TMI Blog2011 (1) TMI 1499X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 80 HHE of the Act, as per the revised return of income. (3) On the facts and circumstances of the case and in law, the ld. CIT(A) has erred in not directing the AO to recomputed the deduction under section 80 HHE of the Act, based on the assessed profits of business. It is prayed that the AO be directed to recomputed the deduction under section 80HHE of the Act on the basis of assessed profits of business. (4) On the facts and circumstances of the case in law, the ld. CIT(A) has erred in confirming levy of interest charged under section 234B and under section 234D of the Act. It is prayed that the ld. AO be directed to grant the necessary relief. 2. The facts of the case are that the assessee is a Private Ltd. Co. carrying on the business of consulting engineers in the field of Infrastructure and Environmental Consultancy. The assessee filed return of income for the impugned assessment year on October 26,2004 declaring total income of ₹ 77,02,710/-. 3. The assessee company entered into a sub-consultancy agreement with Babtie Group Limited to provide services to the Babtie Group in connection with the work carried on for Network Rail Project. Under the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this ground. The Assessee had relied on several judgments as referred to by the ld. CIT(A) on page 8 of his order but none of the authorities was discussed by him. 5. Before us, the ld. AR for the assessee submitted that the bills pertained to the work carried out in FY 2003-04 as mentioned on the bills whose copies are annexed on pages 3 4 of the Paper Book of the assessee. The nature of the work was the same as in respect of the two bills raised in the month of March, 2004 whose copies are also annexed at pages 1 2 of the assessee s Paper Book but the ld. AO has chosen to disallow the claim in respect of Bill Nos.3 4 whereas he was kind enough to allow the claim in respect of the first two bills. Even though the ld. AR submitted that the AO has taken the ground of non-rendering of services while disallowing the claim in respect of bill nos.3 4 but he has not doubted the rendering of services in respect of first two bills even though entire services rendered were of the same nature and was part of the same agreement and was in continuation throughout the year. Further the bills were raised before the closure of the accounts and had formed part of the audit repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. The concept of levying tax on the correct income of the relevant Asst. Year has been emphasized by various authorities. Hon. Bombay High Court in the case of CIT vs. United Motors (India) Ltd. 181 ITR 347 had observed as under :- the liability was rightly recognized as having accrued and it was provided for. The provision itself would have been allowable as a deduction .Instead, the quantified liability in the aggregate sum of ₹ 76,680/- though it was discharged subsequent to the close of the previous year with which we are concerned, must be allowed as a deduction. The payment in that aggregate sum was made by the assessee to its workmen for the services that were rendered by them during the previous year under consideration. Such expenditure was incurred for the purpose of earning the income of the previous year and must be deducted. Hon ble Calcutta High Court in the case of Calcutta Co. Ltd. (1959) 37 ITR 1 held that for computing correct profits and gains of the year the expenditure necessary for earning the receipt should be deducted therefrom, irrespective of whether the expenditure was actually incurred or the liability thereon had accrued but was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... does not come into knowledge of the assessee during the accounting year or before filing return then it will be within his right to claim such expenditure in the subsequent Asst. Year when bills are raised on him and thereby bringing the claim to his notice. In other words if the claim of expenditure remains in the knowledge of the assessee and is made before closure of the accounts or before filing of the return then irrespective of fact whether bills were raised on him in the relevant accounting year or subsequent thereto in the next Financial Year the assessee can adjust his profit and loss account to compute the income correctly by debiting such claim of expenditure in the books. But where such claim escapes his attention and is brought to his knowledge by the other party by raising the bills subsequently then assessee can claim the same in the year in which bills were raised on him. It is so held by Hon ble Chattisgarh High Court in the case of CIT vs. Beekay Engineering Corporation (2010) 323 ITR 252 (Chattishgarh). It shows that assessee has a right available (not an option) to claim the expenditure in the subsequent year if it is so brought into his knowledge by other party ..... X X X X Extracts X X X X X X X X Extracts X X X X
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