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TMI Blog2023 (4) TMI 1050X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly, the delay in filing the present appeal by the assessee is condoned. 3. The assessee in its appeal has raised the following grounds:- 1. In the facts and circumstances of the case and in law the Id. Commissioner of Income-tax (Appeals) has erred in deciding the appeal ex-parte. 2. In the facts and circumstances of the case and in law the Id. Commissioner of Income-tax (Appeals) has erred in confirming the disallowance of Rs.2,47,85,290/- made by the Assessing Officer assuming altogether different grounds of appeal than the grounds taken in the memorandum of appeal. 3. In the facts and circumstances of the case and in law the Id. Commissioner of Income-tax (Appeals) has erred in sustaining the disallowance of Rs. 1,35,957/- u/s 14A of the Income-tax Act, 1961. 4. The appeal order is bad in law and without jurisdiction. 5. The Appellant reserves the right to add, amend, alter, omit or withdraw all or any of the grounds of appeal. 4. Brief facts of the case are that the assessee derives income from offering of management and technical services, renting of equipment, flats, export sales and capital gain. This year the assessee has shown net revenues from operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. 5. Against the above order of AO, the assessee preferred appeal before the ld. CIT(A) and the ld. CIT(A) upheld the findings of the AO and dismissed the appeal of the assessee. 6. Now, the assessee is in further appeal before the Tribunal. 7. Ground No.1, 4 & 5 are general and academic in nature, hence, needs no separate adjudication. 8. Ground No.2 is with regard to disallowance of Rs.2,47,85,290/- on account of payment made towards drawing and designing charges outside India. 9. Ld. AR on this issue has submitted that the payments were made for sale of coal charging car (herein after referred to as "equipment") to Mckeown International, Texas as per Equipment Purchase and Sale Agreement dated 01/02/2012. As per clause 3.3 of the agreement the equipment was to be delivered within 15 months following the date of effectiveness of agreement. As per Section 15.19 of the said agreement, it shall be 60 days from the date of agreement i.e April'12. Accordingly, it was agreed to deliver the equipment by June' 2013. As per the ld. AR the assessee started importing the drawings and designs services and have incurred Rs. 1,88,99,712/- on such services in preceding FY 2012-13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance on the basis of vague and unrelated observations. e) In first appeal Id. CIT(A) dismissed the appeal treating the assessment order as ex-parte order solely on the basis of statement of facts. He did not even call for assessment records. f) The expenses of Rs.2,47,85,290/- relate to sale of Coal Charging Car Equipment to Mckeown International, Texas as per Equipment Purchase and Sale Agreement dated 01/02/2012. g) As per clause 3.3 of the agreement the equipment was to be delivered within 15 months following the date of effectiveness of agreement. As per Section 15.19 it shall be 60 days from the date of agreement i.e April'12. Accordingly, it was agreed to deliver the equipment by June'13. h) Appellant started importing the drawings and designs and incurred Rs. 1,88,99,712/- on importing drawing and design in preceding FY 2012-13. i) It was not charged to P & L A/c in FY 2012-13 and was shown as prepaid expenditure in Balance Sheet as at 31.03.2013 under the head "Short term Loan and Advance " in Note 14. j) The payments of imports of drawings and designs were subjected either to service tax % 12.36% or TDS @ 20%. k) The drawings and designs were imported fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. The AO has also examined the ledger copies furnished for verification. The assessee was not responsive to the appellate proceedings and has also not furnished evidence before the ld. CIT(A) to examine the sales, hence, the evidences were never produced before the AO as well as before the ld. CIT(A), thus, at this stage the same cannot be allowed. The AO/appellate authority/lower court may be given opportunity to furnish the documents/evidence by the assessee for the final decision in the case. Reliance was placed on the decision of ITAT Hyderabad Bench in the case of ACIT Vs. Ascend Telecom Infrastructure (P) Ltd., ITA No.1097&1098/Hyd/2018, order dated 15.04.2021, wherein it is held that while deciding any ground without calling for a remand report from the AO, is untenable in law. Therefore, ld. Sr. DR has prayed that the appeal of the assessee on this ground was rightly adjudicated by the authorities below and the same needs to be sustained. 11. We have considered the rival submissions, perused the material available on record, the additional evidence submitted under Rule 29 of ITAT Rules, 1963 and the judicial pronouncements pressed into our service. Admittedly, the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges were paid in terms of agreement with McKeown international Inc, USA dated 01.02.2012 for sell / purchase of coal charging car under the obligations cast upon the assessee, the same shall be allowed in the year of completion of project under matching concept of accounting. Our view on matching concept of account has support of the view taken by Honble Mumbai High Court In the case of CIT Vs Taparia Tools Ltd, reported in (2003) 260 ITR 102 (BOM), where in it has been held that: In order to determine the net income of an accounting year under the mercantile system of accounting, the revenue and other incomes are matched with the cost of resources consumed. The matching is to be done on accrual basis. Under this matching concept, revenue and income earned during an accounting period irrespective of actual cash inflow is to be compared with expenses incurred during the same period irrespective of actual out-flow of cash. 12. Reliance is also placed on the judgment in the case of CIT Vs U.P. State Industrial Development Corporation, reported in (1997) 225 ITR 703 (SC), where in Hon'ble Apex Court has held that: In order to determine the question of taxability, well settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Rules, 1962 - Expenditure incurred in relation to income not includible in total income (Disallowance) - Assessment year 2002-03 - Whether only that expenditure which is in relation to earning dividends can be disallowed under section 14A and rule 8D - Held, yes - Whether dominant purpose for which investment into shares is made by assessee may not be relevant as section 14A applies irrespective of whether shares are held to gain control or as stock-in-trade - Held, yes - Whether however where shares are held as stock-in-trade, main purpose is to trade in those shares and earn profits therefrom and, in process, certain dividend is also earned which is tax exempt under section 10(34); expenditure attributable to exempt dividend income will have to be appointed to be disallowed under section 14A - Held, yes [Paras 39 & 40] [Partly in favour of assessee] II. Section 14A, of the Income-tax Act, 1961, read with rule 8D of the Income-Tax Rules, 1962 - Expenditure incurred in relation to income not includible in total income (Applicability of rule 8D) - Assessment year 2002-03 - Whether rule 8D is prospective in nature and could not have been made applicable in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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