2024 (8) TMI 1024

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....in M.A. No.197/PUN/2022. ITAT held in M.A.No.197/PUN/2022 that Ground Number 9 raised by the assessee had not been adjudicated and recalled the order for limited purpose of adjudication of Ground Number 9 of the assessee and directed the registry to fix the case for hearing. Accordingly, the said case was heard for limited purpose of adjudication of Ground Number 9 raised by the assessee. 1.1 The Ground Number 9 is as under : "Non consideration of the Hon'ble DRP's direction for granting relief in respect of provision for expenses." Erred in not verifying whether the provision for expenses viz IT support of Rs. 48,08,167 and Freight & Handling charges of Rs. 16,27,824/-have been made on a scientific basis or on the basis of previous ye....

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....ls. However, the Assessee filed a reply as under : "The provision of Rs. 16,27,824/- in respect of freight and material handling charges was made in the books of accounts on an accrual basis .The invoices received from the parties in the subsequent financial year were duly adjusted against aforesaid provision and tax was duly deducted therefrom" 3.2 Considering the reply filed by the assessee, the AO held that it was mere provision, hence disallowed Rs. 16,27,824/-. 3.3 During the hearing before this ITAT the ld.AR reiterated the submission made before the AO. The assessee has merely submitted that the provision of Rs. 16,27,824/- was made on accrual basis. The invoices were received in subsequent financial year. The assessee was asked ....

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....ed as under : The monthly IT expenses and IT cost provision forming part of the IT support expenses were accounted for on an accrual basis and no tax was deductible then as the amounts were provided for on an estimated basis and the invoice was received in the subsequent year. Further, tax on the invoice amount was duly deducted and paid on receipt of the invoice. For details please refer page 24 of Appendix A. 4.2 Thus, the admitted fact is assessee had made the provision on estimated basis. Though the AO has mentioned about TDS being deducted in subsequent year, however, it is just an observation to support that the provision was made on estimation basis, without any scientific support. In these facts and circumstances of the case, s....