TaxTMI 
TaxTMI 
2025 (2) TMI 913
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....e ['CIT(A)'] has erred in passing the order under section ('u/s') 250 of the Income Tax Act, 1961 ('Act'), partly confirming the adjustments made by the learned Deputy Commissioner of Income Tax, Company Circle I(1), Coimbatore ('AO') in the assessment order passed u/s 143(3) read with section 144C of the Act. Each of the ground is referred to separately, which may kindly be considered independent of each other. 1. Ground No. 1 Assessment order is bad in law and hence, void-ab-initio. 1.1 On the facts and circumstances of the case and in law, the learned CIT(A) has failed to adjudicate the following ground taken by the Appellant in the appeal filed before the learned CIT(A): "On the facts and circumstances of the case and in law, the impugned assessment order is bad in law since it has been passed after the limitation period prescribed under section 153(2) of the Act." 2. Ground No. 2 Disallowance u/s 40(a)(ia) of the Act on account of non-deduction of tax at source from discount extended to prepaid distributors. 2.1 On the facts and circumstances of the case and in law, the learned CIT(A)/AO has ....
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.... 2.6.2 to allow deduction in the subject AY for similar disallowance made in prior year's to the extent of demand paid under section 201(1) of the Act during the subject AY in accordance with first proviso to section 40(a)(ia) of the Act. 3. Ground No. 3 Disallowance of year-end accruals under section 40(a)(ia) of the Act. 3.1 On the facts and circumstances of the case and in law, the learned CIT(A)/AO has erred in making a disallowance of INR 158,186,618 under section 40(a)(ia) of the Act towards year-end accruals. 3.2 On the facts and circumstances of the case and in law, the learned CIT(A)/AO has erred in concluding that the year-end accruals, created on a best estimate basis to ascertain the financial results for the year, are subject to tax deduction at source under Chapter XVII-B of the Act. 3.3 Without prejudice to the above, on the facts and circumstances of the case and in law, the learned CIT(A)/AO has erred in not allowing deduction for year-end accruals disallowed in the assessment order passed for AY 2009-10, which were reversed in the beginning of the financial year relevant to the subject assessment year. 4. Ground No....
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....cordingly allowed. 5. Ground No.3 is against disallowance of year-end accruals u/s. 40(a)(ia) of the Act. 5.1 The A.O has made the disallowance of Rs. 15,81,86,618 on year-end provisions for expenses u/s 40(a)(ia) of the Act on the ground that TDS has not been deducted at the time of credit. The assessee has followed mercantile system of accounting and in order to arrive at the correct profit for the year all expenses pertaining to year in accordance with the matching principle is accounted for. The assessee has accounted for all the expenses for the bills/invoices might not have received after closure of Financial Year subject to the A.Y by year-end provisions and after closure of financial year such year-end provisions were fully reversed and credited to profit and loss account. Subsequently, as and when invoices were received in the subsequent year, the same were charged as an expenses and debited to profit and loss account and wherever applicable, tax on such expenses were deducted. The A.O has made the disallowances citing the TDS provisions that TDS is to be deducted whenever any sum credited to any account, even in the case of suspense account. The A.O held that the as....
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.... "It is ex facie apparent that the contention of the assessee inasmuch as non-identification of the payees în the provisions and the disallowance of deduction expenditure under section 40(a)(ia) of the Act has not been rightly appreciated by the Tribunal... If the deduction is not claimed for the expenditures made in the provision even in the return submitted and the same is offered to tax in the subsequent year after reversing the entries pursuant to the receipt of the bills/invoices by the payees, the matter has to be analysed having regard to, whether income has accrued to the payees to deduct tax at source." 12. We may record that it was argued by Shri. Chaithnaya that assessee had deducted tax at source in subsequent year in accordance with the provisions of Chapter XVII-B and remitted within the due date and the same was not refuted. 13. So far as the authority in Palam Gas Service (supra), it is relevant to note that the payees were identified in that case as recorded in para 5 of that judgment. In contradistinction, in the case on hand the payees were not identified. Therefore, the said authority does not lend any support in the contentions urg....