TaxTMI 
TaxTMI 
2012 (6) TMI 61
X X X X Extracts X X X X
X X X X Extracts X X X X
....port of its claim. 3. The learned CIT(A) has erred while sustaining the disallowance made u/s. 43B aggregating 2,01,586/-rejecting the plea of the Assessee that these statutory liabilities are old and unclaimed balances which is not correct and not justified. 4. The learned CIT(A) has erred while sustaining the disallowances made u/s. 40(a)(ia) of Rs. 9,24,853/-, Rs. 6,93,777/-, Rs. 13,88,511/- which is not correct and not justified. Hence, the disallowances may please be deleted. 5. The learned CIT(A) has erred while sustaining the disallowance of conveyance expenses of Rs. 2,20,000/-, disallowance of Interest of Rs. 3,27,501/- and disallowance of depreciation of Rs. 1,70,770/- which is not correct and not justified. Hence, the disallowances may please be deleted. 6. The Assessing Officer has erred while disallowing a sum of Rs. 1,11,73,133/- from the Export Profit claimed by the Assessee Company on the contention that common expenditure relating to the export and domestic business are not deducted from export profit and the same has been confirmed by the learned CIT, Appeals which is not correct and not justified. 7. The Assessee Compa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. However, the Assessing Officer has not considered the same and disallowed a sum of Rs. 2,01,586 u/s. 43B. 6. The Assessing Officer has also disallowed a sum of Rs. 9,24,853 u/s. 40(a)(ia) on the contention that TDS amount payable to the extent of Rs. 18,867/- has not been remitted to the Government Account which is not correct, not justified and bad in law. The AR submitted that the assessee had computed the TDS at higher rates than the actual applicable rate which resulted in higher TDS payable and this was rectified subsequently and actual tax payable was only RS. 84,502/-. However, the Assessing Officer has not considered the same and disallowed a sum of Rs. 9,24,853/- u/s. 40(a)(ia) which is not correct, not justified and bad in law. Hence, the addition may please be deleted. 7. The learned AR submitted that the Assessing Officer disallowed a sum of Rs. 6,93,777/- u/s. 40(a)(ia) on the contention that TDS amount payable has not been remitted to the Government Account within the stipulated time. It is submitted that the delay in remittance of TDS deducted in the January, 2006 and February, 2006 happened by oversight and requested not to disallow the same u/s. 40(a)(ia).....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to in section 28 shall be computed in accordance with the provisions of section 30 to 43D. From the above provisions in the statute, it thus clear that the profit of the undertaking in the case of the appellant has to be computed in accordance with the provisions of the section 30 to 43D., i.e., including the provisions of section 43B of the Act. In view of the above legal provisions in my considered view, exemption under section 10B has to be computed on the profits determined after taking into account the disallowances to be made under section 43B of the Act. " (b) The Delhi Tribunal in the case of ITO v. M/s. Sahasra Electronics Private Limited (2010-TIOL-89-ITAT-DEL) held that it is a settled proposition that when the assessee is claiming exemption under section 10A and assessee's profit from eligible business by the AO is recomputed the deduction under section 10A is also to be allowed on the recomputed profit under section 10A. (c) Delhi Tribunal in the case of M/s. International Gold Co. Ltd. v. Income tax officer 2010-TIOL-652-ITAT- MUM) held that even if the disallowance is sustained, it will only go to increase the business profits of the assessee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....educting TDS. The matter has been already covered by special bench decision in the case of M/s. Merilyn Shipping & Transports v. ACIT, in I.T.A. No. 477/Viz/2008 order dated 29th March, 2012 wherein it was held that the provisions of section 40(a)(ia) of the Income-tax Act, 1961, are applicable only to the amount of expenditure which are payable as on the date 31st March of every year and it cannot be invoked to disallow which had been actually paid during the previous year, without deduction of TDS. 15. In view of the above decision and based on the ratio of above cases we are of the opinion that, disallowances u/s 40(a)(ia) would not have any application on expenditure incurred and paid during the year itself without deduction of TDS. In the present case all the payments are being paid and none of the payments are shown as payable and hence disallowances made u/s 40(a)(ia) is deleted. Accordingly the ground of the assessee is allowed. 16. Ground No. 5 -Not pressed before us hence dismissed as not pressed. 17. Ground Nos. 6 to 8 -Regarding disallowances of Rs. 1,11,73,133/- from export profit. 18. The AR of the assessee submitted that the Assessing Officer has disallow....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rt and domestic business, has ignored the special audit report and complete the assessment on the basis his own estimation. The assessing officer is not correct by ignoring the special audit report when he himself ordered for special audit. The assessing officer should have accepted the audit report and completed the assessment based on the findings of special audit. The matter would have different if the special auditor finds discrepancies in the books. When the special auditor reported that there was no discrepancies in the books of accounts maintained by the assessee the Assessing Officer should have accepted the books of accounts. The assessing officer has in turn rejected the assessee books of accounts and resorted to estimation on purely surmises, suspicious and conjecture manner without any evidence with him to suspect the books of accounts. Books of accounts can be rejected and estimation can be made only when the assessing officer finds out any mistakes in the books of accounts maintained by the assessee. When there are no mistakes in the books of accounts and books of accounts are in verifiable manner, the assessing officer cannot reject the books of accounts and resort t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng the disallowance of service tax of Rs. 11,051/- and disallowance towards provision for leave encashment of Rs. 7,24,955/- ignoring the fact that service tax and leave encashment are not covered u/s. 43B which is not correct and not justified. 7. The learned CIT(A) has erred while sustaining the disallowance of depreciation on plant & machinery of Rs. 1,45,155/- which is not correct and not justified. 8. The learned CIT(A) has erred while sustaining the disallowance of Rs. 11,94,471/- on the ground that the whole amount should be capitalized which is not correct and not justified. The deduction u/s. 35D may be allowed towards the expenditure incurred by the Assessee. 9. The Assessing Officer has erred while disallowing a sum of Rs. 2,08,94,401/- from the Export Profit claimed by the Assessee Company on the contention that common expenditure relating to the export and domestic business are not deducted from export profit and the same has been confirmed by the CIT(A) which is not correct and not justified. 10. The Assessee Company has already submitted the lower authorities that it is maintaining separate set of books of accounts for the turnover....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Swami & Co towards trademark registration amounting Rs. 24,000, audit fees to Yaji Associates Rs. 75000, certification & consulting charges paid to Iris Smart cards amounting Rs. 340000 on the ground that no TDS was deducted and disallowed expenditure of Rs. 10,72,000 under provisions of section 40(a)(ia) of the IT Act. 28. The assessing officer disallowed expenditure of Rs. 18,36,252/- which consists of Central Sales Tax AIDC amounting to Rs. 3,31,383, Central Sales Tax- Retail amounting to Rs. 9,881 , Value Added Tax-others amounting Rs. 14,70,099, Value Added Tax-Retail amounting to Rs. 9,490, Value Added Tax RFID amounting to Rs. 4,348 and Service Tax RFID amounting to Rs. 11,051 on the ground that statutory liabilities are not paid under the provisions of section 43B of the LT Act . 29. The assessing officer made disallowance of Rs. 11,94,471 relating to filing fee to RoC for increase in Share Capital of Rs. 6,50,000, payments made to Arun Shourie in connection with purchase of stamp duty towards increase in share capital (Rs. 1,95,000), legal advice charges and other expenses amounting to Rs. 50,561 and Rs. 2,98,910 respectively on the ground that expenditure incurred ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cognized the leave encashment which accrue for the year has been made provision in the books of accounts. He further submits that it is liability which needs to be paid in future, he further submits that it is not tax or duty which is not covered by section 43B, thereby a provision is created in the books of accounts and requested to delete the addition. 36. On the other hand the DR submitted that the assessing officer has made the addition and the authorized representative of assessee has agreed for the addition is now filed appeal against the addition. Having consented for disallowances during assessment proceedings the appellant cannot take a plea that the AO has erred in disallowing the same. Once the assessee gives his consent for addition he has lost his right of appeal. The DR placed his reliance on the order of Tribunal, Hyderabad Bench in the case of Sri. D. Rajaram (HUF) in ITA. No. 718/Hyd/202. It was further submitted that moreover section 43B very clearly covers even service tax which is a statutory liability. The provisions of section 43B which state that "any sum payable by the assessee by way of tax, duty, cess or fee, by whatever name called, under any law for t....