TaxTMI 
TaxTMI 
2017 (12) TMI 788
X X X X Extracts X X X X
X X X X Extracts X X X X
....5,41,270/-. The case was fixed for scrutiny and during the course of assessment proceedings, the Assessing Officer made the following disallowances:- i) On reconciliation of TDS as per books with Form 26AS, the Assessing Officer observed that the assessee had claimed credit of TDS amounting to Rs. 8,19,286/- which was not appearing in Form 26AS. Subsequently, the assessee produced TDS certificates of Rs. 7,19,423/- only and the Assessing Officer proceeded to disallow TDS credit of Rs. 99,683/-. ii) The Assessing Officer further observed that in certain cases of professional income, the assessee had claimed TDS credit which was equal to the professional receipts offered for taxation. The Assessing Officer applied Rule 37BA(....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Tax (A) also deleted the disallowance out of telephone expenses and mobile depreciation. The Ld. Commissioner of Income Tax (A), however, confirmed the disallowance of Rs. 25,455/- pertaining to difference in credit card expenses as per the AIR information and the books of accounts. 2.2 Now, the aggrieved department has approached the ITAT and has raised the following grounds of appeal:- "1. In the facts and circumstances of the case the Ld. CIT(A) has grossly erred in allowing TDS credit of Rs. 31,10,744/- which was withdrawn by the A.O. as per the provisions of section 199 of the I.T. Act, 1961 read with rule 37BA of the I.T. Rules, 1962. 2. In the facts and circumstances of the case the Ld. CIT(A) has grossly erred....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rder of CIT (A) is contrary to the facts on record and the settled position of law; and the order of the A.O. deserves to be restored." 3. The Ld. Sr. DR submitted that the assessee was following the cash system of accounting and not mercantile system of accounting and, therefore, the credit of TDS can be given only in the year in which the professional income was offered for tax. It was submitted that since the assessee had shown professional income of Rs. 34,56,382/-, only 10% of the TDS was to be allowed as tax credit to the assessee. The Ld. Sr. DR also read out the provisions of section 199 of the Income Tax Act, 1961 (hereinafter called 'the Act') and Rule 37BA(3)(i) of the Income Tax Rules and submitted that the Assessing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....grounds raised by the department, the Ld. AR placed reliance on the findings of the Ld. Commissioner of Income Tax (A) and vehemently argued that the order of the Ld. Commissioner of Income Tax (A) be upheld. 5. We have heard the rival submissions and perused the material available on record. As far as ground nos. 1 and 2 of the department's appeal relating to TDS credit of Rs. 31,10,744/- are concerned, the Assessing Officer has observed that the TDS credit of only Rs. 3,45,638/- was allowable as the assessee had shown professional income of Rs. 34,56,382/- only. However, while doing so, the Assessing Officer has not considered the response of the assessee to his show cause notice wherein the assessee has stated that it has claimed TDS ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....count of repairs and maintenance, general and office expenses is concerned, the Ld. Commissioner of Income Tax (A) has noted that the disallowance had been made by the Assessing Officer on an estimate without pinpointing any specific vouchers for disallowance. The Ld. Commissioner of Income Tax (A) has also noted that a similar disallowance has been made in assessment year 2007-08 against which the assessee had not filed any appeal. A perusal of the assessment order shows that the Ld. Commissioner of Income Tax (A) is absolutely correct in observing that the disallowance has been made on an estimate and we are also in agreement with the adjudication of the Ld. Commissioner of Income Tax (A) that ad hoc disallowance without pointing out any ....