TaxTMI 
TaxTMI 
2022 (1) TMI 1365
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....as prior period expenses without considering the fact the expense was paid at a later date due to pending negotiation with the landlord. 3. That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in making disallowance of Rs. 6,86,317/- u/s 40(a)(ia) of the Income Tax Act on account of non deduction of TDS out of which the amount of Rs.2,73,503/- pertain to the purchase of material and not services as such these are not liable to TDS and the amount of Rs. 4,12,814 pertains to payments made through credit card for online advertisement which was in the nature of business prof it on which no TDS was deductible and more-so when Income could not even be deemed to accrue or arise in India. 4. That on law, facts and circumstances of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO in making disallowance of Rs. 2,82,317/- out of general charges on account of prior period expenses without considering the fact that the expense was incurred wholly and exclusively for the purposes of business of the company and the same is allowable u/s 30 and 37 of the Income tax Act, 1961." 2. Ground of appeal No.1 is ge....
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....e business expenditure and the issue is tax neutral as the expenses have to be allowed in the earlier year or in the current year. Further reliance was placed on the decision of the Hon'ble Delhi High Court in the case of CIT Vs. Modipon Limited Ltd 334 ITR 102. The submissions of the assessee as well the Remand Report of the AO were considered by the Ld.CIT(A) . The Ld.CIT(A) thereafter returned a finding that the appellant has filed certain letters exchanged with JW Marriot and the appellant deferred the payment of rent on its own sweet will in financial year 2008-09. It was further held by the Ld.CIT(A) that since the assessee is following mercantile system of accounting, it shall not be allowed any expense which pertain to any previous year other than the concerned previous year except those expenses which are specifically allowed under the Act. Further reliance was placed on the decision of ITAT Chandigarh Benches in the case of M/s Haryana State Electronics Development Corporation Ltd. Vs. DCIT, 78 Taxmann.com 268 and addition made by the AO was confirmed. 5. Against the said findings, the assessee has come up in appeal before us. During the course of hearing, the Ld. AR....
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....at is equally relevant is that there are no changes in the maximum marginal rates of taxation and there is no loss of revenue where the expenses are booked in subsequent financial year. In the instant case, we find that the assessee right from the initial show-cause during the assessment proceedings and thereafter, during the appellate proceedings has submitted that this expense pertains to rent payment for the stores at JW Marriot Hotel , Mumbai and pending negotiation with the landlord and the brand owners for a possible remission in rent due to poor performance of the store, the lease rent was not paid earlier and the final settlement was reached in August, 2009 and lease rent was thereafter paid as per the modified terms. The AO has not returned any specific finding as to why the submissions so filed by the assessee were not found acceptable besides merely reiterating that these are prior period expenses. No doubt the assessee didn't corroborate its submissions before the AO during the assessment proceedings, however, during the appellate proceedings, the relevant documentation in form of communications exchanged with M/s Juhu Beach Resorts as well as revised rent agreement wer....
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....spective of harmonious construction of all relevant provisions, the assessee deserves an allowance towards these expenses in the year under consideration. 9. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the disallowance of Rs. 30,45,000/- is hereby directed to be deleted and ground no. 2 of assessee's appeal is allowed. 10. In ground of appeal No.3, the assessee has challenged the action of the Ld.CIT(A) in confirming the disallowance of Rs.6,86,317/- u/s 40(a)( ia) of the Act. In this regard, briefly, the facts of the case are that during the course of assessment proceedings, the AO observed that the assessee has not deducted TDS under the head "Advertisement and publicity" on certain transactions as required u/s 194C of the Act. The assessee was issued a show cause notice and after considering the submissions so filed by the assessee and not finding the same acceptable, the AO made a disallowance of Rs.8,90,551/- as no TDS has been deducted on such expenses u/s 40(a) (ia) of the Act r.w.s. 194C of the Act. 11. Being aggrieved, the assessee carried the matter in appeal before the Ld.CIT(A) . The submissions so filed by the assesse....
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....he ld AR that the assessee has filed relevant invoices/documentation in support of its contentions before the ld CIT(A) and therefore, the ld CIT(A) findings that the assessee has not filed any evidence in support of his content ion that the said payment does not require any TDS, is not borne out from the records. Given that the material available on record has not been examined and no findings on merits of the additions have been recorded by the ld CIT(A) , we deem it appropriate that the matter be set-aside to the file of the ld CIT(A) to examine the same on merits after providing reasonable opportunity to the assessee. The contentions advanced on the merits have been left open and the assessee is free to advance the same before the ld CIT(A) as so advised. In the result, the ground no. 3 is allowed for statistical purposes. 15. In ground of appeal No.4, the assessee has challenged sustenance of disallowance of Rs.2,82,317/-. In this regard, briefly, the facts of the case are that during the course of assessment proceedings, the AO observed that the following expenses which have been debited under the head "general charges", do not belong to the period under consideration and, t....