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TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 184
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....uchers. 2. On the facts and circumstances of the case, the Ld CIT(A) has erred in deleting disallowance of Rs. 72.08.010/- made by the AO under head Petrol, Diesel and CNG expenses in absence of documentary evidence in respect of these expenses. 3. On the facts and circumstances of the case, the Ld CIT(A) has erred in deleting disallowance of Rs. 25.422415/- being prepaid insurance expense. 4. The appellant craves leave to add alter or amend any of the grounds of appeal before or during the course of the hearing of the appeal." 2. We first take up the appeal of the assessee. The brief facts and background of the case qua the issue involved are that the assessee is engaged in the business of car rental services mainly for corporate clients and multinational companies. The Ld. Assessing Officer noted that the assessee has debited expenses in the P&L account amounting to Rs. 1,23,52,682/- on account of interest paid. Out of the said expenses amounts aggregating to Rs. 61,24,633/- was paid to various NBFC companies from whom the assessee had taken loan for the purchase of cars. However on such interest payment the assessee had not deducted TDS and accordingly, held that the ....
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....P) Ltd. reported in 377 ITR 365, wherein it has held that the provisos inserted by the Finance Act 2012 in section 40(1)(ia) and 201(1) are declaratory and curative in nature and therefore have to be given retrospective effect from 1.4.2005. Along with the said petition the assessee has also filed certificates from Chartered Accountant of the respective companies. 5. On the other hand the Ld. DR submitted that these are purely additional evidences and that to be only in respect of 3 companies, that is, the assessee has given certificates from 3 companies which too have not been verified by the Assessing Officer. Therefore, these evidences require verification at the end of the Assessing Officer. 6. We have heard the rival submissions, perused the relevant material on record and also the relevant findings given in the impugned order. Admittedly, the assessee under the statute was liable to deduct TDS on the interest paid to NBFCs. However, before us the ld. Counsel has taken a plea that these NBFC companies have given certificate in Form 26A certifying that they have shown interest income in their return of income filed u/s 139(1). Therefore, in view of the second proviso to secti....
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.... copies of bills and vouchers and also books of accounts in support of expenses claimed. In response to the show cause notice the assessee submitted that he has been maintaining ledger accounts and bank book in computerized system, however the bills and vouchers which were lying in the office premises got destroyed in the fire which broke on 4.1.2010. The relevant reply of the assessee before the Assessing Officer in this regard reads as under:- "1. As submitted earlier vide our letter dated 25.11.2011 regarding the books of accounts along with bills/vouchers, we produce the Cash Book, Ledger and Bank Book as were maintained regularly by the assessee in computerized system as in the past for your kind verification. A few files containing bills of vendors were also produced. Regarding the balance bill/vouchers, it was submitted that unfortunately on 04.04.2010 at 00.30 hrs a fire was broke out at the office premises of the assessee located at Prakash House no.l, Opp. State Bank of Patiala, Mahipal Pur Road, New Delhi. It was immediately informed to the local police and local public call the fire bridge also. With the help of fire engines the fire bridge brought the fire under cont....
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....ack up available with the auditor, had been produced before the Assessing Officer, hence the finding that books of account were not produced is incorrect. It is stated that the Assessing Officer was mistaken in making adhoc disallowances without rejecting the books of account u/s 145(3), and moreover the assessment has been completed, not u/s 144, but u/s 143(3), It is contended that the appellant was hot allowed a reasonable opportunity of being heard before making of the disallowances. The appellant has furnished copies of all submissions made during the assessment proceedings including copy of FIR filed before the SHO, Vasant Kunj Police Station, on 06.04.2010 regarding fire on 04.04.2010 in which computers, printers, photocopier machine, air conditioners, office furniture, EPABX system, office files, documents, records and bills were stated to have been completely destroyed, It is considered therefore that the appellant had sufficient reason for being unable to produce the original books of account and bills/vouchers before the Assessing Officer during the scrutiny proceedings which were commenced by issue of notice u/s 143(2) dated 18.08.2010, Moreover the assessment order sho....
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....er should be upheld. 11. On the other hand the ld. AR of the assessee submitted that so far as the observation of the Assessing Officer that the books of accounts have not been produced is not correct as they were duly produced. It was only the bills and vouchers could not be produced due to fire at the office premises. In any case all these expenses have incurred mostly through accounts payee cheques and in some matters the assessee has also confirmation from the 3rd parties. Therefore, in light of these evidences the disallowance cannot be made on ad hoc basis. Moreover, he submitted that the assessee's case in the earlier years have been completed u/s 143(3) wherein on similar nature of expenditure no disallowance/s have been made and also rate of the net profit has also been accepted, when the trading results and net profits by and large remained the same. In support he also filed comparative chart of expenses debited to the profit and loss account for the F.Ys. 2008-09 and 2007-08 along with the copy of assessment order passed u/s 143(3) for the A.Y. 2008-09. 12. We have heard the rival submissions and perused the relevant material placed on record including the impugned ord....
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....d the appeal. 14. We find this issue has been dealt in detail and decided by the Hon'ble Tribunal in the following manner:- "5. We have heard the Id. DR and gone through the facts of the case. Admittedly, insurance premium is paid year after year for a period of 12 months only. The benefit of premium paid in the preceding year would have been available for a portion of period in the year under consideration. As found out by the Id. CIT (A), the assessee is following consistently the same method. It is nobody's claim that premium for a period exceeding 12 months had been claimed in the year consideration and has been paid on the basis of demand notice raised by the insurance company. In this situation, we do not find any flaw in the approach of the Id. CIT (A). Under the mercantile system of accounting, the assessee is entitled to claim deduction on the basis of incurring the liability irrespective of the date of payment. Even such liability can be claimed on the basis of provisions where such liability is not qualified. On the other hand, under the cash system of accounting, the assessee is entitled to claim deduction on the basis of payment irrespective of the date of incur....
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....pursuance of demands raised by the postal, telephone and telegraph departments, etc., the same was claimed as a deduction in computing the income from business. The Assessing Officer negated the claim for deduction of such expenses. In the appeal, the Commissioner of Income-tax accepted the contention of the appellant. On second appeal, the Tribunal held that in principle, the assessee is entitled to the revenue deduction either on the basis of the 'matching principle' or with reference to section 43B of the Act, that the said sum of Rs. 26,729 is not governed by either, thereby it set aside the decision of the Commissioner of Income-tax, and to that extent, restored the order of the Assessing Officer. The case of the assessee is that they are following the mercantile system of accounting, the amount has been actually incurred for which liability to pay has arisen in that accounting year. There is no dispute in this case that the amount has been actually paid. In the statement of case also, it is stated that the assessee-company in its accounts treated the above said amount as prepaid and showed it as an asset in its balance-sheet. However, the payments were made in pursuan....