TMI Blog2019 (9) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... nstallations and fittings - 10% OR 15% - HELD THAT:- No reason to interfere in the order of the CIT(A). The factual findings of the CIT(A) made after perusing the details filed by the assessee that the additions made were in the nature of furniture and fittings, have not been controverted by the assessee by way of any explanation or detail filed before us, nor the Ld.Counsel for the assessee was able to point out any discrepancy in the findings of the CIT(A). That the applicable rate of depreciation on the said assets is 10% is not disputed. In view of the same, we find no reason to interfere in the order of the CIT(A) in restricting the depreciation to 10% on electric fittings Accrual of income - Difference in the amount of interest receivable on FDRs on accrual basis and accounted for by the appellant on receipt basis in the books of accounts - HELD THAT:- Undisputedly the income had accrued in the impugned year to the assessee and TDS also deducted on the same. The same has, therefore, been rightly taxed in the impugned year. Expenditure incurred towards rent disallowed - claim pertained to preceding year and disallowance of excess purchases booked - HELD THAT:- Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dge by way of credit notes issued. CIT(A), we find, despite specific averments made by the assessee upheld the disallowance by giving general findings that income is to be taxed on accrual basis and that income had accrued to the assessee, without addressing the facts as stated by the assessee and pointing out how he arrived at the finding that income accrued to the assessee in this year. We, therefore, consider it fit to restore the issue back to the AO to consider the contention of the assessee - ITA No.1010, 1011 & 1013/Chd/2017 - - - Dated:- 23-8-2019 - Smt. Diva Singh, Judicial Member And Smt.Annapurna Gupta, Accountant Member Assessee by: Shri Jaspal Sharma, Adv. Revenue by: Smt.Chanderkanta, Sr. ORDER PER BENCH: All the above appeals have been preferred by the same assessee against separate orders of the Commissioner of Income Tax (Appeals)-1, Chandigarh [(in short CIT(A) ] dated 26.4.2017, 7.3.2017 and 26.4.2017, passed u/s 250(6) of the Income Tax Act, 1961 (hereinafter referred to as Act ) relating to assessment years 2010-11, 2011-12 and 2013-14 respectively. 2. At the outset it was contended b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after acquisition of the asset, if any, and hence was allowable as per the provisions of section 36(1)(iii) of the Act. The assessee contended that the said facts was evident from the sanction letter of the bank granting term loan and the letter written by the assessee to the Manager of the bank requesting to reimburse the expenditure. The Ld.Counsel for the assessee contended that these were additional documents being submitted which were very relevant for the adjudication of the issue and could not be produced before the lower authorities for the reason that the assessee had shifted its office from Chandigarh to Mohali in the year 2010 and certain records could not be traced thereafter. The assessee filed an application for admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules, 1963 alongwith copies of the above stated additional evidences and further filed an affidavit stating the aforesaid facts on oath therein. The application submitted reads as under: The applicant/appellant begs your Honour's permission to rely on the documents as per Annexure-l attached which are very relevant and necessary to decide the issues in Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given due opportunity of hearing. The ground of appeal No.2 raised by the assessee is allowed for statistical purposes. 10. Ground No.3 raised by the assessee reads as under: 3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in having confirmed the allowance of depreciation on electrical installations and fittings at 10% instead of 15% as claimed by the appellant thereby confirming an addition of ₹ 1,93,193/- to the income of the appellant. 11. The disallowance disputed in the above ground relates to claim of depreciation allegedly at a wrong rate resulting in addition of ₹ 1,93,193/-. The Assessing Officer observed that the assessee had claimed depreciation at the rate of 15% on electrical installations. On examining the details of the 'installations', the Assessing Officer noted that they included electrical fittings like PVC wires, GI pipe, bends, bolts etc. The Assessing Officer observed that the installations were part of furniture fittings and as per prescribed rate 10% depreciation was admissible instead of 15%. No concrete argument was extended by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on receipt basis in the books of accounts. 18. The facts relating to the issue are that the Assessing Officer made an addition of ₹ 1,01,632/- on account of interest earned on Bank deposits, being the excess amount of interest earned stated in Form No. 26AS as compared to that returned by the assessee . The AO noted that the assessee had earned interest income from bank deposits in HDFC Bank to the tune of ₹ 1,52,944/- , as reflected in Form No .26AS,on which TDS of ₹ 15,294/- was deducted, however, income reflected in the return was only of ₹ 51,313/-. The Assessing Officer confronted the assessee regarding the balance interest of ₹ 1,01,632/-. The assessee replied that the income was reflected in subsequent years on maturity of the FDR. The Assessing Officer observed that as per section 5 the income had to be taxed in the year in which it accrued or arose and therefore added it to the income of assessee. 19. The CIT(A) upheld the order of the AO holding at para 5.2 as under: 5.2 I have examined the issue in detail. The income is charged to tax in the year the right to that income has accrued or arisen as per section 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cal purposes. 26. Ground of appeal No.4(i), (ii),(iii) (iv) raised by the assessee reads as under: 4. (i) On the facts and circumstances of the case, the CIT (Appeals) has erred in having confirmed an addition of ₹ 5,72,741/- being the expenditure incurred by the appellant towards rent by holding that as the expenditure incurred on rent related to earlier assessment year, the same cannot be allowed in the year under reference as the appellant was following mercantile system of accounting, (ii) In any case, the appeal of the appellant for the earlier assessment year being pending for disposal before the learned CIT(A), necessary directions should have been issued for the allow ability of the same in the preceding assessment year, (iii) On the facts and circumstances of the case, the CIT(Appeals) has erred in having confirmed an addition of ₹ 2,42,868/- made to the income of the appellant being the amount of excess purchase value of goods claimed by the appellant and which was corrected by the appellant in the subsequent assessment year thereby reducing the purchases for that year. (iv) In any case, the appeal for the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The content of the same, briefly stated, was that the rent disallowed though pertaining to the month of March, 2010 i.e. the preceding year had actually accrued and arose in the impugned year since the agreement on account of which it arose was entered into in the impugned year. The contentions made in this regard at para 1 to 7 are as under: 1. This ground relates to disallowance of ₹ 5,72,7417- on account rent for the month of March,2010 which was debited by the assessee in its books for the year under consideration i.e. AY 2011-12. It was submitted before the Ld.AO that although the rent relates to the month of March,2010 when the store was taken over by us from Benetton India Pvt. Limited but as the payment was made in the year under reference, the same was accounted for in this year (para 4.2 of AO'S order) but the AO disallowed the same without any further discussion. The Ld.CIT(Appeals) confirmed the disallowance holding that the expenses on rent for March,2010 could not have been claimed in financial year 2010-11 as the appellant was following mercantile system of accounting(para 7.3). 2. The facts in brief relating to this issue, are that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment of rent directly to the landlord after IDS and the account of assessee was later on debited by an amount of ₹ 5,72,741/- on account of Rent/CAM/Elect.charged(page 44-45 of paper book) by Benetton India Pvt.Ltd. 5. From the above submissions, it is clear that the assessee rightly accounted for the expenditure of ₹ 5,72,741/- during the financial year 2010-11(AY 2011-12) as the liability was crystallized only after execution of lease deed executed on 12.04.2010. Alternatively (ground 4(ii)) it is prayed that necessary directions may be given to allow the same in the preceding assessment year i.e. asstt.year 2010-11 as the genuineness of expenditure is not in doubt. Kind attention in this behalf is invited to the judgement of the Hon'ble ITAT, Delhi Bench, in the case of Caparo Maruti Ltd.New Delhi Vs.DCIT, ITA N0.5165 and 5059/Del/2014 decided on 09.08.2017(copy attached) where it has been held in para 12 on page 9 of the order as under: 12. The Ld.AR has brought to our notice that such amount was suo motu added by the assessee in its computation of total income for the immediately succeeding year, namely, A.Y. 2011-12. It was submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss amount of ₹ 2,42,868/-(page 25 of additional evidence) and correspondingly ledger account of Discount Receivable was debited on 31.03.2011(Page 27 of Additional evidence). Then the account of Adidas was debited on 01.04.2011 by the amounts of ₹ 1,10,546/- and ₹ 1,32,322/-(aggregate ₹ 2,42,868/-) (pages 28 of additional evidence) and correspondingly ledger account of Discount Receivable was credited by the same amounts on 01.04.2011(page 29 of additional evidence). 10. Therefore effect of excess purchase value claimed, has been neutralized by crediting the Discount account by the same amount during this year itself and the account of Adidas was also reconciled by making necessary entries on 01.04.2011. 31. The Ld.Counsel for the assessee contended that to substantiate its above contention it wished to file additional evidences in the form the lease deed entered into in April, 2010 for the payment of rent pertaining to the month of March, 2010 and ledger account of Discount received and contended that the same could not be filed earlier since certain record and documents were misplaced during the course of shifting of the office f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue are that the Assessing Officer made addition of ₹ 3,79,021/- on account of foreign travel expenses of the directors of the assessee company and their family members incurred on trips to China and Turkey. The expenditure included cost of air tickets, hotel bills and visa fee. The Assessing Officer confronted the assessee about the expense being of nonbusiness nature as the company did not have any export business. The assessee in its reply stated that the both the directors with their wives had visited these countries to keep themselves appraised of the latest fashion trends. The assessee had not furnished before Assessing Officer the information regarding the fashion exhibition/ shows attended, therefore the Assessing officer disallowed these expenses being in the nature of personal use and for nonbusiness purposes. 35. The Ld.CIT(A) upheld the order of the AO holding as under: 8.2 I have considered this issue. 1 agree with the addition made by the Assessing Officer. The appellant did not furnish any information regarding the business purpose of the foreign trips. These trips were made with family apparently as tourists in personal capacity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS on contract payments. The details of expenditure on which TDS was not deducted are as under:- Head of Expenditure Name of party Amount (in Rs.) Advertisement Calender International 34,935/- Advertisement Fine Ads 26,472/- Advertisement Krishna Neon Signs 87,341/- Professional Charges Noshe Oceanic 1,65,450/- Repair Maintenance Kone Elevator 65,716/- Total 3,79,914/- 41. The CIT(A) upheld the order of the AO holding as under: 9.3 I have considered the issue. The payments made were in the nature of Advertisements expense/ professional changes etc on which the appellant was liable as per law to deduct TDS irre spective of the fact that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of accounts of the appellant. 46. The facts relevant to the issue are that the Assessing Officer made an addition of ₹ 7,96,537/- on account of mismatch in the income as per 26AS form and income as per income tax return. The Assessing Officer examined the 26AS form of the assessee and found that there was difference of ₹ 7,96,537/- from M/s V.F. Brands India Pvt. Ltd. and in the absence of any explanation regarding the same from the assessee, added ₹ 7,96,537/- to the income of the assessee. 47. The CIT(A) upheld the order of the AO holding as under: 5.2 I have examined the issue in detail. The income is charged to tax in the year the right to that income has accrued or arisen as per section 5 of the Act. Income has accrued to the appellant in the current year. The Assessing Officer had to brought to tax in this year as mercantile system is being followed. Issue of credit notes to set-off expenses against the income has been done in the next financial year as a result the income chargeability rightly added the income. The addition is confirmed and ground of appeal No, 2 is dismissed. 48. Before us the Ld.Counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that the above ground raised by the assessee in this appeal was identical to ground No.3 raised in assesses appeal in ITA No.1010/Chd/2017 . In view of the same our decision rendered therein at para 15 will apply to this ground with equal force. Following the same this ground of appeal No.3 is dismissed 53, Ground No.4 raised by the assessee reads as under: 4. On the facts and circumstances of the case, the learned ClT(Appeals) has erred in having confirmed disallowance of an amount of ₹ 9,25,537/- being the amount of expenditure incurred on foreign travel of the Directors by treating the same as non business expenditure. 54. It is relevant to mention here that the above ground raised by the assessee in this appeal, it was admitted by both the parties, was identical to ground No.5 raised in assesses appeal in ITA No.1011/Chd/2017 dealt with us above. In view of the same our decision rendered therein at para 37 will apply to this ground with equal force. Following the same this ground of appeal No.4 is partly allowed. In effect the appeal of the assesses is partly allowed for statistical purposes. 55 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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