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2015 (12) TMI 29 - ITAT HYDERABAD

2015 (12) TMI 29 - ITAT HYDERABAD - TMI - Disallowance under section 40(a)(ia) - assessee has not filed any bills and vouchers and hence, not allowable under section 37 - assessee’s objection was only against the disallowance of the expenditure both under section 37(1) as well as under section 40(a)(ia) - disallowance of depreciation - Held that:- We find that in the case before us, the A.O. has not estimated the income @ 8% but has justified the disallowance by stating that the disallowance wou .....

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to interfere with the order of the Ld. CIT(A) that the disallowance under section 37(1) is justified. However, with regard to claim of depreciation, we deem it fit and proper to remit the issue back to the file of A.O. for consideration of the same in the light of judgment of the Hon’ble A.P. High Court in assessee’s own case for A.Y. 1998-99. - Decided partly in favour of assessee for statistical purposes. - ITA.No.1065/Hyd/2015 - Dated:- 6-11-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND S .....

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Hon ble High Court has held that where the profit of the assessee is determined on percentage basis also, deductions like depreciation is allowable. Assessee is also aggrieved by the order of the Ld. CIT(A) in confirming the disallowance made by the A.O. under section 40(a)(ia) of the Act on the ground that the assessee has not filed any bills and vouchers and hence, not allowable under section 37 as well. 3. The brief facts of the case are that the assessee company which is engaged in executio .....

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of the Act. The assessee was required to furnish its objections and also to produce bills/vouchers relating to the said payments. In response to this, the assessee filed a letter dated 18.12.2009 stating that the proposed addition of expenses under section 40(a)(ia) is not correct since these expenses were already paid/incurred and were debited to their respective accounts and thus, amounts paid to the labourers as per the Muster Register and in the absence of any contract/sub-contract are not a .....

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.O. to adopt gross profit of the assessee @ 8% without any allowance. He observed that on account of the disallowance of expenditure claimed under section 37 of the Act, the percentage of income against the gross receipts for the relevant assessment year worked out to 8.4% which is fair and reasonable and therefore, keeping in view the low margin of the profit shown by the assessee, he held that the disallowance of expenditure on account of assessee s failure to prove the expenditure incurred, b .....

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that the said payments amount to payments in pursuance of contract with the sub-contractor for carrying out the work undertaken by the contractor i.e., assessee herein, within the meaning of provisions of section 194(2) of the Act. Therefore, since the assessee failed to deduct TDS, he observed that the provisions of section 40(a)(ia) are attracted and accordingly, disallowed the same at ₹ 9,74,150 and added it to the returned income of the assessee. Aggrieved, assessee preferred an appeal .....

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rted the orders of the authorities below and placed reliance upon the decision of Hon ble High Court of Madhya Pradesh in the case of S.S. Crop Care Ltd., vs. CIT (2014) 41 taxmann.com 549 (M.P.). 6. Having regard to the rival contentions and the material on record, we find that assessee s claim of expenditure under section 37 of the I.T. Act has been disallowed by the A.O. on the grounds that (i) assessee has not produced the copies of the bills/vouchers in support of such claim ; and (ii) the .....

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im of depreciation to the assessee. The Ld. CIT(A) also did not allow the claim of depreciation to the assessee. The decision of the Hon ble High Court of A.P. in the case of the assessee for the earlier assessment year (relied upon by the assessee) is to the effect that where the income is estimated or assessed at a percentage of the turnover, then even in those circumstances, the claim of depreciation, interest etc., is allowable. It is the case of the Ld. Counsel for the assessee that in spit .....

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