DCIT, CIRCLE-1(1), GURUGRAM vs. ABIDI YAHIYA SYED, GURUGRAM

आदेश /O R D E R PER C.N. PRASAD, J.M.

This appeal is filed by the Revenue against the order of Ld.

Commissioner of Income Tax (Appeals)-2, Gurgaon dated 28.12.2018

for the AY 2014-15. The Revenue raised the following grounds: - 1. “Ld.CIT(A) has erred in deleting the addition of Rs.56,34,534/- made by the AO on account of travelling expenses since the Ld.CIT(A) has not considered the facts that the assessee has not explained how the air tickets were booked i.e. whether the booking was made through the travel agent or directly from the airlines or otherwise.

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addition made on account of travelling expenses. In the course of

assessment proceedings the Assessing Officer noticed that assessee

incurred travelling expenses of Rs.56,34,534/- on which assessee

has not deducted TDS. Assessee was required to furnish details of

expenses including travelling along with details of TDS, supporting

bills/vouchers. It is the finding of the AO that the assessee has

submitted only the breakup of travelling expenses without any

supporting bills/vouchers. On examining the breakup of travelling

expenses the AO noticed that assessee has not deducted TDS and no

reason for not deducting TDS has been submitted by the assessee

and accordingly disallowance was made u/s 40(a)(ia) of the Act. On

appeal the Ld.CIT(A) deleted the disallowance.

report was called for from the AO and the AO submitted remand 2

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report stating that the expenses are not covered under the

provisions of Section 194C of the Act. The Ld. DR submits that

based on the remand report the Ld.CIT(A) deleted the

addition/disallowance on the ground that the assessee has produced

the proof of expenses before the AO. The Ld. DR submits that the

question is whether the travelling expenses incurred by the assessee

can be subject matter of TDS or not was not at all examined by the

Ld.CIT(A) but the disallowance was deleted only based on the

observations of the AO that the provisions of Section 194C of the

Act are not attracted. Therefore, Ld. DR submits that the matter

may be restored back to the AO for denovo verification.

before the lower authorities submits that the TDS provisions are not

applicable to the travelling expenses incurred by the assessee.

authorities below, we observe that the assessee did not produce any

bills/vouchers etc. during the course of assessment proceedings. In

the remand report the AO has simply stated that the provisions of

Section 194C are not attracted to these expenses. The Ld.CIT(A)

also has not given any finding as to whether the TDS provisions are

applicable to the travelling expenses or not. Therefore, we are of 3

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the considered view that the matter has to be reexamined by the

AO in accordance with law. Thus, the same is set aside to the file

of the AO for denovo examination in accordance with law after

providing adequate opportunity of being heard to the assessee.

made on account of offsite/event expenses disallowed u/s 40(a)(ia)

of the Act. The Ld. DR submits that in this case also the assessee

has not furnished complete details before the AO and not explained

as to why the TDS was not made. The AO also observed that there

were also personal expenses incurred by the assessee which were

not allowable u/s 37 of the Act. Therefore, the AO disallowed the

same u/s 40(a)(ia) of the Act and also u/s 37 of the Act. Ld. DR

submits that the Ld.CIT(A) deleted the disallowance observing that

the AO verified the bills/vouchers in the remand proceedings and

the nature of expenditure is payment to hotels, forex payments and

other petty payments, payments made for purchases at the time of

events abroad or in India. The Ld. DR submits that in the remand

proceedings the AO only stated that he has test checked the bills

and vouchers and he has not given any finding that these expenses

are not liable for TDS. Ld. DR further submits that even the

Ld.CIT(A) has not examined as to whether any TDS provisions are

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attracted for the expenses incurred by the assessee. Therefore, the

Ld. DR submits that the matter may be restored to the file of the

AO for denovo adjudication after thorough verification.

authorities below, we find that the Ld.CIT(A) has neither examined

nor given any finding as to whether the provision of Section

40(a)(ia) of the Act are applicable for the expenses incurred by the

assessee or not. There is no finding that if there are any personal

expenses incurred by the assessee which were not allowable u/s 37

of the Act. Therefore, considering all these aspects, we are of the

view that the issue has to be reexamined by the AO in accordance

with law. Thus, we set aside the issue to the file of the AO to

examine the issue thoroughly in accordance with law after providing

adequate opportunity of being heard to the assessee. Ground nos. 1

& 2 are allowed for statistical purposes.

made on account of rental income. The Ld. DR submits that the AO

observed that the assessee has earned income of Rs.14,88,242/-

from the guest house during the FY 2012-13. However, the assessee

has not shown any income from the guest house during the subject

assessment year. Ld. DR submits that the AO also observed that the 5

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assessee also incurred guest house expenses of Rs.5,30,742/- and,

therefore, he has concluded that the assessee has not reported the

income from guest house and the expenses cannot be allowed. On

appeal the Ld.CIT(A) deleted the addition based on the remand

report submitted by the AO.

assessment year under consideration the guest house of the

assessee was vacant and no income was earned from it. Ld. Counsel

further submits that the assessee has also given declaration

certificate stating that the company was in the business of guest

house providing accommodation facility for corporate staff till the

FY 2012-13 and due to certain financial reasons the assessee closed

the said business. Ld. Counsel also submits that expenses of

Rs.5,30,742/- which was incurred during the year were against the

event expenses for transit accommodation of guest. Ld. Counsel

submits that considering all these submissions and since there was

no adverse comments given by the Ld.AO the addition was rightly

deleted by the Ld.CIT(A).

below. The contentions of rival parties have been considered by

the Ld.CIT(Appeals) and the AO in the remand proceedings 6

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examined the issue and there was no adverse comments given by

the AO. Therefore, based on the remand report the Ld.CIT(A)

deleted the addition which in our view there is no valid reason to

interfere with the findings of the Ld.CIT(A). The ground raised by

the Revenue is dismissed.

statistical purpose.

Order pronounced in the open court on 31.05.2023

Sd/- Sd/- (NARENDRA KUMAR BILLAIYA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 31.05.2023 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order

Assistant Registrar, ITAT: Delhi Benches-Delhi