TMI Blog2022 (3) TMI 1506X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the Act and the facts we are of the considered view that the assessee has rightly claimed the deduction u/s 40(a)(ia). Relief on account of deferred revenue expenditure - adjustment of TDS credit and negative movement in the deferred revenue - HELD THAT:- We notice that the same issue is pending before the coordinate bench of the Tribunal for adjudication against the order of the CIT(A) for various assessment years from 2009-10 in assessee s own case. The issue can be decided for the year under consideration only based on the outcome of the other appeals pending for the earlier years as the decision will have a cascading effect on the issue for the year under consideration. At this point in time we can only issue a direction to the AO to follow the decision that would be adjudicated by the coordinate bench of the Tribunal for assessment year 2009-10 2010-11 on this issue. The AO is directed to grant consequential relief in accordance with the decision of the coordinate bench of the Tribunal in terms of adjustment of TDS credit and negative movement in the deferred revenue. The AO is directed accordingly and that a reasonable opportunity of being heard to be give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in appeal before the Tribunal. 5. The assessee raised five grounds and several sub grounds before the Tribunal. Ground No.1 is general in nature and does not require separate adjudication and therefore dismissed. During the course of hearing, the Ld AR did not press for ground No.4 hence, the same is dismissed. Ground No.5 is consequential in nature. 6. In this appeal we will adjudicate ground No.2 and 3 which is reproduced below 2. Disallowance of claim under section 40(a)(ia) of the Income tax Act 1961 ( the Act ) 2.1 The Ld. AO has erred in law and on facts in disallowing an amount of Rs 552,789,460 being the expenses claimed as deduction on remittance of Tax Deduction At Source ( TDS ) in accordance with section 40(a)(ia) of the Act. 2.2 The Ld. AO has erred in law and on facts in referring to the appellate order passed for Assessment Year ( AY ) 2009-10 and stating that the Appellant had not furnished one to one correlation of provision created with the invoices subsequent raised, while in fact such details were duly furnished during the assessment stage. 2.3 The Ld. AO has erred in law and on facts in disallowing the claim of deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come. Disallowance of claim u/s 40(a)(ia) of the Act (Ground No.2) 7. During the year under consideration the assessee claimed a sum of Rs.55,27,89,460 u/s.40(a)(ia) of the Act. The said amount was disallowed suo moto by the assessee in the previous year relevant to assessment year 2010-11 for non-deduction of tax at source. The AO, in the course of assessment called for the details of the amount claimed as a deduction u/s.40(a)(ia) for which the assessee submitted the party wise details along with the details of tax deducted at source. The AO disallowed the deduction claimed stating that the assessee did not furnish a one-to-one correlation of the provisions created with the invoices subsequently raised and TDS is remitted 8. Aggrieved by the draft order of AO, the assessee raised objections before the DRP. The DRP gave a direction to the AO stating that - Having considered the submissions, It is noticed by us from the para 2 of the draft assessment order that the AO has mentioned that the assessee failed to furnish one to one correlation with the relevant evidences and therefore, he disallowed such expenses. In our view, in accordance with the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of any assessee ******* (ia) thirty per cent of any sum payable to a resident, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139: Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, thirty per cent of such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid: 14. As per the provisions as extracted herein above the assessee is entitled for the deduction of the amount which was disallowed earlier, in the year in which the TDS is deducted and paid. In the given case, the amount which was disallowed earlier by the assessee is claimed as a deduction u/s.40(a)(ia) in the year under consideration based on the fact that the assessee has deducted and remitted the TDS on the amount in year under consideration. There is no other condition attached while claiming the expenditure in the year of TDS remittanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed the principle laid down in assessee s own case for the asst. year 2009-10 which was upheld by the CIT(A) and concluded that the same principle should be applied. The movement with respect to deferred revenue and the corresponding deferred cost for the year under consideration are as follows:- Since there is a negative movement, the AO did not make any specific additions with respect to deferred revenue / cost in the draft assessment order. 17. The assessee raised objections before the DRP stating that the assessee is following mercantile system of accounting and has been consistent in recognizing the revenue as per the accounting standard. The assessee raised an alternate plea before the DRP stating that if the the principle as laid down by the CIT(A) is to be followed, then the AO ought to have given relief to the assessee for the negative movement. The DRP in the order did not issue any directions on ground that no addition was made by the AO in the draft assessment order and DRP in such circumstances is not empowered to issue any directions. In the final asst. order, the AO confirmed his earlier decision mentioning that since the end movement of the deferred reven ..... X X X X Extracts X X X X X X X X Extracts X X X X
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