of the Act. However, the AO did not accept the above contentions of the assessee and invoked the provisions of Section 145(3) of the Act. The AO considering all the materials facts available on record, applied the gross profit rate of 16% on the gross turnover of ₹ 21,94,41,873 which comes to ₹ 3,51,10,700/- and it resulted into trading addition of ₹ 14,33,722/- after reducing the declared gross profit of the assessee company. 3.3 The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the aforementioned case, the Hon'ble Bench held that non-maintenance of record does not give a license to the AO to reject the books of account. There was no justification in invoking the provisions of Section 145(3) of the I. T. Act if there was no challenge to the transactions represented in the books of accounts then it was not open to the Department to contend that what was shown by the entries was not the real state of affairs. Absence of vouchers or the supporting evidence in respect of a particular item of expenditure could not by itself empower an Assessing Officer to invoke provisions of Section 145(3) for rejecting the books of account. The Hon'ble Amrtisar Tribunal held in the case of Ashok Kumar Co. vs. ITO (2 SOT 518) that rejection of books could not be resorted to simply on the basis of some vouchers and failure to produce the same by the assessee. In other words, any situation should only warrant a specific addition by the Assessing Officer if he came to a conclusion that such expenditure had not been incurred or was not verifiable. Instead of adopting this accepted approach, if an Assessing Officer resorted to a convenient approach of rejecting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t amount of ₹ 28,51,962/- to M/s. A. G. Company due to sale of property to it and the rent was received by the assessee company till Dec. 2008. The AO observed that the rent received on that property from 01-01-2009 was to be the income of M/s. A. G. Company. The AO further observed that assessee company had transferred the rent so received on behalf of M/s. A. G. Company to it after claiming TDS deducted on these receipts. Since the amount so transferred to M/s. A. G. Company was not assessee's income, the TDS made on the same could not be claimed by the assessee. Therefore, the TDS of ₹ 6,89,845/- claimed by the assessee company was disallowed by the AO. 4.3 Being aggrieved, the assessee carried the matter before the ld. CIT(A) who allowed the claim of TDS amounting to ₹ 6,89,845/- by observing as under:- 5.3 I have carefully perused the order of the AO and that the submissions of the A. R. alongwith the order of the Hon'ble ITAT Mumbai Bench in the case of Arvind Murjani Brands (P) Ltd. vs. ITO. I concur with the submissions of the A. R. The facts are that the property had been transferred to A. G. Company and the rent received during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payments made to parties other than individual and HUF. The AO observed that applicable rate of TDS on payment to parties not being individual and HUF on account of advertisement expenses for the assessment year 2009-10 was 1.33%. According to the AO, it was a short deduction of TDS by the assessee on these payments. The total short deduction of TDS was at ₹ 3,109-/- and the total amount on which TDS was not deducted (proportionately) is ₹ 2,33,735/- which was disallowed u/s 40(a)(ia) of the Act by the AO and the same was added back to the income of the assessee. 5.3 The assessee challenged this issue before the ld. CIT(A) who disallowed this ground of the assessee by observing as under:- 6.2 I have carefully perused the order of the AO and submission of the A. R. I do not concur with the submissions of the A. R. The A. R. of the appellant has not rebutted the finding of fact by the AO that TDS was not deducted at prescribed rates and on payments which were subject to such deduction. His only contention was that since the payments had been made the case of the assessee was covered by the finding of Special Bench in the case of Meilyn Shipping Transports vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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