M/S SURAJBHAN COMMODITIES P. LTD.,KOLKATA vs ACIT, CIRCLE-5, KOLKATA, KOLKATA

Income Tax Appellate Tribunal, “D”, BENCH KOLKATA

Before: SHRI N.V. VASUDEVAN, JM &DR. A.L.SAINI, AM

For Appellant: Shri Sunil Surana, CA

Hearing: 04/08/2017Pronounced: 30/08/2017

O R D E R

Per Dr. Arjun Lal Saini, AM:

The captioned appeal filed by the assessee, pertaining to assessment year 2005-06, is directed against the order passed by the ld. Commissioner of Income Tax (Appeals)-2, Kolkata, in Appeal No.499/CIT(A)-2/14-15 dated 19.07.2016, which in turn arises out of an order passed by the AO u/s.143 of the Income Tax Act 1961, (hereinafter referred to as the ‘Act’), dated 31.12.2007.

The facts of the case qua the assessee are that assessee filed its return of income declaring total income of Rs.15,44,780/- on 24.10.2005. The return was processed u/s 143(1) on 31.03.2007. The assessee’s case was selected for scrutiny and notice was issued u/s.143(2) and the Assessing Officer has completed assessment by making addition on account of prior period expenses of M/s. Surajbhan Commodities (P) Ltd. Assessment Year: 2005-06 Rs.80,048/- and addition on account of TDS not deposited into the Central Govt. Account, u/s.40(a)(ia) of Rs.1,22,000/- . 3. The assessee has raised before us the following grounds of appeal: “1.For that the order of the ld. CIT(A) is arbitrary, illegal and bad in law. 2.For that the ld. CIT(A) erred in dismissing the grounds taken by the assessee as general in nature not to require any separate adjudication when specific grounds with regard to the disallowance made were taken before him and the facts were available from the assessment order itself required no fresh investigation of such facts. 3.For that the ld. CIT(A) erred in confirming the disallowance of sales tax payment of Rs.80,048/- as prior period expenses when the same was fully allowable u/s.43B. 4.For that the ld. CIT(A) erred in confirming the disallowance of Rs.1,20,000/- under sec. 40(a)(ia) of the I.T. Act when tax was duly deducted and deposited before the due date of filing of the return of income and therefore no disallowance was called for. 5.For that on the facts and circumstances of the case the order of the CIT(A) be modified and the assessee be given the relief prayed for. 6.For that the assessee craves leave to add, alter or amend any ground before or at the time of hearing.”

4. However, the assessee in this appeal, has raised a multiple grounds of appeal but at the time of hearing, the main grievance of the assessee has been confined to in Ground no.3 and Ground no.4.and other grounds are general in nature, therefore do not require adjudication. 5.Ground No.3 relates to disallowance of sales tax payment of Rs.80,048/- as prior period expenses. 5.1The brief facts qua the issue are that the assessee has debited Rs.80,048/- as prior period expenses in his Profit & Loss A/c. This prior period expenses relates Page | 2 M/s. Surajbhan Commodities (P) Ltd. Assessment Year: 2005-06 to sales demand for the F.Y 2001-02. During the assessment proceedings, the assessee stated before the AO that during the F.Y 2001-02, certain purchases were made from M/s. Gloster Jute Mills Ltd. against which Form ‘14’ was issued and a total sales tax waiver of Rs.80,048/- was obtained. The form was subsequently rejected by the Assistant Commissioner at the time of assessment of the said Gloster Jute Mills Ltd. But the AO ignored the submissions of the assessee stating that these are prior period expenses and it is not allowance expenditure based on mercantile system of accounting. Therefore, addition of Rs.80,048/- was made by AO. 5.2 Aggrieved by the addition of Ld. AO, the assessee filed an appeal before the ld. CIT(A). However, the ld. CIT(A) did not adjudicate the issue stating that the grounds raised by the assessee were general in nature and, therefore, did not require any adjudication. 5.3 Before us, the ld. Counsel for the assessee has submitted that these prior period expenses pertains to the sales tax payment of Rs.80,048/- and the same was fully allowable u/s. 43B of the Act on payment basis. Since, the sales tax payment was made by the assessee before and within due date of filing return of income under sub-section(I) of section 139 therefore, amended provisions of the Act is applicable and these prior period expenses are allowable u/s 43B of the Act. 5.4 On the other hand, the ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and is not repeated for the sake of brevity. Page | 3 M/s. Surajbhan Commodities (P) Ltd. Assessment Year: 2005-06 5.5 We have heard both the parties and perused the materials available on record, we notice that statutory payment, that is, sales tax payment of Rs.80,048/- which pertains to the previous years and paid by the assessee in the assessment year under consideration, should be allowed on payment basis.Therefore, based on payment, it is allowable u/s.43B of the Act. In this case, the allow ability of expenses pertaining to previous years has been crystallized this year, therefore prior period expenses should be allowed based on crystallization. Since, the sales tax payment was made by the assessee before and within due date filing return of income under sub-section(I) of section 139 therefore, amended provisions of the Act, is applicable and these prior period expenses are allowable u/s 43B of the Act.Therefore, based on the above discussion, we are of the view that the addition made by the Assessing Officer and confirmed by the ld. CIT(A) is not justified. Accordingly, we delete the addition of Rs.80,048/-. 5.6 In the result, the appeal filed by the assessee,( Ground No. 3), is allowed. 6.Ground No.4 raised by the assessee relates to disallowance of Rs. 1,22,000/- under section 40 (a) (ia) of the Act. 6.1 Brief facts qua the issue are that the Assessing Officer disallowed Rs.1,22,000/- stating that the assessee did not deduct the TDS u/s194C of the Act.In ground No.4 the amount of Rs.1,20,000/- has been wrongly written, it should be read as Rs.1,22,000/-. Theassessee was asked by the AO, to submit details of deduction under various heads along with the amount deducted as well as deposited with dates. The assessee submitted a detailed chart of all TDS deducted along with the due date and the date of deposit. On perusal of records Page | 4 M/s. Surajbhan Commodities (P) Ltd. Assessment Year: 2005-06 submitted by the assessee it was found by the AO that TDS deducted on certain payments us/194C were not made as per provisions of section 40(a)(ia). These payments were as follows: Expenditure for Contract Payments u/s.194C Name of the party Amount Date on Due date Deposit date which TDS deducted Devendra Singh 58600 03/03/05 07/04/05 07/05/05 24100 10/03/05 07/04/05 07/05/05 32800 29/03/05 07/04/05 07/05/05 SatyanarayanBagla& 6500 22/03/05 07/04/05 07/05/05 Sons Total 1,22,000/- Therefore, as per the details submitted by the assessee mentioned above, thegross amount of expenditure on which TDS was deducted after the due date or TDS not deducted at all was Rs.1,22,000/- u/s.194C, therefore, AO disallowed the same u/s.40(a)(ia) and added back to the total income of the assessee. 6.2 Aggrieved by the order of the Assessing Officer, the assessee filed an appeal before the ld. CIT(A), who has confirmed the addition made by the Assessing Officer stating that the grounds raised by the assessee are general in nature and they do not require any adjudication. 6.3 Before us, the ld. Counsel for the assessee has submitted that assessee had submitted a detailed chart of TDS including the date of deposit. The ld. Counsel submitted that the TDS deducted on certain items u/s.194C has been deposited by the assessee company within due date mentioned u/s.139(1) of the I.T Act and therefore, the assessee is entitled to claim expenditure. The Counsel also relied on the judgment of Hon`ble ITAT Hyderabad, in the case of M/s Page | 5

M/S SURAJBHAN COMMODITIES P. LTD.,KOLKATA vs. ACIT, CIRCLE-5, KOLKATA, KOLKATA