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2016 (5) TMI 924 - ITAT JAIPUR

2016 (5) TMI 924 - ITAT JAIPUR - TMI - Disallowance of provision on account of pay arrear payment - Held that:- As find from the records that the notification was issued by the Finance Department, Govt.of Rajasthan to pay the arrear of Sixth Pay Commission to the Govt. employees in two equal instalments and the sanction was also accorded by the Registrar of Cooperative Society, Govt. of Rajasthan, Jaipur also vide its order dated 5-07-2011 in the assessee company’s employees. We find that the ld .....

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I 54 - BOMBAY High Court) is relied on wherein it is confirmed that the provisions of Section 43B do not apply to the Government Audit Charges - Decided against revenue

Disallowance on account of provision for interest - Held that:- We feel that when the provision for interest does not relate to this year then the ld. CIT(A) has rightly deleted the addition made by the AO.- Decided against revenue

Disallowance of proposed commission in the absence of payment details - Held .....

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when required as per the bye laws of assessee society. We find that the ld. CIT(A) has rightly deleted the addition made by the AO as to overhead expenses which is paid to the respective societies on passing a Resolution.- Decided against revenue

Addition on account of unutilized subsidy which was treated as cessation of liability u/s 41 - Held that:- It appears from the record that the subsidy is not a loss, expenditure or trading liability incurred by the assessee. The unutilized s .....

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LALIET KUMAR, JM For The Revenue : Shri G.R. Parikh, JCIT -DR For The Assessee : None ORDER PER LALIET KUMAR, JMThe Revenue has filed an appeal while the assessee has filed the cross objection against the order of the ld. CIT(A), Kota dated 22-03- 2013 for the assessment year 2010-11. 2.1 None appeared on behalf of the assessee in spite of service of notice of this hearing. Consequently we are left with no alternative but to decide the C.O. on merits, ex parte qua the assessee, after hearing ld. .....

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ch is as under:- On the facts and in the circumstances of the case, the ld. CIT(A) has erred in:- (i) deleting the disallowance of provision of ₹ 89,25,724/- on account of pay arrear payment (ii) deleting the disallowance of provision for audit fees at ₹ 5,59,294/- in the absence of details of payments upto date of filing of return (iii) deleting the disallowance of ₹ 2,05,000/- on account of provision for interest. (iv) deleting the disallowance of ₹ 16,34,209/- out of p .....

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sment year 2009-10 on 30-09-2009 declaring total income of ₹ 1,35,99,290/-.The return of the assessee was processed u/s 143(1) of the Act on 23-07-2010 and the case of the assessee company was selected for scrutiny through CASS (Computer Assisted Scrutiny system) on AST . Accordingly the notice u/s 143(2) and 142(1) were was issued on 25-05-2011 to the assessee company for hearing on 6-06-2011. Thereafter a questionnaire alongwith notice u/s 142(1) of the Act dated 30-06-2011 was issued by .....

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e disallowance of provision of ₹ 89,25,724/- on account of pay arrear payment. In this ground, the AO observed that as per P&L the assessee has claimed provision of ₹ 89.25 lacs under VI Pay Arrear Payment for which AO required the assessee to file the details of the same and the assessee filed the details as per Annexure 1 of its letter dated 25-07-2011 before the AO. After perusal of the details, the AO observed that the assessee has claimed provision for VI Pay Arrear Payment .....

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h Pay Commission arrear payment to the employees and has been adjusted 50% during 2011-12 and balance 50% will be adjusted in2012-13 as per order of Registrar of Cooperative Societies Govt. of Rajasthan of Jodhpur. The copy of the ledger account is enclosed for your perusal. The reply of the assessee was considered by the AO but he did not accept the same by observing that the assessee has not paid the amount claimed during the year under consideration. The AO observed that out of ₹ 89.29 .....

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n which was approved by Rajasthan Cooperative Dairy Federation vide letter dated 20-02-2009. Moreover, in my view any prudent businessman ha to account for anticipated expenses and provide for the same. Whereas in the present case the liability was a clear liability and provision of the same has to be made. In the case of salary, there is no provision of law to disallow the expenses, if the same is not paid. The Assessing Officer is therefore, directed to delete the addition of ₹ 89,25,724 .....

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he assessee company s employees. We find that the ld. CIT(A) has rightly deleted the addition of ₹ 89,25,724/- made by the AO. Hence, Ground No. 1 of the Revenue is dismissed. 7.1 In Ground No. 2, the Revenue is aggrieved that the ld. CIT(A) has deleted the disallowance of provision for audit fees amounting to ₹ 5,59,294 wherein the AO observed that the assessee as per details filed has shown provision for audit fees at ₹ 5,59,294/-. The AO further observed that the assessee ha .....

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e Revenue is before us wherein the ld. DR relied on the order of the AO. 7.4 We have heard the ld. DR and perused the materials available on record. We find from the Income Tax Act, 1961 that Audit Fee is not covered by section 43B of the I.T. Act. The ld. CIT(A) has rightly deleted the addition made by the AO on account of Audit Fee as it is not covered by Section 43B of the Act. To this effect, the decision of Hon'ble Bombay High Court in the case of CIT vs. Shree Warna Sahakari Sakhar Kar .....

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t charges payable for getting the audit of the accounts done. The word fee has been used in the books of account of the assessee loosely, in general commercial sense, as normally understood in the trading society since payments were made to the co-operative department of the State through the Registrar in exchange for the services of the auditors availed of by the assessee. Levy of audit charges are nothing but the price required or demanded for services rendered by the Government auditors. In o .....

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se of business and is an allowable expenditure. The provisions of section 43B do not apply to the Government audit charges. Thus, disallowance of ₹ 1,63,925 on account of outstanding Government audit fees could not have been done by the Assessing Officer nor the same could have been affirmed by the Commissioner of Income-tax (Appeals). As such the Tribunal rightly allowed the same. In view of the decision of Hon'ble Bombay High Court in the case of CIT vs. Shree Warna Sahakari Sakhar K .....

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nt made upto filing of return which was disallowed u/s 43B of the Act and added the same to the total income of the assessee 8.2 Aggrieved, the assessee carried the matter before the ld. CIT(A) who deleted the amount of ₹ 2.05 lacs on account of provision for interest by observing in his order as under:- The provision did not relate to this year, therefore, the Assessing Officer is directed to delete the addition of ₹ 2.05 lacs. 8.3 Now the Revenue is before us wherein the ld. DR rel .....

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erved that the assessee as per balance sheet had shown proposed commission amounting to ₹ 34,45,845/- as on 31-03-2008 and as on 31-03-2009 the same had been shown at ₹ 50,55,230/-. The AO observed that the assessee had not paid the commission claimed during the year at ₹ 16,34,209/- and therefore, added the same to the total income of the assessee. 9.2 Aggrieved, the assessee carried the matter before the ld. CIT(A) who deleted the amount of ₹ 16,34,209/- out of proposed .....

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he record that the assessee society as per its constitution and guidelines have to pay 1.5% procurement overhead expenses (proposed commission) to its member cooperative societies and proposed cooperative societies and such expenses are debited to trading and profit and loss account and credited to individual cooperative societies / proposed cooperative societies account. This amount is paid to its member cooperative societies and proposed cooperative societies as and when required as per the by .....

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case, the AO observed that the assessee has shown ₹ 8,73,729/- for subsidy unutilized in the balance sheet for which the AO required the assessee vide order sheet entry dated 01-11-2011 to file the details and justify the claim and the assessee filed the reply vide letter dated 29-12- 2011 as under:- Credit balance of ₹ 8.73 lacs has been shown as subsidy unutilized. Even the history of receipt of this subsidy has not been explained. This is an old subsidy amount received from Govt. .....

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