TALISMA CORPORATION PVT LTD,BANGALORE vs. JOINT COMMISSIONER OF INCOME TAX (OSD), CIRCLE-7(1)(1), BANAGALORE

PER SHRI PAVAN KUMAR GADALE, JM :

The assessee has filed an appeal against the order of Commissioner of Income Tax (Appeals)-7, Bangalore passed u/s. 143(3) r.w.s. 144C and u/s. 250 of the Income Tax Act, 1961 (the Act) and raised the following grounds of appeal :

2 ITA No.1635/Bang/2017

3 ITA No.1635/Bang/2017

4 ITA No.1635/Bang/2017 order, the assessee filed an appeal with the learned CIT (Appeals) whereas the learned CIT (Appeals) concurred with the action of the Assessing Officer and dismissed the assessee's appeal. Aggrieved by the order of the learned CIT (Appeals), the assessee filed an appeal before the Tribunal. 3. At the time of hearing, the ld. AR submitted that the learned CIT (Appeals) has not adjudicated Grounds of appeal No.1 & 3 in respect of proportionate disallowance of TDS credit and carry forward of losses because the assessee has submitted application for rectification before the Assessing Officer. Similarly CIT (Appeals) confirmed the disallowance of provision for audit fees for non- deduction of tax. The learned Authorised Representative emphasized that the assessee has not paid the amount and accounting entry was reversed in the subsequent assessment year and hence there is no requirement of deduction of TDS and prayed for allowing the appeal. Contra, the learned Departmental Representative supported the orders of CIT (Appeals). 4. We heard the rival submissions and perused the material on record. On the first ground of appeal, the ld. AR submitted that the learned CIT (Appeals) has not adjudicated Ground Nos.1 and 3. The assessee has filed an application for rectification before Assessing Officer and is of the opinion that the assessee intend to withdraw the appeal on above grounds of appeal whereas the learned Authorised Representative vehemently argued that there is no such mention of withdrawal and the assessee has prima facie good case and prayed for one more opportunity before the CIT (Appeals) to substantiate the facts with evidence. We considering the submissions and the findings of the CIT (Appeals), are inclined to provide one more opportunity to the assessee as the CIT (Appeals) has not adjudicated the grounds of appeal in respect of proportionate disallowance of TDS and carry forward of unabsorbed depreciation. Accordingly, we restore these

5 ITA No.1635/Bang/2017 grounds of appeal raised to the file of CIT (Appeals) to adjudicate on merit and pass a reasonable order and further the assessee should be provided adequate opportunity of hearing and co-operate in submitting the information for early disposal of appeal and the grounds of appeal of assessee are allowed for statistical purposes. 5. On the other disputed issue of disallowance of provision for audit fees, the learned Authorised Representative’s contention that the Assessing Officer has disallowed the expenditure as no tax has been deducted (TDS) on provision for Audit fee the learned Authorised Representative submitted that TDS is deductible only when income is chargeable to tax and by making the provision in the Books of Account no income is accrued to the payee and therefore the TDS provisions are not applicable. Further the provision made in the present assessment year has been reversed in a subsequent assessment year as no income is accrued to the payee in the assessment year under consideration. The learned Authorised Representative referred to page 110 of Paper Book where the assessee has substantiated that the provision of audit fees of Rs.7 lakhs and Rs.2 lakhs as on 31.3.2010 was reversed in April, 2010 and supported with evidence in paper book. We on perusal of the order of Assessing Officer find at page 2 para 5, the Assessing Officer has made above addition as the assessee could not produce any details. The contentions of the learned Authorised Representative that no income has accrued to the payee therefore no TDS is deducted cannot be accepted. But the facts are clear that the assessee has claimed deduction in the Profit and Loss account and was not added in the computation of income, we find learned CIT (Appeals) having considered the facts and circumstances and legal provisions and submissions has taken a reasonable view and confirmed the addition which we are not inclined to interfere

6 ITA No.1635/Bang/2017 and upheld the same. Accordingly the ground of appeal of the assessee is dismissed. 6. In the result, the assessee's appeal is partly allowed for statistical purposes. Order pronounced in the open court on 4th September, 2019. Sd/- Sd/- (JASON P BOAZ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 04.09.2019. *Reddy GP Copy to 1. The appellant 2. The Respondent 3. CIT (A) 4. Pr. CIT 5. DR, ITAT, Bangalore. 6. Guard File By order

Assistant Registrar Income-tax Appellate Tribunal Bangalore