2023 (10) TMI 969

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....short] for the Assessment Year (AY) 2021-22. 2. The grounds raised are as under:- "1.1 The order passed u/s. 250 on 30.11.2022 for A.Y. 2021-22 by NFAC Delhi upholding the addition of Rs 6,94,192/- u/s 40(b) as prima facie adjustment u/s 143(1) made by CPC is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. NFAC has grievously erred in law and or on facts in rejecting the revised tax audit report on assumption and without giving opportunity of bearing. 2.1 The Ld. NFAC has grievously erred in law and on facts in confirming addition of Rs. 6,94,192/- u/s 40(b) as prima facie adjustment u/s 143(1) made by CPC. 2.2 That in the facts and circumstances of the case as well ....

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....re us at paper-book page Nos. 2248. Our attention was specifically drawn to clause 21(c) of the Tax Audit Report at page No. 33 of the paper-book which reads as under:- "21 ....... ....... (c) Amounts debited to profit and loss account being, interest, salary, bonus, commission or remuneration inadmissible under Section 40(b)/40(ba) and computation thereof:- SN Particulars Section Amount debited to P/L A/c Amount admissible Amount inadmissible Remarks 1 Interest 40(b) 5,65,692 5,65,690 2 - 2 Interest 40(b) 6,94,190 6,94,190 6,94,190   4. The ld. Counsel for the assessee pointed out that in this column the auditor had reported Rs. 6,94,....

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.... applicable for disallowing the impugned sum in the present case. 5.1 Even otherwise, he clarified that this was a punching error on the part of the person who had uploaded the Tax Audit Report mentioning the figure of Rs. 6,94,190/- as both admissible and inadmissible. He contended that the mistake occurred on account of the fact that in the computation of income while computing the income liable to tax in terms of provision of the Act, the interest or remuneration paid to partners is first disallowed and added to the income of the firm and then in terms of the provisions of the Act, the quantum of such expenditure allowable is subsequently claimed as deduction. He drew our attention to the computation of income for the impugned year pl....

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.... on record, I find merit in the contention of the ld. Counsel for the assessee. The mere fact, as pointed out to me above, which is not disputed by the ld. DR also, that this amount of interest paid to partners of Rs. 6,94,190/- was shown both as admissible and inadmissible in the Tax Audit Report itself takes the issue out of the purview of Section 143(1) of the Act, more particularly Section 143(1)(a)(iv) of the Act which has been invoked in the present case. As pointed out by the ld. Counsel for the assessee, the provisions of Section 143(1)(a)(iv) of the Act permits adjustment to the income of the assessee on account of expenses which are indicated as disallowable in the Tax Audit Report, but not disallowed while computing the total inc....