TaxTMI 
TaxTMI 
2022 (8) TMI 793
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.... out of assessment order dated 10.12.2019 u/s 154 of the Income Tax Act, 1961 passed by DCIT, CPC, Bangalore (hereinafter referred to as the Assessing Officer 'AO'). 2. The facts in brief are the Assessee is a chartered accountancy firm engaged in providing services in the field of Assurance, Risk Advisory, Tax Advisory, Corporate Advisory and Outsourcing. During the relevant assessment year, the appellant had filed its return of income on 29.10.2017 at a total income of Rs. 2,08,91,050/-. The Ld. AO vide communication dated 17.07.2018 asked the appellant to file a response against the proposed adjustment of Rs. 1,11,216/-, being the amount of club expenditure reported in tax audit report. Against such communication, the appellant filed ....
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....e Guidance Note on Tax Audit under section 44AB of the Income tax Act 1961 issued by the Institute of Chartered Accountants of India. (c) That further in this connection, the learned CIT(A) has not given credence to the fact that the said disclosure neither amounts to any incorrect claim as per section 143(l)(a)(ii) of the Act and nor can it be considered as disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return as per section 143(l)(a)(iv) of the Act. 2. That the learned CIT(A) has erred in not adjudicating the ground related to not allowing the TDS credit of Rs. 2,57,252 by the learned Assessing Officer, which was rightly claimed by the appellant a....
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....e amount in clause 21(a) does not result in disallowance of the said expenditure under section 143(1)(a)(ii)/ (iv) of the Act. Further, the said disclosure cannot be considered as disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return (as per section 143(l)(a)(iv) of the Act). It was also submitted that the issue regarding allowability of club expenses is no more res integra in view of the judgment of the Hon'ble Supreme Court in the case of CIT v. United Glass Mfg. Co. Ltd. 2012] 28 taxmann.com 429. It was submitted by Ld AR that the said expenditure of Rs. 40,280/- was reported only for disclosure purpose and no portion of the same is disallowable under section ....
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....the outset, it can be observed that Ld. CIT(A) has confirmed the disallowance with the very summary observations without going on the facts of the case. The copy of Form 3CD available at page no. 105 of the paper book shows that in clause 21(a) of the particulars of expenditures incurred, under head of club entrance fees and subscription has been shown with regard to Gymkhana Club at Rs. 14,407/- , Holiday Club Rs.3,263/- and Panchshila Club rs. 22,610/-, totaling to Rs. 42,280/-. The auditors have not shown these expenditure to be disallowable as required to be disclosed in Annexure available at page no. 73 of the paper book. When admittedly the assessment was completed with intimation u/s 143(1) of the Act then the disallowance based upon....
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....ssue. This itself would indicate that whether the claim of a provision for bad debts is deductible under Section 36(1)(vii) of the Act or not is debatable. Further, the above claim for deductions as made by the applicant was by following the decision of the Gujarat High Court in Vithaldas Dhanjibhai (supra). Thus, a debatable issue. Therefore, the same could not have been disallowed by way of an intimation under section 143(1)(a) of the Act.". 6. In view of the undisputed facts and the decision of Hon'ble Bombay High Court, referred above, we find that the authorities below have erred in disallowing assessee's claim of expenditure in proceedings u/s. 143(1) of the Act and thereafter, rejecting assessee's application u/s. 154 of the....