AI Drafter 
TaxTMI 
TaxTMI 
2021 (9) TMI 1071
X X X X Extracts X X X X
X X X X Extracts X X X X
....ous disallowances at Rs. 8,65,17,356/-. 3. Aggrieved, the assessee preferred an appeal before the CIT(A) and the CIT(A) confirmed the assessment order. 4. Still aggrieved, the assessee is in appeal before the ITAT. 5. The assessee has raised the 54 grounds of appeal, which are disposed of as under: 6. Ground Nos. 3 to 8 are relating to the disallowance of Rs. 3,09,306/- towards prior period expenditure u/s 37 of the Act. 6.1 The facts relating to this ground are that the during the assessment proceedings, the AO noticed that the assessee had debited an amount of Rs. 3,09,306/- towards prior period expenses to the P&L Account. According to the AO, since the assessee is following mercantile system of accounting, prior period expenses cannot be allowed and, hence, he disallowed the same. 6.2 The CIT(A) upheld the action of the AO by holding that the assessee had not submitted any clarification on this issue or submitted any evidence to prove that this expenditure should have been allowed. 6.3 Before us, the ld. AR submitted that the amounts pertain to income and expenditure or prior period arising out of compliance with statutory provisions, i.e. accounting standa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubstantive ground is accepted therefore." 6.6 Since the impugned issue is similar to the above decision, respectfully following the said decision, we direct the AO to delete the addition made on this count. Accordingly, ground Nos. 3 to 8 are allowed. 7. Ground Nos. 9 to 10 are relating to the disallowance of Rs. 16,16,269/- towards disallowance u/s 43B of the Act. 7.1 The facts relating to the said issue are that during the assessment proceedings, the AO noticed that the assessee has the following payment of statutory liabilities: i. PF Rs. 4,82,199/- ii. Professional tax Rs. 1,04,600/- iii. Service Tax Rs. 10,10,654/- iv) Educational Cess Rs. 12,544/- v) SH Educational cess Rs. 6,272/- Total Rs. 16,16,269/- As the assessee did not produce evidence for payment of statutory liabilities as per balance sheet before the due date of filing the return of income, the AO disallowed the said amount of Rs. 16,16,269/- u/s 43B of the Act. 7.2 The CIT(A) confirmed the disallowance on the ground that even before him the assessee failed to produce the evidence for statutory of liabilities cited supra. 7.3 Before us, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....der the head 'miscellaneous expenses' and the same can be written off over a period of 10 years from the year in which' such kind of expenditure was incurred. The appellant further submitted that Section 35D of the Act allow the appellant to get written off of miscellaneous expense amounting to one tenth of the qualifying expenditure over a period of ten years from the year of business commencement. 8.3 The CIT(A) confirmed the addition observing that appellant has not submitted any details or furnished any evidence for the same neither before me nor before the Assessing Officer. 8.4 Before us, the ld. AR of the assessee submitted before the Assessing Officer that the amount of Rs. 56,55,787/- relates to amortisation of intangible assets which were incurred in earlier years. 8.5 We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The issue is covered U/s 35D under the head miscellaneous expenditure which is allowable in ten equal instalments . On observation of the financial statements Note No. 13 under the account head "OTHER NON CURRENT ASSETS" there is a balance as on 31.03.12....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the I.T. Act in terms of Chapter-XVII-B of the Act. Whereas in present case, the Assessing Officer has not treated the assessee as assessee in default u/s.201(1) and no proceedings were initiated accordingly. He, therefore, submitted that the additions made u/s 40(a)(ia) are not warranted. He relied on the following case law: 1. Ramesh Gelli Vs. ACIT, ITA No. 1637/Hyd/2018 2. M/s Visu International Ltd., Hyd Vs. DCIT, ITA No. 488/Hyd/2013. 3. CIT Vs. Ansal Landmark Township (P) Ltd., 61 taxmann.com 45 (HC Delhi) 4. Country Club Hospitality & Holidays Vs. Addl. CIT, Hyd., ITA No. 1504/Hyd/2012. 9.3 On the other hand, ld. DR relied on the orders of revenue authorities and submitted that in the absence of proof of deducting TDS before filing of the return of income, the AO made the additions accordingly u/s 40(a)(ia) of the Act. 9.4 We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. In the case of Ramesh Gelli Vs. ACIT in ITA No. 1637/Hyd/2018 for AY 2009-10 vice order dated 03/04/2019, on which reliance placed by the ld. AR of the assessee, on similar set ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ax at source on the sum paid to a resident or on the sum credited to the account of a resident such person shall not be deemed to be an assessee in default in respect of such tax if such resident has furnished his return of income under Section 139 of the Act. No doubt, there is a mandatory requirement under Section 201 to deduct tax at source under certain contingencies, but the intention of the legislature is not to treat the Assessee as a person in default subject to the fulfilment of the conditions as stipulated in the first proviso to Section 201(1). The insertion of the second proviso to Section 40(a)(ia) also requires to be viewed in the same manner. This again is a proviso intended to benefit the Assessee. The effect of the legal fiction created thereby is to treat the Assessee as a person not in default of deducting tax at source under certain contingencies. 12. Relevant to the case in hand, what is common to both the provisos to Section 40(a)(ia) and Section 201(1) of the Act is that as long as the payee/resident (which in this case is ALIP) has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ncome going untaxed due to tax withholding lapse. The penalty for tax withholding lapse per se is separately provided for in Section 271C, and, section 40(a)(ia) does not add to the same. The provisions of Section 40(a)(ia), as they existed prior to insertion of second proviso thereto, went much beyond the obvious intentions of the lawmakers and created undue hardships even in cases in which the assessees tax withholding lapses did not result in any loss to the exchequer. Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of second proviso must be given retrospective effect from the point of time when the related legal provision was introduced. In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have been an "intended consequence" to punish the assessees for non-deduction of tax at....
X X X X Extracts X X X X
X X X X Extracts X X X X
....filing of return. The Hon'ble Delhi High Court in CIT VS. Aimil Ltd. & Ors. [(2010) 321 ITR 508 (Del)] has held that if the employees' share of contribution is paid before the due date of filing the return u/s 139(1) of the Income-tax Act, 1961 (hereinafter called the Act), then no disallowance can be made. In view of the foregoing facts it is clear that the assessee deserves and is hereby allowed relief on this issue in the light of the above precedents. Therefore, we direct the assessee to furnish the proof of payment before the AO and the AO is directed to examine whether the assessee has paid before the due date of filing of return, If so, allow the assessee's claim. The grounds raised on this issue are treated as allowed for statistical purposes. 11. Ground Nos. 43 to 47 are relating to the addition of Rs. 5,22,05,305/- towards investment written off debited to P&L Account. 11.1 During the assessment proceedings, the Assessing Officer noticed that the assessee had debited an amount of Rs. 5,22,05,305/- to the P&L account towards "Investment written off". The Assessing Officer asked the assessee to submit details. In response, the assessee submitted that though the nomenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e outstanding amount into equity. Later on in view of the RBI's circular No.69 dt. 25-07-2011, 22.5% of the amount invested was written-off during the year. Since the amount was originally offered as income, non-receipt of the same was eligible as deduction u/s.37(1). After obtaining the Remand Report from the AO and also noted down the amounts remitted and capitalization of receivables, Ld. CIT(A) concluded that the write-off does not satisfy the conditions prescribed. Before us, Ld. AR filed various annual reports in support that the amount was originally offered as income and receivable from subsidiary was converted to equity, in view of the FEMA provisions, and then by virtue of RBI circular written-off the amount. Since the amount was originally offered as income, subsequent write-off is allowable as revenue expenditure, it was contended. 5.1. Without going into the merits of the claim, we are of the opinion that this claim also requires re-examination. Assessee's claim that amounts are originally offered as income, subsequently converted to equity of the subsidiary and written-off on the basis of the circulars of RBI requires examination by AO, as none of the....