TMI Blog2022 (6) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee of Rs. 15.84 Crores was awarded. It is another matter that the assessee has not taken any cognizance of the same in the accounts and no adverse inference by the authorities below is also there. Hence, the plea of professional charges paid Pramodh Engineers for pursuing and following of proceedings at Arbitral Tribunal, without any justification is not at all justified. Hence the reasoning of Revenue Authorities that the same is not for the purpose of business is liable to be rejected. CIT(A) has sustained the addition is absence of documentary evidence - We note that the Ld. CIT(A) examined the bills of professional charges to Pramodh Engineers. There is no dispute that the TDS on the same has been deducted. As held by us above, the same is for the purpose of business wherein the said firm was pursuing arbitration proceedings which as mentioned in the note of account has resulted in Rs. 15.84 crores being awarded in favour of assessee. The narration of the professional fee bill by the payee is not at all material in rejecting the professional fee bill. A professional fee bill is based upon understanding between the assessee and professional service provider. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrelevant and extraneous consideration and thus, disallowance upheld d is wholly unwarranted and not in accordance with law. 3 That various adverse findings recorded by the learned Commissioner of Income Tax (Appeals) and learned Assessing Officer are contrary to record and law and thus unsustainable. 3. Brief facts of the case as culled out from the draft assessment order are that the assessee company is incorporated under the laws of Malaysia which is engaged in the business of road construction. Only a maiden contract was awarded to the company by Public Works Department (PWD), Kerala State Transport Project (KSTP), Govt. of Kerala towards upgrading the sections of highway, namely Palakkad - Shornur (Km 0+000 - Km 45+300) and Thirssur - Kuttipuram (Km19+600 - Km 52+680) in the state of Kerala vide Contract Agreement No. Nil dated 07.11.2002. However, during the year under assessment, the assessee has not engaged in any project work except the winding up activities of project work. The Assessing Officer has noted that the perusal of profit and loss a/c shows that the assessee company has no business activities and only an income of Rs. 1,92,514/- has been shown under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7(1) of the Act. 6. Against the above order, the assessee appealed before the Ld. CIT(A). As regards the issue of disallowance of Rs. 5,15,000/- as arbitrator fee for lack of deduction of TDS, the Ld. CIT(A) confirmed the same by observing as under:- 6.3 The appellant also filed copy of the ledger account. On perusal of this ledger account it is seen that expenses of Rs. 20,000/- paid for getting legal opinion and all other expenses are either for secretarial and clerical expenses in connection with arbitration expenses, or arbitration expenses for sitting on a particular date which are paid to Sh. Kurien Methew or Sh. Roy J Vellanikkarn or Sh. Addul Kharder. As mentioned by the AO, the appellant has submitted a chart of details of IDS deducted and re-conciliation. As per the said chart the appellant has itself described payments made to S/Sh. Kurien Methew and Roy J Vellanikkarn and Addul Kharder as, legal, professional and consultancy . The details of TDS deducted and TDS deposited have been mentioned against these charges. Therefore, the plea of appellant does not have any legs to stand. Copy of said chart of details of TDS deducted and reconciliation is enclosed as Ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the above order, the assessee is in appeal before us. 10. We have heard both the counsel and perused the records. We find that the disallowance in these facts has been done out of legal and professional expenses booked by the assessee. The total expenditure booked were Rs. 64,12,272/-. A sum of Rs. 5,15,000/- was disallowed for lack of deduction of TDS. These sums were paid to arbitrator as fee and clerical expenses and no reasonable explanation was given as to why TDS was not deducted thereupon. The assessee's plea that provisions of section 194J are not attracted has rightly been rejected by the Revenue authorities. Moreover, as noted by the Revenue authorities, the assessee itself in its ledger entry has mentioned that the payment is net of TDS to the arbitrator. Hence, assessee is aware that TDS was to be deducted failure to do so would certainly result in disallowance. Hence, we do not find any infirmity in the addition of Rs. 5,15,000/-. 11. Another addition is regarding payment of Rs. 35,05,892/- paid as professional fee to Pramodh Engineers. As noted above, the assessee in this case is a company incorporated under the laws of Malaysia which is engaged in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 22.08.2011, the Hon'ble Tribunal has given award for payment of Rs. 13.92 cores in favour of the Project Office. PWD, Govt. Of Kerala, has filed an appeal before the Hon'ble District Court, Trivandrum against his order, which is yet to be settled. In view of this appeal, cognizance of the award has not been taken in the accounts. Vide order dated 4.7.2013, the Hon'ble Tribunal has given further award in favour of the Project Office of Rs. 15.84 Crores. The cognizance of this award has not been taken in the accounts. The following balances receivable from the customer (PWD, Govt. of Kerala) are subjected to reconciliation and adjustments, if any, will be given effect after final settlement of the claims: Outstanding on account of (as on 31.3.2013 Amount (Rs.) Receivable on construction job 97260799.54 (Dr.) Retention money 56917349.00 (Dr) Interest claimed 4952418.35 (Dr) Mobilisation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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