AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 794
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.... partners, without appreciating the contents of CBDT, New Delhi's Circular No. 739, dated March 25, 1996 (see [1996] 218 ITR (St.) 131 ). (3) On the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in deleting the disallowance of depreciation of Rs. 31,800 in the absence of valid documentary evidence in support of purchase of truck during the year." 2. Regarding ground No. 1, the Revenue has challenged the deletion of the disallowances of the provision of entry tax liability under section 43B of Rs. 40,03,853. 2.1 The facts in brief are that the assessee has made a provision of entry tax for Rs. 40,03,853 as on March 31, 2010, and the assessee was asked to furnish proof of payment by the Assessing Officer. The assessee submitted that in view of the ongoing litigation before the Supreme Court, as a matter of precaution, it has created a liability being the provision for entry tax on one hand and at the same time to nullify the effect of such a provision, it has also passed another entry on the assets side as "advance against entry tax". However, the assessee never charged/collected any entry tax from the customers nor the....
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....ot pay/deposit, then also, despite absence of entries in the accounts, disallowance under section 43B can be made. However, in the present case, the assessee never claimed any deduction as the subjected amount was never debited to the profit and loss account in any of the three years (kindly refer the profit and loss account at paper book page 23). The Assessing Officer completely failed to prove to the contrary. Also it is not case of the Assessing Officer that the assessee though collected entry tax from the customers yet did not deposit the same. It only appears to misconception on the part of the Assessing Officer as regards the accounting treatment. The admitted facts available on record and apparent from the audited balance-sheet for this year as also in the earlier years are that on the liabilities side there is an account being the "provision for entry tax" and at the same time, on the assets side also there is an account named "advance against entry tax" of equal amount, which has been reproduced by the Assessing Officer at pages 4-6 at the assessment order. Thus, it is evidently clear that these are mere accounting entries, neither there was any collection from the custo....
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....ars 2008-09, 2009- 10. Given that there is no claim of provision of entry tax in the profit/loss account and, hence, in the absence of a claim of an expense, the question of section 43B getting attracted does not arise at the first place. Section 43B postulates a situation where the expense otherwise allowable under the Act is subject to disallowance on non-fulfilment of the conditions stipulated therein. Unlike claim of depreciation where the statute stipulates a mandatory allowance of depreciation even if not claimed, there is no such statutory provisions in respect of the claim of statutory liability which even though not claimed but would still be deemed to be allowed for tax purposes. We have also gone through the order of CIT v. Assam Roller Flour Mills [1997] 226 ITR 876 (Raj) and CIT v. Padmavati Raje Cotton Mills Ltd. [1993] 203 ITR 375 (Cal) which does not advance the case of the Revenue. In light of the above, there is no need to interfere with the finding of the learned Commissioner of Income-tax (Appeals) which is hereby confirmed. Hence, ground No. 1 of the Revenue's appeal is dismissed. 3. Regarding ground No. 2, the Revenue has challenged the deletion of the di....
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....partners at the end of the year. It is not disputed that the partners were paid remuneration which was less than the maximum amount provided under the Act. None of the authorities have doubted the payment of remuneration to partners. The provisions of section 40(b) permits the allowance only if the claimed remuneration is found authorised by and in accordance with the partnership deed which condition has duly been fulfilled in the present case. In view of these facts, the last paragraph of CBDT Circular No. 739, dated March 25, 1996, has also been wrongly applied by the Assessing Officer. It was further submitted that the partnership deed was executed on December 9, 2002, and the firm came into existence with effect from December 9, 2002, i.e., from the assessment year 2003-04 and since then, the assessee has been claiming remuneration based on this very partnership deed. In the past as and when such claim was made, was duly allowed by the Assessing Officer. Here also there appears no special reason as to why the Assessing Officer should have taken a contrary view or read the partnership deed, the way he does this year. In support, he relied upon the following case law : * CIT....