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Income Tax Appellate Tribunal, HYDERABAD ‘ B ‘ BENCH, HYDERABAD.
Before: SHRI S.S. GODARA & SHRI LAXMI PRASAD SAHU
O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for the Asst. Year 2014-15 arises from the Commissioner of Income Tax (Appeals)-11, Hyderabad’s order dt.29.02.2016 passed in case No.084/CR-3/CIT(A)-11/14-
15 in the proceedings under Section 143(3) of Income Tax Act, 1961 (‘the Act’).
Heard both the parties. Case file perused.
The Revenue’s side proposes the following substantive grounds in the instant appeal :
“ 1. On the facts and circumstances of the case and in law, the ld. CIT(A) erred in directing the A.O.to verify that whether the company on whose name bills were there, has claimed the expenditure to the tune of Rs.5,64,273/- which was disallowed u/s.37(1) as bills were not in the name of assessee company.
2. The learned CIT(A) erred in directing the AO to allow the payments made through banking channels that is a bearer cheque etc., and disallow only 10% of the expenditure of the cash expenditure of Rs.2,67,10,513/-which was disallowed u/s37(1) for non-submission of bills of expenditure.
3. The Id. CIT(A) erred in deleting the addition of Rs.9,10,000/- made by AD being the prior period expenditure which not relatable to AY in consideration.
4. The Ld. CIT(A) erred in deleting the addition of Rs.1,42,02,401/- made u/s 40(a)(ia) of the IT Act.
a. The CIT(A) erred in deleting the addition of Rs.1 ,00,00,000/- made u/s40(a)(ia) of the LT. Act on the ground that it is a mere provision and hence no tax is deductible at source. b. The CIT (A) ought to have enhanced the income, as the said expenditure is not an ascertained liability and its being a mere provision.
5. The earned CIT(A) erred in deleting the addition made u/s40(a)(ia) for short deduction of tax, observinq that short deduction of tax does not attract the provision of section 40(a)(ia) of the IT. Act.”
We come to the Revenue’s first three substantive grounds seeking to revive section 37(1) expenditure disallowance of Rs.5,64,273; 10% estimated expenditure disallowance of cash payment and prior period expenditure disallowance of Rs.9,10,000; respectively emerges that the CIT(Appeals) has followed the tribunal’s order in assessee's case in A.Y. 2008-09 restoring the very issues back to the Assessing Officer for his afresh necessary factual verification. We thus find no merit in the Revenue’s instant former grievance as the CIT(Appeals) has followed judicial consistency in issuing necessary verification directions to the Assessing Officer. The Revenue fails in its instant former two substantive grounds therefore.
Next comes prior period expenditure disallowance of Rs.9,10,000 wherein the CIT(Appeals) has followed the tribunal order in A.Y. 2010-11 whilst holding that the assessee had claimed the impugned expenditure because of the fact that the corresponding bills has been received in the relevant previous year only. We decline the Revenue’s argument in view of the fact that the assessee's impugned expenditure has crystallized in its relevant previous year as the recipient had issued the correspondingly bill much later. The third substantive ground is also declined therefore.
We next proceed to deal with section 40(a)(ia) issue which involving a sum of Rs.14,20,62,401 (including an amount of Rs.1 Crore in the nature of provision). Suffice to say, it has come on record that the impugned sum represents only a provision made by the assessee in the relevant previous year
without any corresponding payment or any details of the bills as it could not have deducted TDS in absence of any payee; whatsoever. We thus observe that the assessee / deductor could not have complied with Chapter XVII provisions since such compliance involves the latter party in whose hands the income is admittedly assessed. We thus decline the Revenue’s argument seeking to revive 40(a)(ia) disallowance for this precise reason alone.
Learned department representative next contended that the CIT(Appeals) ought to have enhanced the assessee's income since the said expenditure is not an ascertained liability and also his powers are co-terminus with that of Assessing Officer. We find no substance in Revenue’s argument since it can held to be an aggrieved party having locus standi to challenge correctness of CIT(Appeals)’s inaction; if any than an action deciding the issue in tax payer’s favour. This Revenue’s argument is also fails therefore.
Mr. Majumdar lastly submitted that the CIT(Appeals) ought to have upheld the impugned 40(a)(ia) disallowance in TDS. Hon’ble Kolkata high court in DCIT Vs. S. K. Takriwal 361 ITR 432 (Cal) holds that sec.40(a)(ia) does not apply its case involving short deduction of TDS. We thus uphold the CIT(Appeals)’s action deleting the impugned disallowance on this last count as well.
7.1 No other ground has been pressed before us.
This Revenue’s appeal is dismissed.