TaxTMI 
TaxTMI 
2018 (7) TMI 1544
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....confirmation of disallowance to the extent of Rs. 19,43,106/- by the Assessing Officer (AO), made on account of payments in cash in violation of section 40A(3) of the Act. The facts in brief that the assessee was observed to have incurred an expenditure in the sum of Rs. 1,79,61,814/- in cash in apparent contravention of section 40A(3) of the Act. The assessee's claim of the places where the payments in cash were made, which were predominantly as salary to its employees (Rs.160.19 lacs), were not serviced by banks, so that its case would fall within the one of the excepting clauses of rule 6DD (of the Income Tax Rules, 1962) providing for the prescribed circumstances excluding application of the non obstante clause of 40A(3), was rejected on the basis of the rebuttal by the AO, with several branches of different banks, viz. J&K Bank, State Bank of India and other Nationalized Banks, existing at the places mentioned by the assessee. The ld. CIT(A) would upon this, i.e., after issuing a finding that the assessee's contention with regard to the non-servicing of the relevant places by bank facilities to be factually incorrect and, in fact, misleading, hold as under: 'The appel....
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....2016, dated 01/6/2018). In fact, the special bench of the tribunal has in ITO v. Kenaram Saha & Subash Saha [2008] 116 ITD 1 (Kol)(SB) relied on a number of decisions by the Hon'ble High Courts across the country to hold that only where the assessee's case falls under any one of the specified circumstances enumerated u/r. 6DD, would the saving from the rigor of the provision hold; there being no ambiguity in the express language thereof. No decision by the jurisdictional High Court has been brought to our notice. Under the circumstances, we only consider it proper that the matter is restored back to the file of the ld. CIT(A) for a decision on merits in accordance with law after allowing the assessee a reasonable opportunity of being heard. This also decides Ground 3 of the Revenue's appeal for AY 2007-08. Coming to Gd. 1 of the assessee's appeal for AY 2009-10, the disallowance stands upheld by the ld. CIT(A), again, on the aspect of serviceability of the banks at the places where the expenditure stands paid. The said finding remains unrebutted. As, however, we have remitted the matter back to the file of the ld. CIT(A) for AY 2007-08, it is only considered proper that, like-wise,....
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....owed deduction to the assessee in respect of the amounts qua which tax deducted at source (TDS) had been deposited by the due date of filing of the return of income u/s. 139(1). The Revenue contests the same (vide Gd. 1 of its appeals) on the ground that the proviso to s. 40(a)(ia), introducing the leverage so as to exclude from the ambit of the statutory disallowance there-under where the payment has been made by the due date of filing the return u/s. 139(1), stands inserted by Finance Act, 2010 w.e.f. AY 2010-11, so that the said amendment, invoked by the ld. CIT(A) without specifically referring thereto, would not obtain for the relevant years. 6. We have heard the parties, and perused the material on record. The ld. CIT(A) has confirmed the disallowance u/s. 40(a)(ia) to the extent there has been non-deduction of tax at source, i.e., after confirming the figures from the AO through the remand proceedings. The assessee before us contests the said confirmation on the ground that the assessee does not stand to gain/benefit from the non-deduction of tax at source in any manner in-as-much as the relevant expenditure, i.e., against which there has been non-deduction of tax at s....
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....tensibly furnished in the following years, i.e., the previous years relevant to AY 2008-09 and AY 2010- 11 respectively, all that is required, for the purpose, is to see if the assessee had made any claim qua the said sum for these years, i.e., with reference to its disallowance for the relevant years. We decide accordingly. 7. Ground 5 for AY 2007-08 is in respect of confirmation of an addition for Rs. 21,750 credited to the suspense account, so that the same was inferred by the AO as an unexplained liability and, accordingly, added as income. The same stood confirmed on the same basis. No improvement in its case stands effected before us, with the ld. AR in fact conceding to the impugned addition. We accordingly confirm the same. The subject matter of the assessee's Gd. 6 for AY 2009-10 being the same, the same stands also confirmed at the impugned amount of Rs. 27,100. We may though add that the latter sum of Rs. 27,100 should not include - in whole or in part, the former sum of Rs. 21,750, else, to that extent, it would be a case of a double addition. We say so as it could well be that the excess credit as on 31.03.2007 continues to obtain (to whatever extent) as on 31.03....
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....imated the interest accrued for the relevant years on the basis of the average amount outstanding (on the basis of the monthly balance) for the two years under reference. Information u/s. 133(6) was sought from the bank with regard to the interest rates obtaining during the relevant period, and which informed the same to be at 4.5% p.a., (for deposits with maturity from 15 days to 45 days) and at 9.5% p.a., (with maturity period ranging from 46 days to 1 year). He, accordingly, applied an average rate of 8% per annum and computed the interest accrued on FDRs/CDRs accordingly. The same stood confirmed in appeal, with the assessee making no improvement in its case in the appellant proceedings. 10. We have heard the parties, and perused the material on record. The assessee is maintaining its accounts, disclosing business income, on mercantile basis. Section 145 obliges an assessee to maintain books either on cash or mercantile basis, so that hybrid system of accounting is impermissible w.e.f. AY 1997-98. The assessee has, we are sorry to state, at no stage, i.e., during the audit u/s. 142(2A); the assessment proceedings; the remand proceedings - the ld. CIT(A) calling for a rema....
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....d fixture). The same being not produced, he worked out the depreciation as per the relevant provision at Rs. 82,325 and, accordingly, made a disallowance for 83,825 (Rs.82325+1500). The same stood confirmed in appeal in the absence of any improvement in its case by the assessee. The position continues to be the same before us. Accordingly, we have no hesitation in confirming the same. We decide accordingly. 12. The eight ground of appeal for AY 2009-10 is in respect of disallowance of claim for service-tax at Rs. 3,25,000. On the basis of the details of service tax collected by the assessee's different units from piece workers, and that remitted to the account of the Central Government, it was found that there was an excess collection by Rs. 3.25 lacs. This was also confirmed on the basis of the assessee's liability to service tax, for which though no systematic record was found to be maintained by it. The same was accordingly disallowed and, further, confirmed in appeal in the absence of the assessee furnishing any evidence of payment thereof, so that section 43B would operate to bar the allowance of the unremitted amount (sec.43B). Again, there is no improvement in the assesse....
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.... disallowance u/s. 40(a)(ia) on the short deduction of tax at source. The basis of the Revenue's disallowance is that there has been no deduction of tax at source to that extent. The assessee's case, and which found favour with the ld. CIT(A), is that it is a case of short deduction, i.e., with reference to the entire amount liable for deduction of tax at source, arising on account of a bona fide confusion with regard to the rate of deduction, so that the same could not be construed as non-deduction on the balance amount. We may clarify the dichotomy by way of an example. The assessee deducts tax on a sum of Rs. 1000 (say) at 3% (say). The correct rate for TDS is, however, 5% (say). While the Revenue states that there has been no deduction on Rs. 40; the tax deducted (Rs.30) being relatable to the principal sum of Rs. 600, the assessee states that it has deducted tax on Rs. 1000 at the rate of 3% (Rs.30). The matter in our view is factual. If the assessee can show that there has been a short deduction of tax at source, i.e., at the rate of 3%, no disallowance u/s. 40(a)(ia) is called for in-as- much as the tax deducted at source is on the entire sum of Rs. 1000. At the same time, t....
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....u/s. 2(24)(x)) is regulated by section 36(1)(va), providing for its deduction subject to payment within the time prescribed under the relevant Act, or rules framed thereunder. And that the same has no interface with section 43B, which concerns the employer's contribution to the provident or other employee welfare funds (i.e., as an employer, in addition to the employee's contracted remuneration). The other High Courts, viz. Delhi, Uttarakhand, Bombay, Punjab & Haryana & Rajasthan, have expressed a contrary view, holding that section 43B - which allows deduction in respect of the sums specified therein subject to their payment by the due date of filing the return of income u/s. 139(1), would regulate deduction of the employees' contribution, i.e., besides the employers' contribution, as well. There is nothing in the language of the relevant provision, i.e., s. 43B, to indicate that the section is applicable to the employee's contribution as well, deduction in respect of which is, as afore-stated, governed by s. 36(1)(va) r/w s. 2(24)(x). Further, even assuming - for the sake of argument, that sec. 43B is applicable to the employee's contribution, deduction would yet not ensue where ....
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.... be subject to the payment of the impugned sum by the due date of filing of the return u/s. 139(1), which the AO shall verify. We decide accordingly. 18. The fourth and last ground of the Revenue's appeal for AY 2009-10 is in respect of the relief allowed qua the disallowance of depreciation on fixed assets. The assessee failing to produce the bills/vouchers in respect of addition to the fixed assets during the year, the AO worked out the depreciation thereon as per the applicable rates and period, at Rs. 25,97,261. The assessee having made a claim for depreciation at Rs. 120.17 lacs, he effected a disallowance for the balance Rs. 94.20 lacs. In appeal, it was clarified by the assessee that the AO's working fails to take into account the depreciation on the opening value of the different block of assets. The same was worked at Rs. 87.96 lacs, so that the ld. CIT(A) allowed relief to the assessee to that extent. We find no infirmity in the impugned order nor was any pointed out to us during hearing. We accordingly confirm the said deletion. We decide accordingly. 19. In the result, the assessee's appeals are partly allowed, and the Revenues' appeals are partly allowed for stat....
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....llant itself for the A.Y.2011-12, deleted the said addition. Even we realized that jurisdictional High Court in the case of M/s R.M. Exports vs. CIT, Jalandhar in ITA No.115 of 2009 order dated 06.08.2013 held that: "8. In the present case, the assessee had deposited the amounts under ESI and EPF contributions prior to the filing of the return under Section 139(1) of the Act. Section 43B of the Act was interpreted by this Court vide judgment delivered on 5.9.2006 in Avery Cycle Industries (P) Ltd's case (supra) and on 7.3.2007 delivered by the Hon'ble Supreme Court in Vinay Cement Ltd's case (supra). The said decisions were prior in point of time to the decisions of the Tribunal on 5.11.2007 and 23.11.2007. Once that was so, applying the enunciation of law as laid down by the Hon'ble Supreme Court in Saurashtra Kutch Singh Gurbachan 2013.09.11 15:34 I attest to the accuracy and integrity of this document High Court Chandigarh Stock Exchange Ltd's case (supra), the Tribunal was in error in declining to rectify the mistake which was apparent on the face of the record." In the said case decided by the Hon'ble Punjab & Haryana High Court (supra) the issue was related ....