TaxTMI 
TaxTMI 
2015 (3) TMI 305
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....ts and circumstances of the case and in law was justified in deleting the disallowances of Rs. 52,90,624/- made by the Assessing Officer on account of disallowance of capital expenditure included in Misc. contract expenses after entertaining the fresh evidence of the assessee without calling for remand report from the Assessing Officer? iv. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting disallowances of Rs. 9,54,678/- made by the Assessing Officer on account of disallowance out of hire charges paid after entertaining the fresh evidence of the assessee without calling for remand report from the Assessing Officer? v. Whether the CIT(A) under the facts and circumstances of the case and In law was justified in deleting the disallowances of Rs. 23,934/- made by the Assessing Officer on account of disallowance of interest paid on TDS after entertaining the fresh evidence of the assessee without calling for remand report from the Assessing Officer? vi. Whether the CIT(A) under the facts and circumstances of the case and in law was justified in deleting disallowance of Rs. 1,01,549/-- made ay the Assessing Officer on account o....
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.... of ROC Fees. GROUND NO. 1. 5 The facts in brief are that the Assessing Officer vide para no. 5 of the assessment order alleged that the assessee had not charged interest of security deposit given by it to its group companies. The assessee explained before the A.O. that it had given security deposits amounting to Rs. 8,06,54,056/- to various government departments and group companies. The details of which were filed during the course of assessment proceedings. It was stated that the deposits were given mainly to the government agencies, viz., Haryana State Electricity Board; Water and Sewerage Securities and the security deposit to the landlords. Most of the securities were given in earlier years. It was explained further that no interest accrues or paid to the assessee by the Government Agencies and also by the landlords from whom the properties had been taken on rent. It was submitted that it is the industries norm that the interest free security is received by the landlords from the tenant. The A.O. did not agree with the assessee and made the addition of Rs. 29,73,740/- on account of notional interest @ 8.50% on part of interest free security deposits of Rs. 3,49,00,820/-....
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....of Rs. 8 crore, the appellant has paid interest @8.75% p.a. On the basis of this preposition the Assessing Officer concluded that at one hand appellant is paying interest on security deposit, however, no interest is charged on the security deposit of Rs. 8,06,54,056/- given to various govt. agencies and malls. Ongoing through the details of security deposits given to various parties, it is seen that an amount of Rs. 4,53,46,236/- has been given to Haryana State Electricity Board. The security deposit has also been given to sewerage department water supply department. The other deposits have been given for taking food court on rent or taking space from mall on rent. In some cases the advance rent has been given as deposit for taking space on rent. It is well settled principle that any security deposit given to Government for taking electricity connection and other public utilities, no interest is paid by the Government. Similarly, the security deposit and advance security deposit given for taking premises or space on rent no interest is receivable from the landlord. This general practice is prevalent in the market; therefore, there is no question of charging of notional interest on ....
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....xpenses which have all along been allowed to the assessee in the earlier years since inception and even in the subsequent year. The learned CIT(A) after discussing the cases of the assessee as well as the Assessing Officer has deleted the additions in question. 6.1 In support of the ground, the learned DR has basically placed reliance on the assessment order. She submitted that the learned CIT(A) while deleting the additions has not met out the objections raised by the A.O. 6.2 The learned AR, on the other hand, tried to justify the first appellate order on the issue and reiterated the submissions made before the authorities below and placed reliance on the decisions referred before the learned CIT(A). 6.3 We find that the disallowances were made by the A.O. on account of power and fuel expenses (2% of the claim) (ground no. 2); miscellaneous contract expenses under the head repair and maintenance held as "capital expenditure" (ground no. 3); Hire charges (50% of the claim) (ground no. 4); event expenses and consultancy charges (25% of the claim) (ground no. 7); and legal and professional charges (10% of the claim) (ground no. 8). 6.4 So far as power and fuel expenses i....
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.... business and in connection with the extension of the undertaking or in connection with setting up a new unit. It was contended that no new unit or extension of the existing business has taken place, neither the expenditure has been incurred before the commencement of business inasmuch as the business stands duly commenced during the year under consideration. 6.6 The Assessing Officer disallowed a sum of Rs. 9,54,678/- being 50% of Rs. 19,09,355/- on account of Hire charges with the observation there was nil expenditure incurred under this head in the immediately preceding year. This action of the A.O. was contended by the assessee with the submission that the Assessing Officer has failed to consider and failed to appreciate though duly explained to him during the assessing proceedings that in the earlier years, the expenses were grouped under the head "miscellaneous expenses'". It was submitted that in the immediately preceding years a sum of Rs. 17,67,169/- was incurred under the head "Hire charges" grouped with miscellaneous expenses and the marginal increase during the year under consideration is commensurate with the increase in income. The observation of the A.O. that the ....
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....ure out of repair and maintenance expenses. From the assessment order it is seen that Assessing Officer has not doubted the genuineness of these expenses and he has not brought any material on record which could have prove that these expenses were not incurred wholly and exclusively for the business purposes. The appellant has submitted details about the diesel expenses which have been incurred for running DG set for generating electricity which was supplied to various malls and offices to which services are being provided by the appellant. These DG sets were run to supplement the shortage of electricity in Gurgaon region and if there is a increase in the expenses on account of diesel, there is increase in the revenues received by the appellant. The entries given by the Assessing Officer in the assessment order pertains to the expenses incurred on running of DG sets for a particular building and entry for the expenses made on a particular date. These entries nowhere suggest that these are not genuine expenses and not incurred for the business of the appellant. Further, Assessing Officer has not pointed out any defect in the correctness of diesel account maintained by the appellant.....
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.... Rs. 13,80,790/- out of event expenses and consultancy expenses shown under the head 'repair and maintenance'. These expenses have been incurred on the various events organized by the appellant on the event name 'women in India cinema' for promoting business of the appellant. The appellant has given the name of the party to whom these payments were made alongwith the necessary evidences, therefore, disallowance of 25% expenses out of said expenses was not justified. The Assessing Officer has disallowed Rs. 25,15,644/- out of legal and professional expenses. The appellant has paid Rs. 2,51,56,444/- to DSL division. All the payments have been made by cross cheque for the services rendered by various parties wholly and exclusively for the purposes of appellant's business. The appellant has given account of expenses incurred from page 136 to 144 of the paper book. On examination of these expenses, it is seen that these expenses have been paid to various Advocates, Retainer ship fees, salary and other legal and professional services obtained by the appellant. Therefore, it cannot be said that these expenses were not genuine. Further, the Assessing Officer has not made....
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....ther that the liability for expenses being contingent in nature crystallized during the year and accordingly claimed deduction in the year under consideration. Reliance was placed on the decision of Hon'ble Delhi High Court in the case of CIT Vs. Modipon Ltd., (2011) 334 ITR 102 holding that "where certain expenses claimed by the assessee as business expenditure were disallowed by the Assessing Officer on the ground that they pertained to prior period but Tribunal found that all those expenses were settled during the year and were covered U/s 43B, Tribunal order was not to be interfered." Reference of decision of Delhi Bench of the Tribunal in the case of National Agricultural Co-operative Federation of India Ltd. Vs. Joint Commissioner of Income Tax, 304 ITR 303 was also given wherein it has been held that "an assessee cannot claim to deduct an item of liability which is not accepted by him but which on the contrary is disputed by him. The liability is deductible only when it crystallizes into an ascertained liability. Some other decisions have also been cited. Being convinced with the submission of the assessee in this regard, the learned CIT(A) has deleted the addition. 8.1 I....