TaxTMI 
TaxTMI 
2019 (9) TMI 498
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....failed to substantiate the rise in expenses incurred for operating the toll plaza during the assessment proceedings. 2. The Ld. CIT(A)-2, Lucknow has erred in law and on facts in deleting the addition made by Assessing Officer of Rs. 1,27,07,644/- being amount payable to NHAI by admitting fresh evidence in the form of copy of contract with NHAI thereby violating the provisions of Rule 46A of the Income Tax Rules 1962. 3. The Ld. CIT(A)-2, Lucknow has erred in law and on facts in deleting the addition made by Assessing Officer of Rs. 2,21,02,473/- on account of salary and wages ignoring the facts of the case that assessee failed to prove the genuineness and identity of the employees during the assessment proceedings or at the appellate stage." I.T.A. No.672/Lkw/2018 "1. The Ld. CIT(A)-2, Lucknow has erred in law and on facts in deleting the addition of Rs. 20,21,983/- made by Assessing Officer on account of disallowance of expenditure in respect of toll plaza business ignoring the fact that assessee failed to substantiate the excessive claim of expenses for operating the toll plaza during the assessment proceedings. 2. The Ld. CIT(A)-2, L....
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....rival parties and have gone through the material placed on record. We first take up appeal in I.T.A. No. 249. We find that I.T.A. No.249 was earlier dismissed for non prosecution vide order of the Tribunal dated 10/08/2018 which was however recalled vide order of the Tribunal dated 20/03/2019 and the appeal was listed for hearing on merits. We find that assessee is a public limited company and is carrying on the business of automobile dealership and during the year under consideration the assessee had also undertaken toll plaza operation business on behalf of National Highway Authority of India. We further find that in this case the assessment was completed on the basis of directions of Addl. CIT, Range-5, Lucknow u/s 144A of the Act. The pointwise findings of Assessing Officer on additions along with directions of Addl. CIT, Range-5, as reproduced by Assessing Officer in his order, are reproduced below: Addition in respect of toll business "Assessee is engaged in the business of Automobile and shown income from Automobile and toll collection likewise A.Y.2013-14. For A.Y.2013-14 assessee has shown net profit from Motor trade and toll plaza 1.28% and 4.25% resp....
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....ed separately for furnishing of inaccurate of particulars of income." Addition in respect of disallowance out of salary and wages 'It is observed the assessee has claimed excessive salary payment in his profit and loss account. When asked to submit the details, he has submitted details of number of employees and the ledger account of a few premises only. The salary sheet provided contains names of 10-20 employees per premises. When asked for the details of EPF and TDS paid the assessee furnished the following chart- Premier Car Sales Ltd. Employee Details for the F.Y.2O13-14 Months Total no. of Employees Total no. of Employees covered in PF Total no. of Employees covered in TDS Grand Total April, 2013 810 110 5 925 May, 2013 809 107 5 921 June, 2013 810 225 5 1040 July, 2013 844 208 4 1056 August, 2013 857 204 4 1065 September, 2013 878 198 4 1080 October, 2013 852 195 3 1050 November, 2013 805 191 3 999 December, 2013 ....
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....case. I have considered the findings of the AO in the assessment order and the submissions of the appellant made during the course of appellate proceedings. The AO has noted that assessee is engaged in the business of Automobile and shown income from Automobile and toll collection. In A.Y. 2013-14 appellant had shown NP from Motor trade and toll Plaza at 1.28% and 4.25% respectively and overall 1.58% while for A.Y. 2014-15, appellant has shown Net Loss at 5.02% from toll collection. It was noticed that the toll collection during the year have increased as compared to the preceding year but 'operational expenses' have increased by 6.56% in proportion to toll collection. Therefore operating expenses have been allowed on the basis of A.Y. 2013-14 percentage i.e. 5.47% which comes to Rs. 3,18,09,054/- and the remaining amount of Rs. 62,70,485/- has been disallowed. 5. The appellant has contended that the reasons for increase in operating expenses is on account of the following facts: (1) Earlier the Toll collection was confined to the State of Uttar Pradesh only, whereas during the year under consideration, the Toll business was confined to Southern S....
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.... where it had its Registered and business operation. Whereas this year the assessee had three Toll Collection Centres, all of them situated in South India. The Toll Plaza Collection itself has increased from Rs. 33,85,66,892/- to Rs. 58,15,18,366/- in the year under consideration. 7. On examination, I find that the AO has taken the percentage of' Operating Cost' to total Toll Collection for the earlier year and applied the same ratio to the current year Toll Collection and disallowed the operating expenses on ad hoc basis. If the AO was not convinced of a particular expenses he could have made necessary verification before making the disallowance. The onus is on the AO to establish that expenses incurred by the assessee were excessive or unreasonable. In the case of DCIT vs. Lab India Instruments Pvt. Ltd. 93 ITD 20, it has been held that, the onus was on the AO to establish that payments made by the assessee were excessive or reasonable. No other material has been brought by the AO to prove the excessiveness of payment. Therefore, in the absence of adverse material and considering the facts of case as a whole, the orders of the CIT(A) were to be ....
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....llection of Rs. 1,10,81,005/- for the last week of March, 2014, commencing on Monday 24-03-2014 upto 31-03-2014. Against this total amount of Toll Plaza Fee payable is @15,88,455.57/- per day and for the week is Rs. 1,11,19,188.99, and for Monday 31-03-2014 it is Rs. 15,88,455.57, thus the total amount payable as Toll Plaza Fee by the appellant is Rs. 1,27,07,644.56. 5. In this connection, it is observed that while considering deduction of expenditure for income tax purpose, it is one which is either actually paid or, if the accounts are on mercantile basis, provided for towards a liability actually existing at the time. Thus expenditure is not necessarily confined to the money, which has been actually paid out. It also covers a liability which has accrued or which has been incurred, although it may have to be discharged at a future date. A reference may be made to the decision in the case of East Coast Containers (P) Ltd. Vs. ITO 25 ITD 25 ( Madras), wherein it has been held as follows: "... In the case of the assesses following mercantile method of accounts, the provisions made of the definite obligation was in accordance with the method of accounting consistent....
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....esh - 8,957,049.00 Toll Plaza -Chitaura Uttar Pradesh - 1,916,411.00 Toll Plaza -Paranur Tamilnadu 11,189,836.00 - Toll Plaza -Salaipudur Tamilnadu 1,929,216.00 - Toll Plaza -Tuticorin Tamilnadu 236,984.00 - 13,356,036.00 10,873,460.00 Grand Total 119,185,264.00 111,122,619.00 4. On examining the above it is clearly evident that salary and wages on account of workshop and shops has only increased marginally from the previous year i.e. from Rs. 10,02,49,159/- to Rs. 10,58,29,228/- and the salary on account of Toll Plaza for South India is Rs. 1,33,56,036/-. This, amount of Rs. 1,33,56,036/- has been included by the appellant in the 'Operating Expenses', debited in the P&L account. The AO has disallowed part of the 'Operating Expenses' claimed in the P&L account in para 7 of the assessment order and further disallowed 20% of the total salary and wages paid. 5. On examination, I find that the AO has not examined the facts of the case properly and merely made the disallowance on conjectures and surmises. The AO has disallowed Rs. 2,21,02,473/- being 20% of the expenses incurred under th....