TMI Blog2018 (9) TMI 1160X X X X Extracts X X X X X X X X Extracts X X X X ..... s concerned, obviously in the Consolidated Income and Expenditure Account this is styled as 'Provision', but in effect it is not so, and for the application of the expenditure is done by the respective Chapters. Also, as seen in the Consolidated Income and Expenditure Account, this item of expenditure/style of narration has also been there in earlier years. So it has been a regular feature, being expenditure applied by the Chapters and hence it is not a ‘provision’. - Decided against revenue Depreciation claimed without appreciating the fact that the cost of acquisition earlier years thereby reducing written down value to nil - Held that:- We are of the view that the depreciation needs to be allowed. This is a primary accepted principle of accounting. The assets obviously undergo wear and tear/diminution in value and therefore the decline in value has to be accounted for on a systematic way. Be as it may, there has been an insertion in the Act vide Finance (No. 2) Act, 2014, w.e.f. 01.04.2015, being sub-section (6) to section 11 whereby the provisions of section 11 shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made on account of difference in credit of income as per 26AS statement and income credited in Income and Expenditure accounts. 4. The brief facts qua the issue are that during the assessment proceedings, the assessing officer noted that in the previous year, the assessee received Tax deductible income of ₹ 3,17,86,998/- as per the 26AS details against TDS of ₹ 7,40,203/- whereas the assessee claimed TDS credit to the tune of ₹ 6,72,449/-. The assessee was asked to submit the details of such income in light of the anomaly and also due to the fact that the TDS were for Contractual receipts. Even after many adjournments, the assessee failed to submit the details of its Contractual receipts. It also admitted that income related to TDS amounting to ₹ 4,94,685/- was not credited in its income for the year. Therefore, the nature of the Contractual receipts remained unverified. As a matter of fact, the assessee failed to come forward with its Books of accounts wherefrom it can be verified that the income is incorporated in accounts or the nature of such receipts. Therefore, the assessing officer disallowed the corresponding income of ₹ 1,93,02,985/- and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4/- As we explained that Form 26AS is only the statement of the tax deducted during the F.Y; and therefore, the accounting of the income, as also the TDS by the receiver may not exactly tally with the Form 26AS because of timing of recognition. At this juncture it is relevant to quote the provisions of section 199 of the Act and Rule 37BA (3) of the I.T. Rules, which read as follows: Sub-section (3) of Section 199 of the Act reads as follows: The Board may, for the purposes of giving credit in respect of tax deducted or paid in terms of the provisions of this Chapter, make such rules as may be necessary and also the Assessment Year for which such credit may be given . By virtue of this sub-section the Board has framed Rule 37BA and the relevant sub-rule is sub-rule (3) which reads: (3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the Assessment Year for which such income is assessable. (ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6AS which is generated by the department after the payer makes the payment in the name of assessee in Government account; and if Form 26AS is to be believed and the assessee's books of account is to be disbelieved then the assessee should be given an opportunity to confront the payer who made the credit in the assessee's name which formed the basis of generation of Form 26AS, which is not tallying with the books of account of the assessee. Admittedly, the assessee's books of account are audited and the AO could not find any discrepancy in the same. Merely because the 26AS when compared with the service value as reflected in the P L Account of the assessee cannot be the ground to make the addition. In such cases, we should take note that the assessee has no control over the Form 26AS which is generated by the department when the payer credits the tax deducted at source electronically by entering the PAN details of the assessee, where mistake during entering the PAN details or figures cannot be ruled out. The assessee maintained its books of account in the regular business which is audited and has received its receipts through banking channel. In such a scenario, in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount represents entitlements due to respective chapters computed on the basis of collections from membership subscription under their control. The ld. Assessing Officer has disallowed the amount because provision is not an actual application. However, these amounts should be applied by the respective chapters and the assessee had made the provisions on accrual basis concept. We note that so as per the Form No.10B is concerned, the application of income is at ₹ 1,92,30,669/-, and as per the Income and Expenditure Account the expenditure is at ₹ 1,68,23,970/-. Therefore, the application of income is much more than the income accounted for during the year; and therefore, obviously the debit in the Income and Expenditure Account styled as 'Provision for Entitlement' has been applied. The DDIT AO has not found fault with the Form No.10B. We note that the amount represents entitlements due to the respective Chapters computed on the basis of collections from membership subscription under the control, and that these amounts should be applied by the respective Chapters. Therefore, it is an ascertained expenditure which obviously must be applied by the Chapters. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ati Samaj (Regd.) (2011) 64 DTR 76 (MP). We are of the view that the depreciation needs to be allowed. This is a primary accepted principle of accounting. The assets obviously undergo wear and tear/diminution in value and therefore the decline in value has to be accounted for on a systematic way. Be as it may, there has been an insertion in the Act vide Finance (No. 2) Act, 2014, w.e.f. 01.04.2015, being sub-section (6) to section 11 whereby the provisions of section 11 shall be determined without any deduction or allowance by way of depreciation or otherwise in respect of any asset. This insertion is w.e.f. 01.04.2015, and therefore is not applicable to the AY 2010-11 to the assessee under consideration. 17. We also rely of the judgment of the Hon`ble Supreme Court in the case of CIT vs. Rajasthan and Gujarati Charitable Foundation Poorna, (2017) (12) TMI 1067 (SC) wherein it was held as follows: 4. Question No. 2 herein is identical to the question which was raised before the Bombay High Court in the case of Director of Income-tax (Exemption) v. Framjee Cawasjee Institute [1993] 109 CTR 463. In that case, the facts were as follows: The assessee was the Trust. It derive ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
