TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 673
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.... 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 support from several authorities to which it had referred in its appellate procee....
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.... 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 and the Department from long drawn unnecessary litigation. 6. The appellant craves leave to add, amend and/or alter the gr....
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....dit 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 under section 36(1)(vii) read with section 36(2) of the Act for the bad debts. Therefore the same should not be allowed in the year under consideration. Thus the AO made the....
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.... 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 relevant extract of the order is reproduced here as under: "The only requirement under Section 37 of the Act is that the expenses (not capital or personal) should be incurred for the purposes of the business....
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.... 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 1. House Keeping Expense 1200315 2. Misc. Expense 491443 3. Interest 2970299 4. Statutory Auditor Fees 2774630 5. Rework Charge 1131047 6. Commission (Sales CFA) 710176 7. Commission Export 1940561 8. C....
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....cordingly, 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 section 195 of the Act. 16. The learned CIT(A) after considering the submission of the assessee has held that the assessee is liable for deducting the TDS on the expenses claimed on provisional basis. In the event of non-deduction of TDS, impugned expenses cannot be allowed as deduction by virtue of the operations ....
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....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 prescribed time to the income tax authorities as provided under subsection (3) to section 200 of the Act. 20.3. Subsequently, the assessee shall issue a certificate to the person to whose account such credit is given to the effect that tax has been deducted as provided under section 203 of the Act. 20.4. Thus the cumulative effect of the pro....
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....ount 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-tax Rules, 1962 for the tax deducted at source. The assessee has to necessarily give the details of name and address of deductee, the PAN of deductee and amount credited. In this case, the assessee could not identify the name and address of deductee and his PAN. The assessee also may not be in a position to quantify the amount required for incurring....
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....sed 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 predecessor in the own case of assessee for immediate preceding AY 2011-12. 25. Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 25. The Learned DR before us vehemently supported the order of the AO whereas the Learned AR before us submitted that the Tribunal in the own case of the assessee has allowed the issue in its favour in ITA No. No. 3669/AHD/2015 f....
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....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 infirmities in the order of the ld. CIT-A but the ld. DR appearing on behalf of the Revenue failed to do so. In holding so we draw support and guidance from the order of the Hon'ble Delhi High Court in the case of CIT Vs. Rama Krishna Jewellers reported in 52 taxmann.com 23 wherein it was held as under: "Further, Revenue was aggrieved by the order passed by the Commissioner of Income Tax (Appeals) and was the appellant before the Tr....
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...., 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 system of accounting, which is mandatorily required to be followed by the companies as per the provisions of Companies Act, 1956. (b) that the provision made on 31/03/2013 towards Provisions for Expenses were not liable for deduction of IDS in view of the fact that at the time of making provision for Expenses the parties to whom payments made were not identifiable and even appreciating the fact that there will not be any income accrued to the payee as the provisions in question were r....