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Order u/s.254(1)of the Income-tax Act,1961(Act) लेखा लेखा सद�य लेखा लेखा सद�य सद�य राजे�� सद�य राजे�� राजे�� केकेकेके अनुसार राजे�� अनुसार अनुसार PER RAJENDRA, AM- अनुसार Challenging the order,dated 24.08.2011,of the CIT(A)-21,Mumbai,the Assessee has filed the present appeal.First two grounds of appeal were not pressed by the Authorised Representative (AR)during the course of hearing before us.Hence,both the(Gr.No.1&2)grounds stand dismissed, as not pressed. 2.Assessee-company,engaged in the business consultancy services in relation to technical support for development of computed software filed its return of income for the year under consideration,on 30.09.2008,declaring its total income at (-)Rs.52,90,494/-. The AO completed the assessment u/s.143(3) of the Act,1961 on 20.10.2010, assessing the total income of the assessee at Rs.13,84,160/-. 3.Ground No.3 is about confirming the disallowance of Rs.9.72 lakhs on account of excess provisions written back by the assessee.During the assessment proceedings it was found by the AO that the assessee had credited an amount of Rs.9,72,920/- to its P&L Account on account of excess provision written back, that the assessee had claimed that the said amount was on account of provisional liability and not actually ascertained liability, that same was to be reduced while calculating the taxable income, that the unascertained liability could not be assessed to tax, that in the earlier years it had debited the P&L account and had added back the said provisions though no deduction was claimed in respect of the liabilities in the past,that the liability had 1
8624/Mum/2011Silicon Interfaces crystallised during the year,that the provisions made in the past were excessive and were required to be written back.However,the AO did not agree with the assessee and same was added to its total income. He held that assessee had not filed any justification for the claim.
3.1.Aggrieved by the order of the AO,the assessee preferred an appeal before the First Appellate Authority (FAA).He referred to the audit report filed by the assessee.After considering the submission of the assessee and assessment order,the FAA held that the assessee had not filed any documentary evidence namely balance sheet, P&L A/c., returns of income for the earlier years to justify the claim,that the assessee had not satisfactorily proved that the deduction of the liabilities were not claimed in the earlier years.Finally,he upheld the order of the AO.
3.2.Before us,the AR stated that balance sheet, P&L Account of the earlier years were available with the department,that the AO did not make any enquiry in that regard, that the assessee had not claimed deduction with regard to above referred liabilities in the earlier year.DR supported the order of the FAA.
3.3.We have heard the rival submissions and perused the material before us.We find that the FAA had upheld the disallowance, made by the AO, that he had held that the assessee had not filed the returns of income,P&L A/c.s for the earlier years.Considering the fact that these basic documents were available to AO as well as FAA,we are of the opinion that before taking an adverse view they should have verified the facts from the available records or should have directed the assessee to file the same.Considering the peculiar facts and circumstances of the case,we are of the opinion that the issue needs further verification.So,in the interest of justice we are restoring back the matter to the file of the AO to decide the issue afresh after going through the returns of income, P&L accounts, balance sheet of the earlier years. Assessee is directed to provide these basic documents to the AO.Third Ground is decided in favour of the assessee,in part.
4.Next Ground of appeal is about confirming the disallowance of Rs.65,922/- on account of the late payment of PF.During the assessment proceedings the AO found that payment of employees’ contribution to PF and ESIC was not made within the stipulated date as provided in section 36(1) of the Act. Provident Fund 2
8624/Mum/2011Silicon Interfaces
Months Employees Contribution Due Date Date of Payment July, 07 35714 20.08.2007 23.08.2007 October, 07 302208 20.11.2007 22.11.2007 ESIC July, 07 3216 21.08.2007 23.08.2007 October, 07 1844 21.11.2007 22.11.2007 The above amount was considered by AO as assessee’s income as per the provisions of section 2(24)(x) r.w.s.36(1)(va) of the Act.
4.1.During the appellate proceedings the assessee argued that in some cases the payment was made with marginal delay of 2-3 days, that the payments were made before the due date of filing of return, that no disallowance could be made u/s.43B of the Act.After considering the submission of the assessee the FAA held that payment made after grace period was not eligible for deduction. Giving partial relief he upheld the disallowance of Rs.65.922.
4.2.Before us, the AR relied upon the cases of Ghatge Patil Transports (368ITR749) and Hindustan Organics Chemicals Ltd.(366ITR1) of the Hon'ble Jurisdictional High Court. The DR left the issue to the discretion of the Bench. We find that in the case of Ghatge Patil Transports(supra),the Court had held that if the payments were made before the due date of filing of return of income, no disallowance can be made as per the provisions of section 36(1).Respectfully,following the above judgment of the Hon'ble Bombay High Court,we decide Ground No.4 in favour of the assessee.
5.Last Ground of appeal deals with disallowance of expenses claimed under the head travelling and conveyance expenditure amounting to Rs.5.92 lakhs.During the assessment proceedings the AO found that the assessee had debited an amount of Rs.27.84 lakhs to the P&L A/c under the head travelling and conveyance including foreign travel exepenses.He directed the assessee to submit the details. As per the AO the assessee did not submit any details such as bills, vouchers, nature of foreign travel etc.Therefore,in absence of the details he disallowed 1/4th of the expenses i.e. Rs.6.96 lakhs. 5.1.During the appellate proceedings the assessee contended that the expenditure was incurred towards travelling of employees and the management abroad, for business purposes, that all the 8624/Mum/2011Silicon Interfaces details called for by the AO were submitted vide letter 8.1.2010, 7.5.2010 and 16.08.2010. Before the AO,the assessee filed ledger account of the expenses justifying the claim made. It also filed copies of supporting evidences and requested the FAA to admit the same as additional evidence.He directed the AO to file a remand report in that regard,but,till the passing of the order by FAA, the AO did not submit any report .After considering the available material he held that foreign travel expenses were incurred for the purpose of business, that there was some force in the submission of the assessee, that disallowance was made on adhoc basis. He further observed that the assessee had filed ledger copies of incurring of expenditure of Rs.21.92 lakhs only, whereas it claimed expenditure of Rs.27.84 lakhs.Therefore,he restricted the addition to Rs. 5.92 lakhs.