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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Shri Amarjit Singh
आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2011-12, arises from order of the CIT(A)-2, Vadodara dated 08-07-2015, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
The assessee has raised following substantive grounds of appeal:-
I.T.A No. 2822/Ahd/2015 A.Y. 2011-12 Page No 2 M/s. Neptune Realty Pvt. Ltd. vs. ACIT
“1. The learned Commissioner of Income Tax (Appeals) - 2, “Vadodara ["the CIT(A)"] erred in fact and in law in confirming the action of the Assistant Commissioner of Income tax, Circle-4, Baroda ("the AO") in making addition of Rs.2,00,000/- to the total income purely on the basis of surmises, conjectures and assumption. 2. The learned CIT(A) erred in fact and in law in confirming the action of the AO in making addition of Rs. 2,00,000/- treating it as hiring income despite the fact that it is towards reimbursement of labour charges incurred by the Appellant. 3. The learned CIT(A) erred in fact and in law in confirming the action of the AO in disallowing sum of Rs. 14,18,289/- u/s.40(a)(ia) of the Income tax Act,1961 ("the Act") despite the fact that the Appellant has actually made payment of TDS. 4. The learned CIT(A) erred in fact and in law in confirming the action of the AO 'in doubting the genuineness of Short Term Capital Loss ("STCL") claimed by the Appellant and thereby disallowed the claim of carry forward of such STCL. 5. The learned CIT(A) erred in fact and in law in confirming the action of the AO in making disallowance of labour expenses amounting to Rs. 5,00,000/- on adhoc basis.”
Ground No. 1 &2 3. During the course of assessment proceedings, the assessing officer noticed that assessee has received Rs. 2 lacs from United Way of Baroda on which TDS of Rs. 4,000 has been deducted u/s. 194C but the assessee has not declared the corresponding receipt in its P & L a/c. On query, the assessee explained that the same has been credited in labour charges common account expenses, therefore, it is not correct that assessee has not shown aforesaid receipt. However, the assessing officer has not accepted the justification given by the assessee on the ground that assessee was unable to substantiate its claim that the receipt of Rs. 2 lacs from United Way of Baroda was the reimbursement of expenses incurred for preparation of Garba ground.
Aggrieved assessee filed appeal before the ld. CIT(A). The ld. CIT(A) has sustained the addition and reiterated the reasons given by the assessing officer.
I.T.A No. 2822/Ahd/2015 A.Y. 2011-12 Page No 3 M/s. Neptune Realty Pvt. Ltd. vs. ACIT
During the course of appellate proceedings before us , the ld. counsel has referred the page no. 50 of paper book filed during the course of appellate proceedings pertaining to ledger account in respect of labour charges showing that on 1.1. 2011 the assessee has credited an amount of Rs. 2 lacs received from the United Way of Baroda and only net expenses has been claimed in the P & L account for the year under consideration. In the light of the above fact we find that it is clearly demonstrated from the aforesaid ledger account that assessee has duly included the aforesaid receipts in its account under the head labour charges, therefore, we do not find any merit in the decision of lower authorities of declining the claim of assessee. Accordingly, this ground of appeal of the assessee is allowed.
Ground No. 3: Disallowance of Rs. 14,18,289/- u/s. 40(a)(ia)
At the time of assessment on verification of audited account of the assessee, the assessing officer noticed that assessee has not deducted TDS from the following payments:- Sr. No. To whom paid Nature of payment Amount 1 Kotak Mahindra Prime Ltd. -BMW Interest 194395 Car Loan 2 Kotak Mahindara Prime Lt. - Interest 104439 Mercedes Car Loan 3 Baroda land & building Sales promotion 992700 4 Heritage Infrastructure Pvt. Ltd. Supervisor charges 1418259
The assessing officer observed that assessee has filed revised TDS return for assessment year 2010-11 on 4th March, 2014 after discrepancy was pointed out by the department. The assessing officer was of the view that as per the
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provision of section 40(a)(ia) the deduction will be available only if the TDS is paid on or before the due date u/s. 139(1) for filing the return of income of income for the relevant assessment year. Therefore, he has disallowed an amount of Rs. 14,18,259/- u/s. 40(a)(ia) of the act
Aggrieved assessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has sustained the disallowance made by the assessing officer.
During the course of appellate proceedings before us, the ld. counsel has submitted a paper book showing ledger account stating that assessee has duly deducted the tax from different payments made to the aforesaid persons and duly deposited the same before filing the return of income and contended that the ld. CIT(A) has erred in sustaining disallowance made by the assessing officer. On the other hand, the ld. departmental representative has placed reliance on the order of ld. CIT(A).
We have heard the rival contentions and perused the material on record carefully. After taking into consideration the information filed by the assessee in the paper book claiming that it has duly deducted and deposited the tax from the payment made to the aforesaid persons, we observe it will be appropriate to restore this issue to the file of assessing officer for deciding afresh after considering the relevant material and after affording adequate opportunity of hearing to the assessee. Accordinly this issue is restored to the file of the assessing officer for deciding de novo as directed above. Therefore, this ground of appeal is allowed for statistical purposes
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Groud No. 4
At the time of hearing, ld. counsel of the assessee has not pressed this ground of appeal, therefore, the same is dismissed as not pressed.
Groud No. 5:Disallowance of labour expenses of Rs. 5 lacs
Durgn the assessment proceedings, the assessing officer noticed that assessee has debited labour charges of Rs. 16,58,922/- for the year under consideration. From the detail furnished by the assessee, the assessing officer observed that labuour charges were incurred for making payment to laborer as well as contractor in cash on self made vouchers. Therefore, the assessing officer has disallowed an amount of Rs. 5 lacs on the ground that vouchers were not fully verifiable.
Aggrieved assessee filed appeal before he ld. CIT(A). The ld. CIT(A) has sustained the addition reiterated the reason given by the assessing officer.
During the course of appellate proceedings before us, the ld. counsel contended that assessing officer has disallowed the labour expenses on general observation without disproving the claim of labour expenses incurred by the assesssee. On the other hand, the ld. departmental representative has supported the order of ld. CIT(A).
I.T.A No. 2822/Ahd/2015 A.Y. 2011-12 Page No 6 M/s. Neptune Realty Pvt. Ltd. vs. ACIT
We have heard the rival contentions and perused the material on record carefully. It is noticed that assessee has given labour accounts of labour charges which reflect date, particulars, voucher no. etc. under the different heads of payment made for labour charges during the year under consideration. After considering the fact that assessing officer has not provided any specific reason for making disallowance we observe it will be reasonable to disallow such expenses under the above circumstances to the extent of Rs. 2 lacs. Accordingly the disallowance is restricted to Rs. 2 lac Therefore, this ground appeal of the assessee is partly allowed.
In the result, ground nos. 1 and 2 of appeal of the assessee are allowed, ground no. 3 is allowed for statistical purposes, ground no. 4 is dismissed and ground no. 5 is partly allowed. Order pronounced in the open court on 18-01-2019 Sd/- Sd/- (MADHUMITA ROY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 18/01/2019 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद