2013 (4) TMI 63 - AT - Income Tax

ITAT allows repair expenses and TDS claim, partly allowing appeal.

M/s. M. Gulab Singh & Sons (P) Ltd. Versus The Asstt. Commr. of Income Tax

The ITAT ruled in favor of the assessee, directing the AO to allow the repair and maintenance expenses claim of Rs.60,000 and to address the TDS claim of ... Sharing of expenses - claim of expenditure on the basis of debit note - Addition on account of repair and maintenance expenses - Held that:- Accepting arguments of the assessee that premises of both the concerns are common at Jalandhar where machines of both the concerns have been installed. The expenses having been incurred by M/s. Holy Faith International Pvt. Ltd and small items like Nuts, bolts, Gear, Element, Patti, Bearings, Tools, Beeding and Grease etc. as mentioned hereinabove have been purchased by M/s. Holy Faith International Pvt. Ltd for which all the details are available. The expenses pertaining to the assessee out of the total bills which is fraction which pertains to the assessee were debited to the assessee by crediting to the expenses account by M/s. Holy Faith International Pvt. Ltd is not under dispute. The expenses have been claimed only at one place by the assessee is also not under dispute. Both the concerns are being taxed at highest slab is not under dispute & also assessee is having machinery which is part of the asset side of the balance sheet and, therefore, one cannot imagine that there will be not expenditure of machinery maintenance. Thus the debit note issued by M/s. Holy Faith International Pvt. Ltd has rightly been claimed by the assessee as an expenditure. The A.O. is directed to allow the same and accordingly the order of the ld. CIT(A) is reversed on the issue. Claim of TDS rejected - selection of assessment year - Held that:- There is no dispute to the fact that the same pertains to the assessment year 2003-04. The tax has been paid in the treasury of the Govt. and the credit for the same is required to be given to the assessee since the same does not pertain to the impugned assessment year and income has not been credited during the impugned year. Therefore, the CIT(A) has rightly decided that TDS claim cannot be allowed in this year. It is also claimed that TDS is allowed only in the year where the income has been credited. Therefore, the matter is set aside to the file of the AO who will allow the claim of TDS in the year in which the income has been credited and accordingly decide the issue. Thus, grounds No. 1 & 2 of the assessee are allowed and grounds No. 3 & 4 of the assessee are allowed for statistical purposes. Issues involved:1. Disallowance of repair and maintenance expenses2. Non-allowance of credit of TDS amountAnalysis:Issue 1: Disallowance of repair and maintenance expensesThe appeal arose from the CIT(A)'s order for the assessment year 2004-05, where the assessee contested the addition of Rs.60,000 as repair and maintenance expenses. The ITAT, Amritsar Bench had previously set aside the issues to the CIT(A) for reconsideration. The CIT(A) confirmed the disallowance of Rs.60,000 citing lack of evidence and also upheld the non-disallowance of credit of TDS amounting to Rs.55,510. The assessee argued that the expenses were incurred by a sister concern with common premises, and all details were available. The expenses were for small items like nuts, bolts, gear, etc., which were not separately billed to the assessee. The ITAT found the arguments convincing, noting that the machinery was part of the balance sheet assets, and directed the AO to allow the claim, reversing the CIT(A)'s decision on the issue.Issue 2: Non-allowance of credit of TDS amountRegarding the TDS claim of Rs.55,510, it was acknowledged that it pertained to the preceding year. The assessee's counsel argued to allow the claim for the relevant assessment year. The ITAT agreed that the TDS claim should be allowed in the year to which it pertains, i.e., assessment year 2003-04. The matter was remanded to the AO to decide the issue accordingly. The ITAT held that since the income was not credited during the impugned year, the TDS claim could not be allowed in the current year. Therefore, the grounds related to TDS were allowed, and the appeal was partly allowed for statistical purposes.In conclusion, the ITAT ruled in favor of the assessee on both issues, directing the AO to allow the repair and maintenance expenses claim and to address the TDS claim for the relevant assessment year. Grounds 5 and 6 were deemed general and did not require further adjudication.