PIPADA MOTORS,,AHMEDNAGAR vs. ASSISTANT COMMISSIONER OF INCOME-TAX, AHMEDNAGAR CIRCLE,, AHMEDNAGAR

The relevant facts as culled out from the material on record are as under :-

The first ground is with respect to disallowance of Rs.9,000/- by considering it as prior period expenses.

During the course of assessment proceedings, the Assessing Officer noticed that the assessee had debited Rs.9,000/- to the Profit and Loss on account on VAT audit fee, pertaining to F.Y. 2012-13. The Assessing Officer was of the view that since the audit was for F.Y. 2012-13 it was expenditure of prior period and not allowable in the year under consideration. He therefore disallowed Rs.9,000/-.

Before me, the ld. AR reiterated the submissions made before Assessing Officer and CIT(A) and further submitted that though the claim is for VAT audit fee for F.Y. 2012-13 but the audit was completed after the year end and the bill from auditor was also received by the assessee in the year under consideration and therefore, the same be allowed. The ld. DR supported the order of lower authorities.

I have heard the rival submissions and perused the material on record. The issue in present ground is with respect to denial of claim of deduction of Rs.9,000/- by holding the expenses to be of prior period. Before me, it is assessee’s contention that the bill from the auditor for audit of VAT was received after the completion of year and in the year under consideration and the audit was also completed after the financial year ending 31-03-2013. The aforesaid facts have not been controverted by the Revenue. Considering the totality of the aforesaid facts, I am of the view that the claim of assessee needs to be upheld, more so as the bill was received in the year under consideration and the audit was also completed after 31-03-2013. I therefore direct the deletion of disallowance. Thus, the ground raised by the assessee is allowed.

The ground No. 2 with respect to disallowance of Rs.1,58,219/- on ad-hoc basis.

The Assessing Officer noticed that the assessee had debited Rs.7,31,495/- on account of office expenses and Rs.8,20,699/- on account of workshop expenses thus, aggregating to Rs.15,82,194/-. The assessee was asked to prove the genuineness of expenses and produce the necessary documentary evidence to support it. On perusing the documents furnished by the assessee the Assessing Officer noted that most of the expenses have been incurred in cash and were not fully supported with independent evidences. He therefore disallowed 10% of the aggregating expense and worked out disallowance at Rs.1,58,219/-. Aggrieved by the order of Assessing Officer, the assessee carried the matter before the CIT(A) who upheld the order of Assessing Officer by noting that the assessee had itself agreed for disallowance to the extent of 10%. Aggrieved by the order of CIT(A), the assessee is now in appeal.

Before me, the ld. AR reiterated the submissions made before Assessing Officer and CIT(A) and submitted that the disallowance has been made on ad-hoc basis without any evidence of the expenses not being genuine. He therefore, submitted that the addition be deleted. The ld. DR on the other hand pointed out the findings of CIT(A) and Assessing Officer wherein it was noted that the assessee had agreed for such disallowance and therefore, the same was disallowed. He submitted that the assessee can now not be allowed to take about turn and agitate the issue. He thus supported the order of CIT(A) and Assessing Officer.

I have heard the rival submissions and perused the material on record. The issue in present ground is with respect to disallowance of Rs.1,58,219/- on ad-hoc basis. I find that the CIT(A) has noted

The ground Nos. 3 and 4 are considered together.

During the course of assessment proceedings the Assessing Officer noticed that the assessee was charging higher amount from the customer on sales and later on after expiry of significant time, claimed to allow discount to the customer which was refunded in cash. The total of such refund worked out to Rs.24,60,313/-. He also noticed that the assessee was in the practice of paying RTO payment in cash on behalf of the customer and during year the assessee had made payment of Rs.34,08,901/-. The assessee was asked to explain as to why the same be not disallowed and also explain the refund of discount paid to the customers. With respect to discount it was submitted by the assessee that the assessee first issues quotation of the vehicle to the customer for his loan purpose. On the basis of quotation, the bank or financial institution sanctions loan to the customer and the payment is received by the assessee from bank or financial institution. After payment is received, the delivery of vehicle is made and the final bill is prepared. While preparing the final bill the prevailing discount as per schemes of supplier is passed on to the assessee which leads to credit balance in the account of customers which is refunded to the customer on completion of paper work. It was further submitted that the assessee

Before me, the ld. AR reiterated the submissions made by Assessing Officer and CIT(A) and further submitted that the assessee is following the same method of accounting for discounts and RTO payments and no disallowance has been made in subsequent year. He further submitted that as far as RTO expenses are concerned the payments are made on behalf of the customers and assessee is not claiming it as expenses in its books of account and in such a situation no disallowance can be made in assessee’s hands. The ld. DR on the other hand supported the order of Assessing Officer and CIT(A).

I have heard the rival submissions and perused the material on record. The issue in present ground is with respect to disallowance of Rs.1,58,219/- of discount paid on ad-hoc basis and disallowance of Rs.6,81,780/- on account of RTO expenses. It is assessee’s contention that the assessee is following same method of accounting

In the result, the appeal of assessee is partly allowed.