TMI Blog2016 (3) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts and form 26AS. The assessee has explained the difference by furnishing necessary reconciliation. Therefore, we are of the opinion that the A.O. was not correct in making additions, towards difference in turnover without pointing out any mistakes in books of accounts, that too based on form 26AS. Therefore, we direct the A.O. to delete the additions towards difference in turnover. - Decided in favour of assessee Disallowance u/s 40(a)(ia) - advertisement charges and finance charges for non deduction of tax at source - Held that:- The revenue did not dispute the fact with regard to paid and payable. The CIT(A) has recorded finding of the fact that the expenditure incurred under these heads have been already paid during the financial year. Therefore, considering the facts and circumstances of the case we are of the opinion that no disallowance can be made on the payments which has been paid during the financial year. Therefore, we direct the A.O. to delete the additions made u/s 40(a)(ia) of the Act - Decided in favour of assessee - I.T.A.No.655&656/Vizag/2013, ITA No.1/Vizag/2014 - - - Dated:- 22-1-2016 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. MANJUNATHA, ACCOU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce received as income of the year. However, the same is accounted in subsequent year. To this effect filed a reconciliation statement before the assessing officer. The A.O. after verification of the details furnished by the assessee held that the assessee has not offered any satisfactory explanations for short admission of receipts to the extent of ₹ 25,53,769/-, therefore, the difference is added to the income of the assessee. 3. Similarly, the A.O. noticed that the assessee has debited various expenditures, on which TDS provisions are attracted, therefore, asked to furnish whether TDS has been deducted wherever applicable. In reply, the assessee submitted that as far as advertisement charges is concerned, these expenses are actually incurred towards daily allowances paid to drivers, trip expenses, oil and lubricants purchased for the vehicle. The assessee further submitted that the individual payments and the aggregate of such payments does not exceed the specified limit as per section 194C of the Act, therefore, TDS has not been deducted on such payments. The assessee further submitted that the expenditure incurred under these heads has been already paid during the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the following grounds: 1. The Ld. CIT(A) is not at all correct in upholding the assessment even though the assessment is not pending as on the date of search and none of the additions to the returned income are based any incriminating material. 2. The Ld. CIT(A) is not correct in upholding the validity of the assessment even though opportunity / of hearing has not be afforded to the assessee by the Additional CIT before granting approval to the assessment order. 3. The Ld. CIT(A) is not correct in upholding the addition of ₹ 10,12,419 on account of suppressed/unaccounted turnover. 4. The Ld. CIT(A) is not correct in upholding the additions made by the AO under section 40(a)(ia) with respect to the following amounts: i. Advertisements - ₹ 6,96,040. ii. Financial Charges - ₹ 5,29,800. 5. The appellant craves leave to add to, amend or alter any or all of the above grounds of appeal. All the grounds of appeal are without prejudice to each other. 6. From ground nos.1 2, the assessee has challenged the validity of assessment proceedings. During the course of hearing, the A.R. of the assessee did not press the ground nos.1 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther verification of the reconciliation statement filed by the assessee, we find that the difference quantified by the A.O. is based on form 26AS. The assessee contended that she is following mercantile system of accounting and recognized the income on accrual basis. The A.O. has not pointed out any mistakes in the method of accounting followed by the assessee. He never rejected the books of accounts maintained by the assessee. The A.O. simply quantified the difference between books of accounts and form 26AS. The assessee has explained the difference by furnishing necessary reconciliation. Therefore, we are of the opinion that the A.O. was not correct in making additions, towards difference in turnover without pointing out any mistakes in books of accounts, that too based on form 26AS. Therefore, we direct the A.O. to delete the additions towards difference in turnover. 9. The next issue came up for our consideration is disallowance u/s 40(a)(ia) of the Act. The A.O. disallowed advertisement charges and finance charges for non deduction of tax at source. The A.O. was of the opinion that these payments attract TDS provisions, but the assessee has failed to deduct TDS, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view taken by the ITAT Special Bench Visakhapatnam and also in the light of the view expressed by the Hon ble A.P. High Court in the case of Janapriya Engineering Syndicate, we are of the opinion that the provisions of section 40(a)(ia) of the Act cannot be made applicable in respect of the amounts already paid before 31st March. In other words, the A.O. is directed to restrict the disallowance to the amounts payable after 31st March. With these observations, ground no.3 of the assessee is treated as partly allowed. 11. The revenue did not dispute the fact with regard to paid and payable. The CIT(A) has recorded finding of the fact that the expenditure incurred under these heads have been already paid during the financial year. Therefore, considering the facts and circumstances of the case and also respectfully following the coordinate bench decision in ITA No.657/Vizag/2010 (supra), we are of the opinion that no disallowance can be made on the payments which has been paid during the financial year. Therefore, we direct the A.O. to delete the additions made u/s 40(a)(ia) of the Act. 12. In the result, the appeal filed by the assessee is allowed. ITA No.656/Vizag/2013: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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