TMI Blog2017 (4) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) and restore the order of the AO. - ITA No. 6391/MUM/2014, ITA No. 7071/MUM/2014 - - - Dated:- 11-4-2017 - SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) For The Assessee : Shri Malav P. Sheth, AR For The Revenue : Shri Love Kumar, DR ORDER PER N.K. PRADHAN, AM These two cross appeals one by the assessee and the other by the revenue for the Assessment Year 2011-12 directed against the order of the Commissioner (Appeals) 32, Mumbai, involve some common issues. As such, we are proceeding to dispose them off by this consolidated order for the sake of convenience. 2. The ground of appeal filed by the assessee reads as under: On facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the disallowance under section 43B of the Income-tax Act, 1961 ( Act ) in relation to provision for BMC charges of ₹ 27,04,976/- without appreciating that the amount payable is in the nature of premium payable to BMC and therefore, not in the nature of any tax/duty/cess or fee within the meaning of section 43B. 3. In a nutshell, the facts are that the assessee has debited provisional expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that the said amount of FSI premium does not fall within the ambit of tax, duty, cess or fee within section 43B(a). It is stated that the said payment was made for obtaining additional FSI, thereby it is payment towards acquisition of license. At the most, it can be said as payment towards obtaining leasehold rights wherein BMC is the lessor. Since it is towards obtaining exclusive rights / privilege of BMC, there was no consideration for services from BMC. The fact that this is payment towards license fee / consideration for obtaining exclusive right is proved from the fact that BMC itself has stated so in its letter dated 18.03.2008 (page 16 17 of the paper book). The BMC has also stated that if any extra potential is derived in the form of additional FSI on the said plot due to revision of the policies / rules etc., it, as lessor will have exclusive right of taking one time premium for the said extra FSI as per the then prevailing policy. Thus, the learned counsel submits that fee u/s 43B(a) envisages only service fees and not fees for obtaining exclusive trading rights. It does not envisage lease premium / rent. Regarding the finding of the learned CIT(A) that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that premium collected by the assessee on sale of kerosene on behalf of the State Government cannot be treated as cess, fee, duty or tax or any sum payable by the assessee by whatever name called within the meaning of section 43B. Also the said provision is not a contingent liability, as there is present obligation on the part of the assessee to make payment to BMC of the said FSI premium and this obligation is arising out of past event, wherein reasonable estimate has been made In view of the above, we set aside the order of the learned CIT(A) on the above issues and delete the disallowance made by the AO of balance amount of ₹ 27,04,976/- provided by the assessee for the FSI premium. Thus the above ground of appeal is allowed. 8. The grounds of appeal filed by the revenue read as under: i. On the facts in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering that the TDS can be allowed as deduction only if it is deducted and paid before the due date. ii. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not considering that since the contractual expenses were liable to TDS and it was deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2012-13 as reproduced by the A.O. at page 5 of the assessment order. Thus it is stated that when payee is not identified and also the quantum of expense to be incurred, then TDS provisions will not be applicable in the year in which the adhoc provisions are made. Therefore, it is stated that the learned CIT(A) has rightly deleted the disallowance of ₹ 43,63,515/- made by the A.O. u/s 40(a)(ia) of the Act. 13. We have heard the rival submissions and perused the relevant material on record. A similar issue arose in the case of Apollo Tyres Ltd. vs. DCIT (2017) 163 ITD 177 (Delhi Trib.). In the above case, an order was passed by the AO u/s 201 and 201(1A) holding that the assessee failed to deduct TDS in respect of provisions made under several heads of income amounting to ₹ 15,07,25,637/-. Accordingly, the demand u/s 201(1) was raised at ₹ 1,04,02,197/- and also interest u/s 201(1A) at ₹ 38,48,924/-. After considering the order in the case of (i) Abad Builders (P) Ltd. vs. ACIT (2014) 43 taxmann.com 128, (ii) Dishnet Wireless Ltd. vs. DCIT (2015) 154 ITD 827 and (iii) Industrial Development Bank of India vs. ITO (2007) 107 ITD 45, the Tribunal held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayee is not identifiable, the provision of Chapter XVII B i.e. tax deduction at source cannot be pressed into service and, therefore, the assessee is not required to deduct tax at source in such a case. The AO will adjudicate the issue afresh after examining the above facts. Needless to say that the AO will allow adequate opportunity of being heard to the assessee while giving effect to this order. Thus this ground of appeal is allowed for statistical purposes. 14. Now we turn to 3rd ground of appeal of the revenue. The AO found that as per Form No 26AS, the assessee has been paid ₹ 4,40,000/- on 31.03.2011 on which TDS of ₹ 44,000/- was deducted. The assessee has not shown the above amount of ₹ 4,40,000/- in his computation of income. As the assessee is following mercantile system of accounting for his construction business, the AO did not accept his plea that cash method of accounting was followed for liaison work. So the AO did not accept the contention of the assessee that he had not received ₹ 4,40,000/- in the A.Y. 2011-12, but had received in A.Y. 2012-13. Therefore, the AO made an addition of ₹ 4,40,000/- in the impugned assessment year. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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