TaxTMI 
TaxTMI 
2013 (11) TMI 1679
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....(ia) of the Act. 3. The assessee-company is engaged in construction business. The assessee has filed its return of income for the year under consideration declaring a total income of Rs. 5.64 crores. The Assessing Officer completed the assessment by determining the total income at Rs. 7.04 crores by making various additions, which included the addition made by the Assessing Officer u/s. 40(a)(ia) of the Act ( mentioned as 40(a) in the assessment order) of Sundry creditors balance of Rs. 1,47,91,477/-. It is pertinent to note that the Assessing Officer made this addition without making any discussion in the body of the assessment order. Hence, during the course of appellate proceedings, the Ld. CIT(A) called for a remand report. The Assessi....
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....t arise to such provision for expenses. Alternatively, the Ld. AR contended that the provision for expenses so made is already included in the work-in-progress amount which is credited to the profit and loss account and hence, the claim of making provision for expenses stands nullified. The Ld. Counsel further submitted that the assessee has claimed deduction of the above said amount in the assessment year 2008-09 on protective basis and hence, the Ld. CIT(A) should not have taken cognizance of the same for deciding the issue against the assessee. 5. On the contrary, the Ld. DR submitted that the assessee is not denying the fact that the provision for expenses is susceptible to tax deduction at source. The Ld. DR further submitted that the....
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....egree of estimation. A liability is a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. The Accounting Standard further states as to when a provision should be recognised. It is stated as under:- A provision should be recognised when:_ (a) an enterprise has a present obligation as a result of past event; (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation. If these conditions are not met, no provision should be recognised. Thus, it is seen that a provision ....
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....he provisions of sec. 194C clearly states that the assessee is liable to deduct tax at source either at the time of credit to the account of the contractor or at the time of payment thereof, whichever is earlier. It is further provided that the said liability would arise even if the amount is credited to any other account whether called "Suspense Account" or by any other name. Hence, in our view, the assessee would be liable to deduct tax at source u/s 194C on the amount provided under the head "provision for expenses". Hence, we reject the contentions of the assessee that the TDS provisions shall not apply to the provision for expenses. 6.3 The assessee further submitted that the work in progress amount credit to the profit and loss accou....