TaxTMI 
TaxTMI 
2018 (4) TMI 251
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....e was filed declaring loss of Rs. 2,03,303 and unabsorbed depreciation of Rs. 4,63,021 in all a sum of Rs. 6,66,324/- has to be allowed to be carried forward for set off against income of subsequent Assessment year. 3. In the course of assessment proceedings, the AO noticed that assessee had paid a sum of Rs. 33,92,698/- to M/s Gangothri Water Supply in assessment year 2013-14 and a sum of Rs. 39,33,528/- in assessment year 2014-15. According to the AO, the aforesaid payment made by the assessee to M/s Gangothri Water Supply was payment to a contractor for carrying out work and therefore the assessee ought to have deducted tax at source on the aforesaid payment as per the provisions of Sec.194-C of the Act. According to the AO, the assessee did not deduct tax at source on such payment and therefore, the sum paid to M/s Gangothri Water Supply was liable to be added to the total income in view of the provisions of sec. 40(a)(ia) of the Act. As per the provision of sec. 40(a)(ia) of the Act, where tax is deductible on payment and if tax has not been deducted by an assessee, then the sum paid/payable, if it is claimed as an expenditure in computing income from business, it will not ....
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.... apply in respect of a contract for supply of any article or thing as per prescribed specifications only if it is a contract for work and not a contract for sale, the payment in question does not fall within the ambit of Sec.194C of the Act and therefore there was no obligation on the part of the Assessee to deduct tax at source. 5. The Assessing Officer however rejected the claim of the assessee as above and added sum paid to M/s Gangothri Water Supply to the total income of the assessee by invoking the provisions of sec. 40(a)(ia) of the Act. On appeal by the assessee, the CIT(A) upheld the order of the AO. The CIT(A) found that in AY 2013-14, the Assessee had collected more sum from its clients than what it had paid towards the water charges to Gangothri Water Supply and such excess was shown as income in its profit and loss account which proved that though the Assessee has not shown gross receipts and payments but has shown the net receipt on purchase of water. He therefore held that the Assessee had impliedly claimed water charges as deduction while computing its income from business. The CIT(A) held that the purpose of Section 40(a)(ia) is to ensure the recovery of tax. Th....
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....iture had been recognized in the Profit and Loss Account on this account and that there is no expense incurred by the appellant attracting the provisions of section 40(a) (ia) of the Act. The appellant denies that it collected any monies from the property occupants in excess of that defrayed Gangotri and made a surplus in the transaction as observed by the Commissioner of Income- Tax (Appeals). Your appellant seeks leave to add to, to amend any of the foregoing grounds as and when considered necessary/at the time of hearing." 9. The assessee has filed an application for admission of the following additional grounds:- "ADDITIONAL GROUNDS OF APPEAL 2.0 On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in not considering ground no.3 raised in respect of not setting of current year losses and depreciation allowance aggregating to Rs. 9,95,622/against the addition made, on the ground that the same is miscellaneous and general in nature and did not need separate adjudication." 10. In support of the plea for admission of additional ground, it has been submitted he assessee filed its return of income sh....
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....Electronics India Ltd., 14. A copy of the agreement between the assessee and Philips Electronics India Ltd., is available at page No.92 to 116 of the assessee's paper book. As per this agreement, the assessee has to render various services to Philips Electronics India Ltd., as set out in exhibit A in the agreement. The assessee has to maintain adequate supply of water to the commercial establishment. Clause 4.2 of the agreement on supply of water reads as follows:- "4.2 Electricity and Water Charges a. The Client shall pay electricity charges levied by Bangalore Electricity Supply Company or any successor-in-interest or assign thereof ("BESCOM") at actuals, based on the connected load and in accordance with the relevant meter readings, or such other basis as agreed by the pares, to the Service Provider who shall, upon receipt, and in any event no later than the due date for payment, pay the monies received from the Client to BESCOM. b. The Client shall pay water charges levied by the Bangalore Water Supply and Sewerage Board or any successor-in-interest or assign thereof ("BWSSB")/ or any other parties supplying water at actuals, based on consumption a....