TMI Blog2018 (3) TMI 1511X X X X Extracts X X X X X X X X Extracts X X X X ..... ismissed. Disallowance of repairing expenses to the extent 1/4th - Held that:- As necessary details were duly filed by assessee at the time of assessment proceedings but AO was not satisfied with the same, therefore he disallowed the same on ad hoc basis. In view of above proposition we note that if assessee has not furnished necessary documents then AO should have disallowed all the expenses claimed by it under the head “repairs”. It is settled law that the disallowance on account of ad hoc basis is not permissible under the provision of the Act. If the AO is not satisfied with the submission of assessee then he has to make the disallowance after making specific reference to such documents / vouchers. AO cannot just make the disallowance on ad hoc basis without pointing out any defect / error in the submission of assessee. As the entire amount of repairing charges was deducted by TML and the complete addresses of TML was in the possession of AO during the assessment proceedings, no addition to be made. - ITA No. 1354/Kol/2016 - - - Dated:- 19-2-2018 - Shri Waseem Ahmed, Accountant Member And Shri S.S.Viswanethra Ravi, Judicial Member By Appellant : Shri Saurabh Kumar, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.1 is that Ld. CIT(A) erred in deleting the addition made by the Assessing Officer for ₹ 81,51,702/- on the basis of additional evidence which was accepted in contravention to the provision of Rule 46A of the Income Tax Rules, 1962. 4. The assessee was entitled to 1% incentive remuneration from TML on the basis of monthly collection made by it on behalf of said company. The assessee has shown incentive remuneration for ₹ 5 49,815/- only whereas Form 26AS was reflecting the incentive remuneration of ₹ 87,01,516/- only. Thus, there was difference of ₹ 81,51,702/- as observed by the AO. On question by the AO about the aforesaid mismatch, the assessee submitted that as per the agreement with TML, there was a penalty clause of 15% of the finance amount to be levied on the assessee in the event of non-recovery of hire charges amount. The assessee also submitted that besides 15% penalty there was a clause for the penalty @ 100% of finance amount if the party fails to pay single installment to TML and if the party fails to register the vehicle showing hypothecation clause of TML. 5. In view of the above, assessee submitted that an amount of ₹ 81,51,70 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned amount of ₹ 8151702/- representing dealers liability was based upon debit notes issued by M/s Tata Motors Ltd. as per terms of the agreement, which leads to the inference that s claimed by the appellant the liability has actually crystallized during the relevant assessment year. Therefore, the addition of the entire amount of ₹ 8151702/- made by the AO is found to be not justified. The AO is directed to delete the addition. This ground is allowed. The Revenue, being aggrieved, is in appeal before us. 7. Ld. DR for the Revenue before us submitted that the relief has been granted by Ld. CIT(A) on the basis of additional evidence which were admitted in contravention to the provision of Rule 46A of the IT Rules, 1962 and he vehemently relied on the order of AO. On the other hand, Ld. AR before us field the paper book which is running from pages 1 to 54 and stated that copy of incentive remuneration statement was duly filed before AO which is placed on page 1 of the paper book and also filed copy of agreement with TML which is also placed on pages 5 to 7 of the paper book. Ld. AR drew our attention on page 8 of the paper book where the necessary deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Incentive Remuneration recd. Amounting to ₹ 549814.60 which is the difference of the credit and debit of the said ledger. You have called for an explanation and a brief write up regarding the debit of ₹ 3404435, ₹ 3060378/- and ₹ 1286889/- on account of Tata Motors Ltd (DLR liability) HP Remuneration. As desired a short note in this regard is enclosed. We trust you will find the same in order. Thanking You, Yours faithfully, Sd/-Illegible Enclo: As above. From the finding of AO we note that the addition was made by AO on account of non furnishing and information such as given below: i) The amount recovered the finance amount from the customer is not ascertainable. ii) The assessee also failed to furnish the party-wise details which have defaulted in the payment of installment financed by TML. iii) No detail has been submitted by assessee regarding the subsequent recovery from the customers. iv) There is no detail filed by the assessee with regard to the parties from whom the vehicles financed by TML were recovered. In view of above we note that no additional detail was submitted by assessee before appellate proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income duly offered to tax in the immediate preceding assessment year but the amount of TDS was claimed in the year under consideration as it was reflecting in Form 26AS of the current year. The assessee in support of its claim filed the copy of Form 26AS for the year under consideration. Ld. CIT(A) after considering the submissions of assessee deleted the addition made by AO by observing as under:- I have carefully considered the material before me. I find that the AO made the addition on the basis that the Appellant failed to file the reconciliation statement. The AR of the Appellant submitted in the Appellate proceedings that corresponding income relating to the said TDS related to FY 2006-07. There is force in respect to the submission of the Appellant that corresponding income of ₹ 993901/- was shown in the FY 2006-07 and corresponding TDS amount is claimed during this year. Therefore, the addition made by the AO of ₹ 993901/- is found to be not justified. The AO is directed to delete the addition made of ₹ 9,93,901/-. This ground is allowed. The Revenue, being aggrieved, is in appeal before us. 12. 7. Ld. DR for the Revenue before us submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n filed in your office. 5. M/s Tata Motors Ltd used to deduct TDS on the gross amount of billing and the income in the accounts are reflected after considering various debit notes issued by the said company from time to time. From the above, we note that no additional evidence as alleged by Revenue was admitted by Ld. CIT(A). Thus, we do not find any infirmity in the order of Ld. CIT(A). Accordingly, we uphold the same. Consequently, ground raised by Revenue is dismissed. 14. Next issue raised by Revenue in ground No.3 is that Ld. CIT(A) erred in deleting the addition made by AO for ₹ 2,08,115/- on account of late deposit of employees contribution to PF/ ESI. 15. The Assessing Officer, during the course of assessment proceedings observed that the assessee failed to deposit the employees contribution to PF / ESI within due date as specified under the relevant Act. Therefore, the Assessing Officer disallowed the same u/s 36(1)(va) and treated the income of assessee u/s. 2(24)(x) of the Act. Thus, AO added a sum of ₹ 2,08,115/- to the total income of assessee. 16. Aggrieved, assessee preferred an appeal before Ld. CIT(A) who deleted the addition made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of contribution to PF shall be allowed, if the same is paid on or before the due date of filing of return of income u/s 139(1) of the Act. The only issue to be resolved is whether the assessee would be entitled to claim deduction for the employees' contribution made to PF after the due date prescribed under the PF Act, but before the due date prescribed for filing of income-tax return in the light of the provisions contained in section 36(1)(va) of the Act and section 43B(b) of the Act. It is the contention of the assessee that there is no distinction between employer and employee contribution after omission of second proviso of section 43B of the Act by Finance Act, 2003 w.e.f. 1.4.2004. In this regard we find that the allowability of employees contribution to provident fund is governed by the provisions of section 36(1)(va) of the Act which reads as under : Other deductions. 236. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- -------- (va) any sum received by the assessee from any of his employees to which the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of the same is concerned under the provisions of section 43B of the Act. The Hon'ble Karnataka High Court, in the case of Essae Teraoka (P.) Ltd. v. Dy. CIT [2014] 366 ITR 408/222 Taxman 170 (Mag.)/43 taxmann.com 33 took the view that the word contribution occurring in section 43B of the Act would include employees' contribution to PF in the light of the definition of the word contribution as per the provisions of section 2(c) of the PF Act. As per the said section, contribution would mean both employer's contribution and employees' contribution. Accordingly, it was held that the provisions of section 43B of the Act allowing deduction for payment made before the due date of filing of Income-tax return cannot be ignored. Similarly, the ITAT Hyderabad Tribunal in the case of Tetra Soft (India) (P) Ltd. v. ACIT [2015] 70 SOT 66/61 taxmann.com 299 held that when assessee remitted employees' contribution to PF within due date of filing return of income u/s 139(1) of the Act, amount of employees' contribution to PF cannot be disallowed. Similar view was upheld by the Chennai bench of the ITAT, in the case of Asstt. CIT v. Farida Shoes (P.) Ltd. [2016] 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of repairing charges. Ld. CIT(A) after considering submission of assessee deleted the addition made by AO by observing as under:- I have carefully considered the material before me. I find that no detail in respect of such expenses has furnished. The AR of the Appellant submitted in his submission that the amount debited in the said ledger repayment payment made to various parties workshop with whom the job work was done by us and all expenses are supported with proper bills and vouchers. The estimated disallowance made by the AO is unjustified and needs to be deleted in full. There is force in the submissions of the AR of the Appellant that all expenses are fully vouched and the AO made the addition without any base and on estimate basis. Therefore, the addition made by the AO of ₹ 6,73,765/- is unwarranted and I direct the AO to delete the addition of ₹ 673765/-. This ground is allowed. Being aggrieved by this order of Ld. CIT(A) Revenue has come up an appeal before us. 22. Ld. DR submitted that relief was granted by Ld. CIT(A) on the basis of additional evidence which was admitted by him (Ld. CIT(A)) in contravention to the provision of Rule 46A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on ad hoc basis. In view of above proposition we note that if assessee has not furnished necessary documents then AO should have disallowed all the expenses claimed by it under the head repairs . It is settled law that the disallowance on account of ad hoc basis is not permissible under the provision of the Act. If the AO is not satisfied with the submission of assessee then he has to make the disallowance after making specific reference to such documents / vouchers. AO cannot just make the disallowance on ad hoc basis without pointing out any defect / error in the submission of assessee. In this connection, we also rely in the order of Coordinate Bench of ITAT Kolkata in the case of Animesh Sadhu Vs. ACIT in ITA 11/Kol/2013 Dated 12.11.2014. The relevant extract is reproduced below.:- 8. We have considered the rival submissions. A perusal of the assessment order shows that the Assessing Officer has disallowed 20% of the expenses on estimate basis on the ground that no independent verification to be made to find out the authenticity of the expenses. Ld. CIT(Appeals) has reduced the same on the same ground. However, we are of the view that no estimated disallowance scan be m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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