TaxTMI 
TaxTMI 
2021 (1) TMI 673
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....following grounds: 1. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in treating Ground No. 1 of the appellant's appeal, challenging the validity of the assessment order, as being general in nature dismissing it. 2. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding the addition relating to the employees contribution to PF and ESIC amounting to Rs. 27,84,027/- stating that the employees contribution is required to be deposited within the due date prescribed u/s. 36(1)(va) of the Act. The learned CIT(A) ought to have appreciated, inter alia. (a) that when deduction for employer's contribution could not be denied where payment was made after the due date prescribed in the respective law if payment was made before the due date for filing income-tax return (vide the First Proviso to Section 43B), there really could be no reason for refusing deduction for employees' contribution as long as payment was made before the due date for filing the income-tax return; (b) that the appellant's contention found suppor....
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....not be any income accrued to the payee and accordingly, there will be no liability to deduct TDS on the provisions. (c) that the amounts are credited to the accounts of respective parties in the next financial year on receipt of bills from parties and tax deducted at source relating to the same has been duly paid before the due date of filling the return of income. (d) that out of the total disallowance of provision for expenses, Rs. 11,79,474/- pertained towards the provision made in respect of Service Infra, the head which never existed in the books of account of the appellant. 5. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in dismissing ground No. 8 of the appellant's appeal challenging initiation of penalty proceedings u/s. 271(1)(c) on the ground that an appeal did not lie against mere initiation of penalty proceedings. He ought to have appreciated, inter alia, that in the peculiar facts and circumstances of the respondent's case, there being absolutely no warrant/justification for initiating the penalty proceedings, they deserved to be dropped, thereby saving both the appellant ....
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....on or before the due date. Explanation :-- for the purpose of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract or service or of otherwise." 5.1. In view of the above, we dismiss the ground of appeal raised by of the assessee. 6. The 3rd issue raised by the assessee is that the learned CIT(A) erred in confirming the addition made by the AO for Rs. 4,55,074/- on account of the amount written off for non-recovery of security deposits. 7. The assessee during the year has written of security deposit for Rs. 4,55,074/- made with the landlord. The assessee contended that the same was written off as the same became irrecoverable. However, the AO found that the assessee failed to make reply to the show cause notice issued dated 02/03/2015 purposing the disallowances of the impugned amount. Thus it was not established by the assessee that the impugned amount was offered to tax in the earlier years which is necessary for claiming deduction un....
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....nvolving identical issue has decided the matter in favor of the assessee. The relevant extract of the order is reproduced as under: 22. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that the assessee cannot be allowed deduction for writing off such security deposit as bad debts for the reason that the conditions as specified under the provision section 36(2) have not been satisfied. 22.1. However, the fact has not been doubted by any of the authorities below that such expenses were not incurred by the assessee in the course of the business. As such, the assessee has taken two showrooms in 2 different cities for the purpose of its business. Accordingly, the security deposits were made in the course of its business activities. Therefore, any loss incurred for any activity carried out in the course of the business is eligible for deduction either under section 37 or section 28 of the Act. In this regard we find support and guidance from the judgment of Hon'ble Gujarat High Court in case of PCIT vs. Dishman Pharmaceuticals & Chemicals Ltd. reported in 417 ITR 373 the re....
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....g of the ITAT, as discussed above, suggesting that there was the change in the facts and circumstances or under the provisions of law. Hence, being there no change in the facts and circumstances viz-a-viz. under the provisions of law, we set aside the order of the ld. CIT-A in view of the order of this tribunal in the own case of the assessee (supra). Accordingly we direct the AO to delete the addition made by him. Hence the ground of appeal of the Assessee is allowed. 13. The next interconnected issue raised by the assessee is that the learned CIT(A) erred in upholding the order of the AO by sustaining the disallowance of Rs. 3,04,82,419/- in part under section 40(a)(ia) of the Act on account of non-deduction of TDS with respect to the expenses claimed on provisional basis. 14. The facts in brief are that the assessee in the present case is a limited company and engaged in the business of manufacturing & retailing of apparels. The assessee in the year under consideration has claimed certain expenses by making the provision in the books of accounts but without deducting the TDS. The details of such expenses stand as under: Sr. No. Nature of expense Amount....
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....submitted that it has actually accounted the provisional expenses in the next financial year on the receipt of bills from the parties. As such the parties were identified with respect to the provisions made in the year under consideration in the next financial year 2012-13 corresponding to assessment 2013-15.3 Accordingly, the expenses were claimed after deducting the TDS before the due date of filing the return of income for the year under consideration i.e. 30 September 2012. Thus the assessee contended that there cannot be any disallowance of the expenses on account of non-deduction of TDS on the provision of expenses made in the year under consideration. 15.4. Besides the above, the assessee also contended that there is no liability for deducting the TDS on the commission of Rs. 26,11,804/- as the provision for the same was made with respect to the non-resident agents who provided services for procuring orders from outside India. As per the assessee the provisions with respect to the export commission does not fall within the definition of fees for technical services as provided under section 9 of the Act and therefore the same is not liable for TDS under the provisions of s....
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....VII of the Act. However, the provisions of chapter XVII of the Act generally mandate that person is liable to deduct the TDS where he is responsible for paying any sum/income to a resident though the same was credited to any suspense account or any other account. Admittedly, the assessee in the year under consideration has accounted the expenses, though on provisional basis which represents the sum/income payable to the other parties. However, undisputedly, the parties are not identifiable which is crux of the issue on hand. In other words, question arises for our adjudication whether the assessee is liable to deduct the TDS under chapter XVII of the Act with respect to the expenses claimed by it in a situation where the parties for such expenses were not identifiable. 20.2. Indeed, the provisions of section 194C, 194H and 194J of the Act requires the assessee to deduct the TDS with respect to sum/income payable to a resident which has to be deposited in the account of Government Exchequer as provided under section 200 of the Act by the assessee. Thereafter, the assessee shall prepare statement containing the details of tax deducted at source which shall be filed within the pres....
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....iod. Revenue, however, contends that due to misconception and ignorance of law and with an intention to circumvent the statutory provisions, the assessee made the provision. The fact remains that the payment was not made to anyone and it is not credited to the account of any party or individual. The account does not disclose the person to whom the amount is to be paid. The contractor who is supposed to be engaged for dismantling the tower and restore the site in its original position is not identified. As contended by the assessee, the assessee by itself engaging its own labourers may dismantle the towers and restore the site to its original position. In such a case, the question of deducting tax at source does not arise. The assessee has to pay only the salary to the respective employees. Suppose the work is entrusted to a contractor, then definitely the assessee has to deduct tax. In this case, the contractor would be identified after the expiry of lease period. Therefore, even if the assessee deducts tax, it cannot be paid to the credit of any individual as rightly pointed out by the ld. Sr. counsel. The assessee has to issue Form 16A prescribed under Rule 31(1)(b) of the Income....
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.... of Rs. 2,64,46,952/- made on account of disallowance of depreciation treating data processing equipment as eligible for depreciation @ 15% as against 60% claimed by the assessee. (ii) That the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 26,11,804/- made u/s. 40(a)(ia) on account of disallowance of commission expenses. 22. The first issue raised by the revenue is that the learned CIT(A) erred in deleting the addition made for Rs. 2,64,46,952/- on account of depreciation on data processing equipment. 23. The assessee during the year under consideration claimed depreciation of Rs. 3,11,14,062/- @ 60% on its block of assets classified under data processing equipment which is consisting of software, laptop, desktop, printer scanner, etc. However, the Assessing Officer held that depreciation on Data Processing Equipment should be allowable @ 15% only as the same is not computer. Accordingly, the AO disallowed Rs. 2,64,46,952/- being excess depreciation and added to the total income of the assessee. 24. Aggrieved assessee preferred an appeal before learned CIT(A) who deleted the addition made by the AO by following the order of his predecess....
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....7.2. The learned DR at the time of hearing has not pointed out any defect in the finding of the learned CIT(A). 7.3. At the time of hearing, a query was raised from the Bench to the learned AR for the assessee whether the items of the addition under data processing equipments were verified by the authorities below during the assessment proceedings. The learned AR could not make any satisfactory reply. Accordingly, we in the interest of justice and fair play, expressed to set aside the finding of the learned CIT(A) to the AO to verify whether the items of addition are part and parcel of the computers. But at the time of dictation, we find that the learned CIT(A) has given very clear finding about the addition of the items under the head data processing equipments are computers/connected devices which was not controverted by the learned DR appearing for the Revenue. Therefore, we find that there is no justification to set aside the issue to the file of the AO for fresh adjudication of the items of addition for Rs. 1,18,73,028/- under data processing equipments. 7.4. We also note that the appeal was filed by the Revenue and the onus was on it to high lights the infir....
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....ssed. Coming to the ITA No: 2377/Ahd/2017 for A.Y. 2013-14 30. The assessee has raised following grounds of appeal 1. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in treating Ground No. 1 of the appellant's appeal, challenging the validity of the assessment order, as being general in nature dismissing it. 2. In law and in the facts and in the circumstances of the appellant's case, the Ld. CIT(A) has erred in confirming disallowance of employees Contribution to Provident Fund for Rs. 48,990/- when no such disallowance was required to be made. The same is liable to be deleted. 3. In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in upholding the disallowance u/s. 40(a)(ia) of the Act amounting to Rs. 4,21,44,256/- as against the disallowance of Rs. 4,40,43,452/- made in the Assessment order on account of non-deduction of TDS in respect of provision for expenses. The Ld. CIT(A) ought to have appreciated, inter alia: (a) that the provision for expenses was made at the end of the year in accordance with the Mercantile ....
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....ided in favour of the assessee by us in paragraph no. 20 of this order. Accordingly following the same we allow the ground of appeal of the assessee. 36. Issue raised in ground no. 4 & 5 are premature to decide. Accordingly the same are dismissed. 36.1. In the result the appeal filed by the assessee is partly allowed. Coming to the ITA No: 2618/Ahd/2017 for A.Y. 2014-15 37. The assessee has raised following ground of appeal 1. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming disallowance of Rs. 574 being Employees contribution to ESI made by the Assessing Officer on the ground that the aforesaid payment was made after the due date prescribed under the relevant ESI Act, even though the payment was made within the time prescribed u/s. 139(1) of the Act for filing the return of income. 2. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming disallowance of provision for expenses to the extent of Rs. 6,54,06,503 from out of the total disallowance of Rs. 6,91,12,924 made by the Assessing Officer by invoking the provision of section 40(a)(ia) of the I.T. Act for non-deduction of ta....