2014 (1) TMI 227

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....e made u/s 40(a)(ia) amounting to Rs. 5,65,692/- without appreciating the relevant facts and without considering the CBDT's cir No.715 dated 8.8.1995, as per which TDS is applicable on payments of actual reimbursements as well.    2. On the facts and in the circumstances of the case and in law, the CIT (A) erred in deleting the disallowance made by the AO on account of Electricity expenses amounting to Rs.4,87,359/-....." 3. First ground relates to the disallowance of Rs.5,65,692/- u/s 40(a)(ia) of the Act. In this regard, the case of the AO is that the said amount attracts the provision of section u/s 40(a)(ia) of the Act, though the said amounts are mere reimbursements paid by the assessee to M/s. APP Graphics Pvt. Ltd, wh....

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....there is no element of income and the payment is only the reimbursement of expenses then no disallowance can be made u/s 40(a)(ia) of the Act, we find no reason to interfere with the order of the CIT (A). As such, nothing is brought to our notice by the Revenue that the said expenses are not cases of reimbursement and no contrary decision was also brought to our notice by the revenue. Therefore, the order of the CIT(A) does not call for any interference on this issue. Accordingly, ground no.1 raised by the Revenue is dismissed. 8. Ground no.2 relates to disallowance of expenses on account of electricity expenses amounting to Rs.4,87,359/-. During the assessment proceedings, AO disallowed Rs.4,87,359/- being 50% of the total aggregate ele....

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....87,359/- being 50% of the total electricity charges incurred by the assessee company during the financial year 2007-08 under the erroneous assumption/finding that the aggregate of electricity charges of Rs.9,74,718/- debited to Profit & Loss Account is for office premises at Suraj House, Ghodbunder, Thane. The factual position is that the aggregate of electricity charges of Rs.9,74,718/- comprise electricity charges of Rs.4,16,350/- directly paid to MSEDC Ltd. for office premises at Suraj House (hired on leave and license basis from Suraj Realtors). Rs.4,63,415/- reimbursed to APP Graphics Pvt. Ltd., being assessee's share of electricity charges for the manufacturing, storage cum logistic set-up at Mahape Navi Mumbai (already fully disallow....

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....ire 2nd Floor was occupied by the assessee, which comprised the area of 4 shops originally envisaged by the builder, the assessee had to pay the electricity charges for the entire premises used/occupied by the assessee. The learned Assessing Officer did not seek any clarification on the unwarranted assumptions he has made in the assessment order and in the process has landed up with multiple disallowances on account of electricity charges in the aggregate at Rs.9,50,774/- as against the total electricity charges booked and debited to Profit & Loss Account at Rs.9,74,718/-. For your Honor's kind perusal we have enclosed herewith the extract of ledger account of Electricity charges incurred by the assessee for the financial year 2007-08 (page....