Arvind Lifestyle Brands Ltd., Ahmedabad V. The Dy. Commissioner of Income Tax, Circle-1(1)(2), Ahmedabad

ITA 1817/AHD/2016

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9055 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 24-03-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 07-07-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: VARTIK R CHOKSI
• Keywords: Depreciation; Initiation of penalty proceedings; Bad and doubtful debts; Ignorance of law; TDS; Set aside
• Section: 271(1)(c); 143(3); 40(a)(ia); 37(1); 195; 64; 194J; 13; 145; 37; 28

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT AT AHMEDABAD) BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ASSESSEE BY : SHRI V ARTIK R. CHOKSI , A.R REVENUE BY : SHRI L.P. JAIN , SR.D.R WITH SHRI SANJEEV JAIN , CIT .D R / DATE OF HEARING : 02 / 12 / 2020 / DATE OF PRONOUNCEMENT: 04 / 01/2021 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER : THESE FOUR APPEALS HAVE BEEN FILED AT THE INSTANCE OF THE ASSESSEE AND REVENUE AGAINST THE APPELLATE ORDERS OF THE LEARNED COMMISSI ONER OF INCOME - TAX (APPEALS) , AHMEDABAD [ LD. CIT (A) IN SHORT] RELEVANT TO ASSESSMENT SL. NO(S) ITA NO(S) ASSET. YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 1817/AHD/2016 2012 - 13 ARVIND LIFESTYLE BRANDS LTD., ARVIND MILLS PREMISES, NARODA ROAD, AHMEDABAD - 380025. PAN NO. AAACH725 2A D.C.I.T, CIRCLE - 1(1)(2) , AHMEDABAD . 2. 2056/AHD/2016 2012 - 13 D.C.I.T, CIRCLE - 1(1)(2) , AHMEDABAD . ARVIND LIFESTYLE BRANDS LTD., 3. 2377/AHD/2017 2013 - 14 ARVIND LIFESTYLE BRANDS LTD., D.C.I.T, CIRCLE - 1(1)(2) , AHMEDABAD . 4. 2618/AHD/2017 2014 - 15 ARVIND LIFESTYLE BRANDS LTD., ITO WARD - 1(1)(3) AHMEDABAD ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 2 YEAR S 2012 - 13, 2013 - 14 AND 2006 - 07 . OUT OF FOUR APPEALS, THREE APPEALS ARE BY THE ASSESSEE AND ONE APPEAL BY THE REVENUE. SINCE, COMMON ISSUES ARE ARISING IN ALL THE APPEALS AND FACTS BEING IDENTI CAL, WE DISPOSE OF ALL THESE APPEAL BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY . 2. FIRST WE TAKE ITA NO.1817/AHD/2016 FOR A.Y. 2012 - 13 AN APPEAL BY THE ASSESSEE ON THE FOLLOWING GROUNDS: 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN TREATING GROUND NO. 1 OF THE APPELLANT'S APPEAL, CHALLENGING THE VALIDITY OF THE ASSESSMENT ORDER, AS BEING GENERAL IN NATURE DISMISSING IT. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION RELATING TO THE EMPLOYEES CONTRIBUTION TO PF AND ESIC AMOUNTING TO RS. 27,84,027/ - STATING THAT THE EMPLOYEES CONTRIBUTION IS REQUIRED TO BE DEPOSITED WITHIN THE DUE DATE PRES CRIBED U/S. 36(1 )(VA) OF THE ACT. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED, INTER ALIA . (A) THAT WHEN DEDUCTION FOR EMPLOYER'S CONTRIBUTION COULD NOT BE DENIED WHERE PAYMENT WAS MADE AFTER THE DUE DATE PRESCRIBED IN THE RESPECTIVE LAW IF PAYMENT WAS MAD E BEFORE THE DUE DATE FOR FILING INCOME - TAX RETURN (VIDE THE FIRST PROVISO TO SECTION 43B), THERE REALLY COULD BE NO REASON FOR REFUSING DEDUCTION FOR EMPLOYEES' CONTRIBUTION AS LONG AS PAYMENT WAS MADE BEFORE THE DUE DATE FOR FILING THE INCOME - TAX RETURN; (B) THAT THE APPELLANT'S CONTENTION FOUND SUPPORT FROM SEVERAL AUTHORITIES TO WHICH IT HAD REFERRED IN ITS APPELLATE PROCEEDINGS. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLO WANCE OF LOSS OF RS. 4,55,074/ - , BEING THE AMOUNT WRITTEN OFF ON ACCOUNT OF NON - RECOVERABLE SECURITY DEPOSITS GIVEN TO THE LANDLORDS. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED, INTER ALIA, THAT THE SAID AMOUNT WAS PAID TO THE LANDLORDS AS SECURITY DEPOSITS FOR ACQUIRING RENTED PREMISES FOR ITS BUSINESS PURPOSE. HOWEVER, REFUND OF THOSE SECURITY DEPOSITS COULD NOT BE OBTAINED FOR REASONS SUCH AS THE APPELLANT'S INABILITY TO OCCUPY THE PREMISES FOR THE PURPOSE OF ITS RETAIL STORE AND HENCE LOSS HAS OCCURRED TO THE APPELLANT. THEREFORE, THE APPELLANT HAS CLAIMED IT AS BUSINESS LOSS U/S. 28 AND/OR U/S.37 OF THE ACT. 4. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT AMOUNTING TO RS. 3,04,82,4197 - ON ACCOUNT OF NON - DEDUCTION OF TDS IN RESPECT OF PROVISION FOR EXPENSES. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED, INTER ALIA: (A) THAT THE PROVISION FOR EXPENSES WAS MADE AT THE END OF THE YEAR IN ACCORDANC E WITH THE MERCANTILE SYSTEM OF ACCOUNTING, WHICH IS MANDATORILY REQUIRED TO BE FOLLOWED BY THE COMPANIES AS THE PROVISIONS OF COMPANIES ACT, 1956. ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 3 (B) THAT THE PROVISION MADE ON 31/03/2012 TOWARDS PROVISIONS FOR EXPENSES WERE NOT LIABLE FOR DEDUCTION OF TDS AS AT THE TIME OF MAKING PROVISION FOR EXPENSES THE PARTIES TO WHOM PAYMENTS WERE MADE WERE NOT IDENTIFIABLE. SINCE THE PROVISION WAS MADE FOR EXPENSES, PERTAINING TO THE PRESENT ASSESSMENT YEAR, FOR WHICH LIABILITY TO PAY TO THE CREDITORS IN THE LEGAL SEN SE HAD NOT ACCRUED, AS PER THE GENERAL PRACTICE, THE PROVISIONS IN QUESTION WERE REVERSED IN THE BEGINNING OF THE IMMEDIATELY FOLLOWING YEAR; THAT ACCORDINGLY, IN THE SUBSEQUENT YEAR, AS AND WHEN PAYMENT TO THE CONCERNED PARTIES FALL DUE, THEY WOULD BE MAD E AFTER DEDUCTING TAX AT SOURCE AS APPLICABLE AND SINCE THE REVERSAL ENTRY MADE IN THE BEGINNING OF THE YEAR WAS TO THE CREDIT OF THE RESPECTIVE EXPENDITURE AC COUNT THERE WILL BE NEUTRALIZING IMPACT OVER A PERIOD OF TIME ON THE PROFIT OF THE APPELLANT. THU S, WHEN THE PROVISION MADE FOR EXPENSES WAS REVERSED IN THE BEGINNING OF NEXT YEAR THERE WILL NOT BE ANY INCOME ACCRUED TO THE PAYEE AND ACCORDINGLY, THERE WILL BE NO LIABILITY TO DEDUCT TDS ON THE PROVISIONS. (C) THAT THE AMOUNTS ARE CREDITED TO THE ACCOUNT S OF RESPECTIVE PARTIES IN THE NEXT FINANCIAL YEAR ON RECEIPT OF BILLS FROM PARTIES AND TAX DEDUCTED AT SOURCE RELATING TO THE SAME HAS BEEN DULY PAID BEFORE THE DUE DATE OF FILLING THE RETURN OF INCOME. (D) THAT OUT OF THE TOTAL DISALLOWANCE OF PROVISION FOR EXPENSES, RS. 11,79,4747 - PERTAINED TOWARDS THE PROVISION MADE IN RESPECT OF SERVICE INFRA, THE HEAD WHICH NEVER EXISTED IN THE BOOKS OF ACCOUNT OF THE APPELLANT. 5. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMISSING GROUND NO. 8 OF THE APPELLANT'S APPEAL CHALLENGING INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C) ON THE GROUND THAT AN APPEAL DID NOT LIE AGAINST MERE INITIATION OF PENALTY PROCEEDINGS. HE OUGHT TO HAVE APPRECIATED, INTE R ALIA, THAT IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THE RESPONDENT'S CASE, THERE BEING ABSOLUTELY NO WARRANT/JUSTIFICATION FOR INITIATING THE PENALTY PROCEEDINGS, THEY DESERVED TO BE DROPPED, THEREBY SAVING BOTH THE APPELLANT AND THE DEPARTMENT FROM LO NG DRAWN UNNECESSARY LITIGATION. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND AND/OR ALTER THE GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING. 3. A T THE OUTSET, THE LEARNED AR FOR THE ASSESSEE BEFORE US SUBMITTED THAT HE HAS BEEN INSTRUCTED BY THE ASSESSEE NOT TO PRESS THE GROUND NO. 1 FILED IN THE MEMO OF APPEAL. ACCORDINGLY WE DISMISS THE SAME AS NOT PRESSED. 4. THE 2 ND ISSUE RAISED BY THE ASSESSEE IS THAT THE LE ARNED CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO FOR 27,84,027/ - UNDER SECTION 36(1)(VA) OF THE ACT ON ACCOUNT OF DELAY IN THE DEPOSIT OF EMPLOYEES CONTRIBUTION TOWARDS PF AND ESIC. ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 4 5 . THE LEARNE D AR FOR THE ASSESSEE AT THE OUTSET FAIRLY CONCEDED THAT THE ISSUE IS COVERED AGAINST THE ASSESSEE BY THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GSTRC REPORTED IN 41 TAXMANN.COM 100. THE RELEVANT EXTRACT OF THE JUDGMENT READS AS UNDER: 7.4 SECT ION 36 OF THE ACT PROVIDES FOR DEDUCTION IN COMPUTING THE INCOME REFERRED TO IN SECTION 28. THE RELEVANT PROVISIONS APPLICABLE TO THE PRESENT CASES WOULD BE SECTION 36(1)(VA). AS PER SUB - SECTION 36(1)(VA), ASSESSEE SHALL BE ENTITLED TO THE DEDUCTION IN COM PUTING THE INCOME REFERRED TO IN SECTION 28 WITH RESPECT TO ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES TO WHICH THE PROVISIONS OF SUB - CLAUSE (X) OF CLAUSE (24) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES' ACCOUNTS IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE 'DUE DATE'. AS PER EXPLANATION TO SECTION 36(1)(VA) FOR THE PURPOSE OF THE SAID CLAUSE, 'DUE DATE' MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT THE EMPLOYEES' CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER THE ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STANDING ORDER, AWARD, CONTRACT OR SERVICE OR OTHERWISE. SECTION 36(1)(VA) READS AS UNDER : 'SECTION 36(1) : THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWING CLAUSES SHALL BE ALLOWED IN RESPECT OF THE MATTERS DEALT WITH THEREIN, IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 SECTION 36(1) (VA) : ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH THE PROVISIONS OF SUB - CLAUSE (X) O F CLAUSE (24) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEE'S ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. EXPLANATION : FOR THE PURPOSE OF THIS CLAUSE, 'DUE DATE' MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT AN EMPLOYEE'S CONTRIBUTION TO THE EMPLOYEE'S ACCOUNT IN THE RELEVANT FUND UNDER ANY ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STANDING ORDER, AWARD, CONTRACT OR SERVICE OR OTHERWISE.' 5.1 IN VIEW OF THE ABOVE, WE DISMISS THE GROUND OF APPEAL RAISED BY OF THE ASSESSEE. 6. THE 3 RD ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO FOR 4,55,074/ - ON ACCOUNT OF THE AMOUNT WRITTEN OFF FOR NON - REC OVERY OF SECURITY DEPOSITS. 7. THE ASSESSEE DURING THE YEAR HAS WRITTEN OF SECU RITY DEPOSIT FOR 4,55,074/ - MADE WITH THE LANDLORD. THE ASSESSEE CONTENDED THAT THE SAME WAS WRITTEN OFF AS ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 5 THE SAME BECAME IRRECOVERABLE . HOWEVER, THE AO FOUND THAT THE ASSESSEE FAILED TO MAKE REPLY TO THE SHOW CAUSE NOTICE ISSUED DATED 02/03/2015 PURPOSING THE DISALLOWANCES OF THE IMPUGNED AMOUNT . THUS IT WAS NOT ESTABLISHED BY THE ASSESSEE THAT THE IMPUGNED AMOUNT WAS OFFERED TO TAX IN THE EARLIER YEARS WHICH IS NEC ESSARY FOR CLAIMI NG DEDUCTION UNDER SECTION 36(1) (VII) READ WITH SECTION 36(2) OF THE ACT FOR THE BAD DEBTS . THEREFORE THE SAME SHOULD NOT BE ALLOWED IN THE YEAR UNDER CONSIDERATION. THUS THE AO MADE THE ADDITION OF 4,55,074/ - TO THE TOTAL INCOME OF THE A SSESSEE UNDER THE SECTION 36(2) R.W.S. 28 OF THE ACT. 8 . AGGRIEVED ASSESSEE PREFERRED AN AP PEAL BEFORE THE LEARNED CIT (A) WHO CONFIRMED THE ADDITION MADE BY THE AO BY HOLDING AS UNDER: 6.3 / HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSION FILED BY I THE APPELLANT. THE APPELLANT HAS CLAIMED WRITE OFF OF SECURITY DEPOSITS FOR RS.4,55,074/ - ON THE GROUND THAT SAME IS NOT RECOVERABLE FROM LANDLORD. THE ASSESSING OFFICER HAS DISALLOWED THE ABOVE CLAIM ON THE GROUND THAT APPELLANT HAS FAILED TO PROVE THAT AMOUNT WRITTEN OFF AS BAD DEBT HAS BEEN CONSIDERED IN COMPUTING THE INCOME OF EARLIER ASSESSMENT YEAR. ON THE OTHER HAND, APPELLANT HAS ARGUED THAT DEPOSITS WERE GIVEN FOR TAKING PREMIS ES ON RENT AND AS LANDLORD HAS NOT RETURNED SUCH DEPOSITS, IT IS CLAIMED AS LOSS UNDER SECTION 28 OR 37 OF THE ACT. ON CAREFUL CONSIDERATION OF ENTIRE FACTS, IT IS OBSERVED THAT APPELLANT HAS FAILED TO SUBMIT ANY EVIDENCE WHICH CAN JUSTIFY THAT SECURITY DE POSITS WERE GIVEN TO LANDLORD FOR TAKING PREMISES ON RENT AND REASON FOR NOT GETTING ANY REFUND OF SUCH DEPOSITS. THE APPELLANT IS ENTITLED TO CLAIM LOSS UNDER SECTION 28 OF THE ACT WHEN IT PROVES THAT LOSS HAS ARISEN 'IN YEAR UNDER CONSIDERATION WHEREAS A PPELLANT HAS FAILED TO SUBMIT SUCH DETAILS. CONSIDERING THESE FACTS, ADDITION MADE BY ASSESSING OFFICER FOR RS. 4,55,074/ -- IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED. 9. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEF ORE US. 10 . THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 TO 88 AND SUBMITTED THAT THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE HAS ALLOWED THE CLAIM IN CO. NO. 17/AHD/2016 IN ITA NO. 3669 /AHD/201 2 FOR THE AY 2011 - 12 VIDE ORDER DATED 28 - 1 - 2020 . ON THE CONTRARY, THE L EARNED DR BEFORE US VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 6 11 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET WE NOTE THAT THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE IN CO. NO. 17/AHD/2016 IN ITA NO. NO.3669/AHD/2015 FOR THE ASSESSMENT YEAR 2011 - 12 VIDE ORDER DATED 28 TH OF JANUARY 2020, INVOLVING IDENTICAL ISSUE HAS DECIDED THE MATTER IN FAVOR OF THE ASSESSEE. THE RELEVANT EXTRACT OF TH E ORDER IS REPRODUCED AS UNDER: 22. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE PRECEDING DISCUSSION, WE NOTE THAT THE ASSESSEE CANNOT BE ALLOWED DEDUCTION FOR WRITING OFF SUCH SECURITY DEPOSIT AS BAD DEBTS FOR THE REASON THAT THE CONDITIONS AS SPECIFIED UNDER THE PROVISION SECTION 36(2) HAVE NOT BEEN SATISFIED. 22.1. HOWEVER, THE FACT HAS NOT BEEN DOUBTED BY ANY OF THE AUTHORITIES BELO W THAT SUCH EXPENSES WERE NOT INCURRED BY THE ASSESSEE IN THE COURSE OF THE BUSINESS. AS SUCH, THE ASSESSEE HAS TAKEN TWO SHOWROOMS IN 2 DIFFERENT CITIES FOR THE PURPOSE OF ITS BUSINESS. ACCORDINGLY, THE SECURITY DEPOSITS WERE MADE IN THE COURSE OF ITS BUS INESS ACTIVITIES. THEREFORE, ANY LOSS INCURRED FOR ANY ACTIVITY CARRIED OUT IN THE COURSE OF THE BUSINESS IS ELIGIBLE FOR DEDUCTION EITHER UNDER SECTION 37 OR SECTION 28 OF THE ACT. IN THIS REGARD WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HON'BLE GUJARAT HIGH COURT IN CASE OF PCIT VS. DISHMAN PHARMACEUTICALS & CHEMICALS LTD REPORTED IN 417 ITR 373 THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED HERE AS UNDER: 'THE ONLY REQUIREMENT UNDER SECTION 37 OF THE ACT IS THAT THE EXPENSES (NOT CAPITAL OR PERSONAL) SHOULD BE INCURRED FOR THE PURPOSES OF THE BUSINESS OR PROFESSION. THERE IS NO NEED TO DEMO NSTRATE THAT A CERTAIN EXPENSE RELATES TO A PARTICULAR INCOME IN ORDER TO CLAIM SUCH EXPENSE.' 22.2. IN VIEW OF THE ABOVE, WE HOLD THAT THE LOSS INCURRED IN THE COURSE OF THE BUSINESS IS ELIGIBLE FOR DEDUCTION. 22.3. HOWEVER, THE CONTROVERSY ARISES WHETHER SUCH LOSS PERTAINS TO THE YEAR UNDER CONSIDERATION OR IN THE EARLIER YEARS. IN OTHER WORDS IT IS TO BE FOUND OUT THE RELEVANT YEAR IN WHICH SUCH LOSS WOULD BE ELIGIBLE FOR THE DEDUCTION. IN THIS REGARD WE NOTE THAT THERE CANNOT BE ANY SET OF RULES TO DETE RMINE THE FACT OF THE CRYSTALLIZATION OF THE LOSS. WE CAN UNDERSTAND THIS FACT WITH THE HELP OF AN EXAMPLE. 22.4. SUPPOSING THE ASSESSEE (MR. X) HAS ACQUIRED A PROPERTY ON LEASE FOR A PERIOD OF 3 YEARS AFTER MAKING THE DEPOSIT OF THE SECURITY AMOUNT SAY RS. 1 LAKH ONLY. AS PER THE ARRANGEMENT BETWEEN THE ASSESSEE AND THE LESSOR, THE ASSESSEE WAS TO GET THE SECUR ITY DEPOSIT ON TERMINATION OF THE LEASE PERIOD. LET US ASSUME, THE ASSESSEE WAS TO GET THE REFUND OF THE SECURITY DEPOSIT IN THE FINANCIAL YEAR 2010 - 11. BUT THE LESSOR, FAILED TO DO SO. HOWEVER, THE ASSESSEE KEPT SHOWING SUCH SECURITY DEPOSIT IN ITS BALANC E SHEET FOR 2 YEARS AND ALSO CHASED LESSOR FOR THE RECOVERY OF THE SECURITY DEPOSITS. BUT ALL THE FORCE OF THE ASSESSEE REMAINS UNFRUITFUL. FINALLY, THE ASSESSEE IN THE FINANCIAL YEAR 14 - 15 LOST THE HOPE OF THE RECOVERY OF THE IMPUGNED AMOUNT AND DECIDED T O WRITE IT OFF IN THE FINANCIAL STATEMENTS. IN OUR CONSIDERED VIEW, THE ACTION OF THE ASSESSEE WRITING IT OFF IN THE FINANCIAL STATEMENTS SUGGESTS THE YEAR OF CRYSTALLIZATION, THOUGH THE ASSESSEE WAS ENTITLED TO RECEIVE THE AMOUNT OF SECURITY DEPOSIT IN TH E FINANCIAL YEAR 11 - 12. AS SUCH, IN OUR CONSIDERED VIEW, THE YEAR IN WHICH THE ASSESSEE HAS WRITTEN OFF THE AMOUNT OF SECURITY DEPOSIT IS THE RELEVANT ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 7 YEAR IN WHICH THE LIABILITY HAS CRYSTALLIZED. ACCORDINGLY, WE REVERSE THE ORDER OF THE LEARNED CIT (A) AN D DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IN ITS CO IS ALLOWED. 12 . THE LEARNED DR AT THE TIME OF HEARING HAS NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE FINDING OF THE ITAT, AS DISCUSSED ABOVE, SUGG ESTING THAT THERE WAS THE CHANGE IN THE FACTS AND CIRCUMSTANCES OR UNDER THE PROVISIONS OF LAW. HENCE, BEING THERE NO CHANGE IN THE FACTS AND CIRCUMSTANCES VIZ A VIZ UNDER THE PROVISIONS OF LAW, WE SET ASIDE THE ORDER OF THE LD. CIT - A IN VIEW OF THE ORDER OF THIS TRIBUNAL IN THE OWN CASE OF THE ASSESSEE (SUPRA) . ACCORDINGLY WE DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 13 . T HE NEXT INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED C IT (A) ERRED IN UPHOLDING THE ORDER OF THE AO BY SU STAINING THE DISALLOWANCE OF 3, 04 , 82 , 419 / - IN PART UNDER SECTION 40( A )( IA ) OF THE ACT ON ACCOUNT OF NON - DEDUCTION OF TDS WITH RESPECT TO THE EXPENSES CLAIMED ON PROVISIONAL BASIS. 14 . THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A LIMITED COMPANY AND ENGAGED IN THE BUSINESS O F MANUFACTURING & RETAILING OF A PPARELS. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS CLAIMED CERTAIN EXPENSES BY MAKING THE PROVISION IN THE BOOKS OF ACC OUNTS BUT WITHOUT DEDUCTING THE TDS. THE DETAILS OF SUCH EXPENSES STAND AS UNDER: SR.NO. NATURE OF EXPENSE AMOUNT 1. HOUSE KEEPING EXPENSE 1200315 2. MISC. EXPENSE 491443 3. INTEREST 2970299 4. STATUTORY AUDITOR FEES 2774630 5. REWORK CHARGE 1131047 6. COMMISSION (SALES CFA) 710176 7. COMMISSION EXPORT 1940561 8. COMMISSION OTHERS 9342553 9. SERVICE INFRA 1179474 10. RCM OTHERS 9513556 ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 8 11 PROF & CONSULTANCY 2840169 TOTAL 34094223 14.1 I T WAS CONTENDED BY THE ASSESSEE THAT IT IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AS PRESCRIBED UNDER SECTION 145 OF THE ACT WHICH REQUIRES TO ACCOUNT FOR THE EXPENSES IN THE YEAR TO WHICH IT PERTAINS. AS SUCH THE AFORESAID EXPENSES WERE CLAIMED BY MAKI NG THE PROVISIONS IN THE BOOKS OF ACCOUNTS AS THESE EXPENSES ARE PERTAINING TO THE PRESENT ASSESSMENT YEAR. ACCORDINGLY, THE ASSESSEE WAS OF THE VIEW THAT THERE CANNOT BE ANY DISALLOWANCE OF THE AFORESAID EXPENSES ON ACCOUNT OF NON - DEDUCTION OF TDS AS PROV IDED UNDER SECTION 40( A )(I) AND 40( A )( IA ) OF THE ACT. HOWEVER, THE AO DISAGREED WITH THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION FOR NON - DEDUCTION OF THE TDS WITH RESPECT TO THE EXPENSES CLAIMED BY IT. ACCORDINGLY THE AO DISALLOWED THE CLAIM OF THE ASSESSEE AND ADDED THE IMPUGNED EXPENSES TO THE TOTAL INCOME OF THE ASSESSEE. 15. AGGR IEVED ASSESSEE PREFERRED AN APPEAL TO THE LEARNED CIT (A). 15 . 1 THE ASSESSEE BEFORE THE LEARNED CIT (A), AMONG OTHER THINGS, SUBMITTED THAT AS THE PAYEES WERE NOT IDENTIFIABLE AT THE TIME OF MAKING THE PROVISIONS IN THE BOOKS OF ACCOUNTS, IT HAS NOT DEDU CTED TDS. AS PER THE ASSESSEE THE PROVISIONS OF SECTION 40 ( A ) ( IA ) OF THE ACT ARE NOT APPLICABLE FOR THE PROVISIONS WITH RESPECT OT THE EXPENSES MADE IN THE BOOKS OF ACCOUNTS IN A SITUATION WHERE THE PAYEES WERE NOT IDENTIFIABLE. 15 .1 THE ASSESSEE ALSO C ONTENDED THAT THE PROVISIONS, AS DISCUSSED ABOVE, WERE MADE AS ON 31 MARCH 2012 WHICH WERE REVERSED IN THE BOOKS OF ACCOUNTS IMMEDIATELY ON THE 1 ST DAY OF THE NEXT FINANCIAL YEAR I.E. 1 APRIL 2012. THUS THE EXPENSES CLAIMED IN THE YEAR UNDER CONSIDERATION BY MAKING THE PROVISIONS WERE OFFERED TO TAX IMMEDIATELY IN THE NEXT ASSESSMENT YEAR BEFORE THE DUE DATE OF MAKING THE PAYMENT FOR THE TDS. ACCORDINGLY THE ASSESSEE CLAIMED THAT SUCH EXPENSES ARE NOT SUBJECT TO THE PROVISIONS OF TDS. ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 9 15 .2 THE ASSESSEE FU RTHER SUBMITTED THAT IT HAS ACTUALLY ACCOUNTED THE PROVISIONAL EXPENSES IN THE NEXT FINANCIAL YEAR ON THE RECEIPT OF BILLS FROM THE PARTIES. AS SUCH THE PARTIES WERE IDENTIFIED WITH RESPECT TO THE PROVISIONS MADE IN THE YEAR UNDER CONSIDERATION IN THE NEXT FINANCIAL YEAR 2012 - 13 CORRESPONDING TO ASSESSMENT 2013 - 15.3 ACCORDINGLY, THE EXPENSES WERE CLAIMED AFTER DEDUCTING THE TDS BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION I.E. 30 SEPTEMBER 2012. THUS THE ASSESSEE CON TENDED THAT THERE CANNOT BE ANY DISALLOWANCE OF THE EXPENSES ON ACCOUNT OF NON - DEDUCTION OF TDS ON THE PROVISION OF EXPENSES MADE IN THE YEAR UNDER CONSIDERATION. 15.4 BESIDES THE ABOVE, THE ASSESSEE ALSO CONTENDED THAT THERE IS NO LIABILITY FOR DEDUCTIN G THE TDS ON THE COMMISSION OF 26,11,804/ - AS THE PROVISION FOR THE SAME WAS MADE WITH RESPECT TO THE NON - RESIDENT AGENTS WHO PROVIDED SERVICES FOR PROCURING ORDERS FROM OUTSIDE INDIA. AS PER THE ASSESSEE THE PROVISIONS WITH RESPECT TO THE EXPORT COMMISSI ON DOES NOT FALL WITHIN THE DEFINITION OF FEES FOR TECHNICAL SERVICES AS PROVIDED UNDER SECTION 9 OF THE ACT AND THEREFORE THE SAME IS NOT LIABLE FOR TDS UNDER THE PROVISIONS OF SECTION 195 OF THE ACT. 16 . THE LEARNED CIT (A) AFTER CONSIDERING THE SUBMIS SION OF THE ASSESSEE HAS HELD THAT THE ASSESSEE IS LIABLE FOR DEDUCTING THE TDS ON THE EXPENSES CLAIMED ON PROVISIONAL BASIS. IN THE EVENT OF NON - DEDUCTION OF TDS, IMPUGNED EXPENSES CANNOT BE ALLOWED AS DEDUCTION BY VIRTUE OF THE OPERATIONS OF THE PROVISIO NS OF SECTION 40(A)(IA) OF THE ACT. 16 .1 HOWEVER THE LEARNED CIT (A) FOUND THAT THE ASSESSEE IS NOT LIABLE TO DEDUCT THE TDS UNDER THE PROVISIONS OF SECTION 195 OF THE ACT WITH RESPECT TO THE FOREIGN COMMISSION EXPENDITURE AS IT IS NOT CHARGEABLE TO TAX UNDER THE PROVISIONS OF SECTION 9 OF THE ACT. ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 10 16 .2 IN VIEW OF THE ABOVE THE LEARNED CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE IN PART. 17 . BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), BOTH THE ASSESSEE AND THE REVENUE ARE IN APPEAL BEFORE US. THE ASSESSEE IS IN APPEAL AGAINST THE CONFIRMATION OF THE ADDITION FOR 3,04,82,419/ - ON ACCOUNT OF NON - DEDUCTION OF TDS UNDER SECTION 40(A)(IA ) OF THE ACT, WHEREAS THE REVENUE IS IN APPEAL AGAINST THE DELETION OF THE ADDITION MADE BY THE AO WITH RESPECT TO FOREIGN COMMISSION EXPENDITURE AMOUNTING TO 26,11,804/ - ONLY. 18. THE REVENUE IN ITA NO. 2056/AHD/2016 HAS RAISED THE FOLLOWING GROUND NO. 2 IN ITS APPEAL : 2. THAT THE LD.CIT9A) HAS ERRED IN LAW AND ON FACTSN IN DELETING THE ADDITION OF RS.26,11,804/ - MADE U/S.40(A)(IA) ON ACCOUNT OF DISALLOWANCE OF COMMISSION EXPENSES. 19 . THE LEARNED AR BEFORE US FILED A PAPER BOOK RUNNING FROM PAGES 1 T O 88 AND REITERATED THE SUBMISSIONS AS MADE BEFORE THE AUTHORITIES BELOW. BOTH THE LEARNED AR AND THE DR BEFORE US VEHEMENTLY SUPPORTED THE ORDER OF THE AUTHORITIES BELOW TO THE EXTENT FAVOURABLE TO THEM. 20 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH T HE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE PRIMARY ISSUE, IN THE PRESENT CASE, DEALS WITH THE FACT WHETHER THE ASSESSEE IS LIABLE TO DEDUCT TDS FOR THE EXPENSES MADE ON PROVISIONAL BASIS, PARTICULARLY IN A SITUATION WHERE THE PARTIES FOR SUCH PROVISIONAL EXPENSES WERE NOT IDENTIFIABLE AT THE TIME OF CREATING SUCH PROVISION IN THE BOOKS OF ACCOUNTS. 20 . 1 ON PERUSAL OF THE EXPENSES CLAIMED BY THE ASSESSEE ON PROVISIONAL BASIS AS DISCUSSED ABOVE, WE NOTE THAT THE AUTHORITIES BELOW HAS NOT MADE REFERENCE TO ANY SPECIFIC SECTION UNDER WHICH THE ASSESSEE WAS LIABLE TO DEDUCT THE TDS UNDER CHAPTER XVII OF THE ACT. HOWEVER, THE PROVISIONS OF CHAPTER XVII OF THE ACT GENERALLY ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 11 MANDATE THAT PERSON IS LIABLE TO DEDUCT THE TDS WHERE HE IS RESPONSIBLE FOR PAYING ANY SUM/INCOME TO A RESIDENT THOUGH THE SAME WAS CREDITED TO ANY SUSPENSE ACCOUNT OR ANY OTHER ACCOUNT. ADMITTEDLY, THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS ACCOUNTED THE EXPENSES, THOUGH ON PROVISIONAL BASIS WHICH REPRESENTS THE SUM/IN COME PAYABLE TO THE OTHER PARTIES. HOWEVER, UNDISPUTEDLY, THE PARTIES ARE NOT IDENTIFIABLE WHICH IS CRUX OF THE ISSUE ON HAND. IN OTHER WORDS, QUESTION ARISES FOR OUR ADJUDICATION WHETHER THE ASSESSEE IS LIABLE TO DEDUCT THE TDS UNDER CHAPTER XVII OF THE A CT WITH RESPECT TO THE EXPENSES CLAIMED BY IT IN A SITUATION WHERE THE PARTIES FOR SUCH EXPENSES WERE NOT IDENTIFIABLE. 20 .2 INDEED, THE PROVISIONS OF SECTION 194C, 194H AND 194J OF THE ACT REQUIRES THE ASSESSEE TO DEDUCT THE TDS WITH RESPECT TO SUM/INCOM E PAYABLE TO A RESIDENT WHICH HAS TO BE DEPOSITED IN THE ACCOUNT OF GOVERNMENT EXCHEQUER AS PROVIDED UNDER SECTION 200 OF THE ACT BY THE ASSESSEE. THEREAFTER, THE ASSESSEE SHALL PREPARE STATEMENT CONTAINING THE DETAILS OF TAX DEDUCTED AT SOURCE WHICH SHALL BE FILED WITHIN THE PRESCRIBED TIME TO THE INCOME TAX AUTHORITIES AS PROVIDED UNDER SUBSECTION (3) TO SECTION 200 OF THE ACT. 20 .3 SUBSEQUENTLY, THE ASSESSEE SHALL ISSUE A CERTIFICATE TO THE PERSON TO WHOSE ACCOUNT SUCH CREDIT IS GIVEN TO THE EFFECT THA T TAX HAS BEEN DEDUCTED AS PROVIDED UNDER SECTION 203 OF THE ACT. 20 .4 THUS THE CUMULATIVE EFFECT OF THE PROVISIONS OF SECTION 194C/194H/194J/200/203 OF THE ACT IS THAT AFTER THE DEDUCTION TDS FROM THE SUM/INCOME PAYABLE TO A PERSON, THE SAME HAS TO BE P AID TO THE GOVERNMENT EXCHEQUER AND A CERTIFICATE HAS TO BE ISSUED TO THE CONCERNED PERSON WHO IS RECIPIENT OF SUCH SUM/INCOME PAYABLE BY THE ASSESSEE. BUT THE SAME IS NOT POSSIBLE WHERE THE RECIPIENT OF SUCH SUM/INCOME PAYABLE BY THE ASSESSEE IS NOT IDENT IFIABLE. IN OTHER WORDS, THE ASSESSEE CANNOT COMPLY THE PROVISIONS OF CHAPTER XVII OF THE ACT WITH RESPECT TO THE EXPENSES CLAIMED ON PROVISIONAL BASIS IN A SITUATION WHERE THE RECIPIENTS/PARTIES/PAYEES ARE NOT IDENTIFIABLE. IN THE CASE ON HAND, THERE WAS ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 12 NO ALLEGATION FROM THE REVENUE THAT RECIPIENTS/PARTIES/PAYEES ARE IDENTIFIABLE. THUS WE CAN SAFELY CONCLUDE THAT RECIPIENTS/PARTIES/PAYEES ARE NOT IDENTIFIABLE IN THE PRESENT CASE IN THE GIVEN FACTS AND CIRCUMSTANCES AND ACCORDINGLY THE ASSESSEE CANNOT BE TREATED AS ASSESSEE IS DEFAULT ON ACCOUNT OF NON - DEDUCTION OF TDS UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. IN HOLDING SO, WE DRAW SUPPORT AND GUIDANCE FROM THE ORDER OF HON BLE CHENNAI TRIBUNAL IN CASE OF DISHNET WIRELESS LIMITED VS. DCIT IN I TA NO. 320 TO 329/MDS/2014 REPORTED IN 60 TAXMANN.COM 329 WHERE TRIBUNAL HELD AS UNDER: 23. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEE, A TELECOM OPERATOR, MADE PROVISION FOR SITE RESTORATION EXPENSES, HOWEVER, TDS WAS NOT MADE. THE PURPOSE FOR WHICH THE PROVISION WAS MADE IS NOT IN DISPUTE. IN OTHER WORDS, THE ADMITTED CASE OF BOTH THE PARTIES IS THAT THE ASSESSEE MADE THE PROVISION FOR DISMANTLING THE TOWERS AND RESTORATI ON OF SITE TO ITS ORIGINAL POSITION AFTER TERMINATION OF THE LEASE PERIOD. THE LEASE PERIOD IS NORMALLY 20 YEARS AND ABOVE. THE ASSESSEE BY PLACING RELIANCE ON THE ACCOUNTING STANDARD - 29 CLAIMS THAT A PROVISION WOULD BE MADE IN RESPECT OF AN OBLIGATION. IN OTHER WORDS, THE ASSESSEE HAD AN OBLIGATION TO INCUR THE EXPENDITURE AFTER TERMINATION OF THE LEASE PERIOD. REVENUE, HOWEVER, CONTENDS THAT DUE TO MISCONCEPTION AND IGNORANCE OF LAW AND WITH AN INTENTION TO CIRCUMVENT THE STATUTORY PROVISIONS, THE ASSES SEE MADE THE PROVISION. THE FACT REMAINS THAT THE PAYMENT WAS NOT MADE TO ANYONE AND IT IS NOT CREDITED TO THE ACCOUNT OF ANY PARTY OR INDIVIDUAL. THE ACCOUNT DOES NOT DISCLOSE THE PERSON TO WHOM THE AMOUNT IS TO BE PAID. THE CONTRACTOR WHO IS SUPPOSED TO BE ENGAGED FOR DISMANTLING THE TOWER AND RESTORE THE SITE IN ITS ORIGINAL POSITION IS NOT IDENTIFIED. AS CONTENDED BY THE ASSESSEE, THE ASSESSEE BY ITSELF ENGAGING ITS OWN LABOURERS MAY DISMANTLE THE TOWERS AND RESTORE THE SITE TO ITS ORIGINAL POSITION. IN SUCH A CASE, THE QUESTION OF DEDUCTING TAX AT SOURCE DOES NOT ARISE. THE ASSESSEE HAS TO PAY ONLY THE SALARY TO THE RESPECTIVE EMPLOYEES. SUPPOSE THE WORK IS ENTRUSTED TO A CONTRACTOR, THEN DEFINITELY THE ASSESSEE HAS TO DEDUCT TAX. IN THIS CASE, THE CONT RACTOR WOULD BE IDENTIFIED AFTER THE EXPIRY OF LEASE PERIOD. THEREFORE, EVEN IF THE ASSESSEE DEDUCTS TAX, IT CANNOT BE PAID TO THE CREDIT OF ANY INDIVIDUAL AS RIGHTLY POINTED OUT BY THE LD. SR. COUNSEL. THE ASSESSEE HAS TO ISSUE FORM 16A PRESCRIBED UNDER R ULE 31(1)(B) OF THE INCOME - TAX RULES, 1962 FOR THE TAX DEDUCTED AT SOURCE. THE ASSESSEE HAS TO NECESSARILY GIVE THE DETAILS OF NAME AND ADDRESS OF DEDUCTEE, THE PAN OF DEDUCTEE AND AMOUNT CREDITED. IN THIS CASE, THE ASSESSEE COULD NOT IDENTIFY THE NAME AND ADDRESS OF DEDUCTEE AND AND HIS PAN. THE ASSESSEE ALSO MAY NOT BE IN A POSITION TO QUANTIFY THE AMOUNT REQUIRED FOR INCURRING THE EXPENDITURE FOR DISMANTLING AND RESTORATION OF SITE TO ITS ORIGINAL POSITION. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE PROVISION WHICH REQUIRES DEDUCTION OF TAX AT SOURCE FAILS. HENCE, THE ASSESSEE CANNOT BE FAULTED FOR NON - DEDUCTION OF TAX AT SOURCE WHILE MAKING A PROVISION. THEREFORE, WE ARE UNABLE TO ACCEPT THE CONTENTION OF THE LD. D.R. ACC ORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THIS GROUND OF APPEAL IS ALLOWED. 20 .5 WE ALSO FIND SUPPORT FROM THE ORDER OF THE HON BLE JURISDICTIONAL HIGH COURT IN CASE PCIT VS. SANGHI INFRASTRUCTURE LTD. REPORTED IN 96 TAXMANN.COM 370 WHERE THE HON BLE COURT HELD AS UNDER: 4. NOW, SO FAR AS THE PROPOSED QUESTION NO. B VIZ. DELETING DIS - ALLOWANCE MADE ON ACCOUNT OF LEASE RENTAL PAYMENTS, DIS - ALLOWANCE OF RS.70 LAKH UNDER SECTION 37(1) OF THE IT ACT ON ACCOUNT OF OPERATING AND MAINTENANCE CHARGES AND REPAIRS AND MAINTENANCE CHARGES OF ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 13 RS.60 LAKH UNDER SECTION 40(A)(IA) OF THE IT ACT ON THE PAYMENTS ON WHICH TDS WAS NOT DEDUCTED BY THE ASSESSEE IS CONCERNED, IT IS REQUIRED TO BE NOTED THAT IN THE YEAR UNDER CONSIDERATION, NO TDS WAS DEDUCTE D AS THE SAME WAS CONTINGENT LIABILITY AND THE BILLS WERE NOT ISSUED WHICH WERE ISSUED SUBSEQUENTLY AND ON THAT THE TDS WAS DEDUCTED AS AND WHEN THE FINAL BILLS WERE RECEIVED. CONSIDERING THE ABOVE, NO ERROR HAS BEEN COMMITTED BY THE LEARNED CIT (A) AS WEL L AS THE LEARNED TRIBUNAL IN DELETING THE DIS - ALLOWANCE. WE ARE IN COMPLETE AGREEMENT WITH THE VIEW TAKEN BY THE LEARNED TRIBUNAL AS WELL AS THE LEARNED CIT (A). 20 .6 RESPECTFULLY FOLLOWING THE ABOVE JUDICIAL PRECEDENTS WE HEREBY ALLOW THE GROUND OF APPEAL OF THE ASSESSEE AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 20.7 IN THE RESULT APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED COMING TO THE REVENUE APPEAL IN ITA NO: 2056/AHD/2016 FOR A.Y. 2012 - 13 21 . THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: (I) THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,64,46,952/ - MADE ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION TREATING DATA PRO CESSING EQUIPMENT AS ELIGIBLE FOR DEPRECIARION @ 15% AS AGAINST 60% CLAIMED BY THE ASSESSEE. (II) THAT THE LD.CIT9A) HAS ERRED IN LAW AND ON FACTSN IN DELETING THE ADDITION OF RS.26,11,804/ - MADE U/S.40(A)(IA) ON ACCOUNT OF DISALLOWANCE OF COMMISSION EXPENSES. 22. THE FIRST ISSUE RAISED BY THE REVENUE IS THAT THE LEARNED CIT (A) ERRED IN DELETING THE ADDITION MADE FOR RS. 2,64,46,952/ - ON ACCOUNT OF DEPRECIATION ON DATA PROCESSING EQUIPMENT 23 . T HE ASSESSEE DURING THE YEAR UNDER CONSIDERATI ON CLAIMED DEPRECIATION OF RS. 3,11,14,062 / - @ 60% ON ITS BLOCK OF ASSETS CLASSIFIED UNDER DATA PROCESSING EQUIPMENT WHICH IS CONSISTING OF SOFTWARE, LAPTOP, DESKTOP, PRINTER SCANNER, ETC. HOWEVER, THE ASSESSING OFFICER HELD THAT DEPRECIATION ON DATA PROCESSING EQUIP MENT SHOULD BE ALLOWABLE @ 15% ONLY AS THE SAME IS NOT COMPUTER. ACCORDINGLY, THE AO DISALLOWED RS. 2, 64 , 46 , 952 / - BEING EXCESS DEPRECIATION AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 14 24 . AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LEARNED CIT (A) WHO DELETED THE ADDITION MADE BY THE AO BY FOLLOWING THE ORDER OF HIS PREDECESSOR IN THE OWN CASE OF ASSESSEE FOR IMMEDIATE PRECEDING AY 2011 - 12. 25. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE REVENUE IS IN APPEAL BEFORE US. 25 . THE LEARNED DR B EFORE US VEHEMENTLY SUPPORTED THE ORDER OF THE AO W HEREAS THE LEARNED AR BEFORE US SUBMITTED THAT THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE HAS ALLOWED THE ISSUE IN ITS FAVOUR IN ITA NO. NO.3669/AHD /2015 FOR THE ASSESSMENT YEAR 2011 - 12 VIDE ORDER DATED 28 TH OF JANUARY 2020. THE LEARNED AR VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT (A). 26 . WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. AT THE OUTSET WE NOTE THAT THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE IN ITA NO. NO. 3669/AHD/2015 FOR THE ASSESSMENT YEAR 2011 - 12 VIDE ORDER DATED 28 T H OF JANUARY 2020, INVOLVING IDENTICAL ISSUE HAS DECIDED THE MATTER IN FAVO U R OF THE ASSESSEE. THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED AS UNDER: 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE PRECEDING DISCUSSION WE NOTE THAT THE AO IN THE IMMEDIATE PRECEDING ASSESSMENT YEAR HAS ALLOWED THE DEPRECIATION ON THE BLOCK OF DATA PROCESSING EQUIPMENT AT THE RATE OF 60% ON THE ASSESSMENT FRAMED UNDER SECTION 143(3) OF THE ACT. 7.1. SIMILARLY, WE ALSO NOTE THAT THERE WAS AN ADDITION AMOUNTING TO RS. 1,18,73,028/ - UNDER THE BLOCK OF DATA PROCESSING EQUIPMENTS. THE LEARNED CIT (A) HAS GIVEN VERY CLEAR - CUT FINDING THAT ALL THE ADDITION O F THE ITEMS IN THE BLOCK REPRESENTS THE COMPUTERS AND OTHER CONNECTED DEVICES. ACCORDINGLY THE LEARNED CIT (A) HAS ALLOWED THE DEPRECIATION AT THE RATE OF 60% ON THE ADDITION OF SUCH ITEMS. THE RELEVANT FINDING OF THE LEARNED CIT (A) STANDS AS UNDER: '3.3. .......... ON PERUSAL OF DETAILS SUBMITTED BY THE APPELLANT IT IS OBSERVED THAT THE ADDITION MADE TO DATA PROCESSING EQUIPMENT ARE PERTAINING TO COMPUTER AND COMPUTER RELATED ITEMS SUCH AS LAP TOPS, DESK TOPS, PRINTERS, SCANNERS, MODEMS AND ROUTERS. THE A SSESSING OFFICER HAS PROCEEDED TO MAKE DISALLOWANCE SOLELY ON THE GROUND THAT BLOCK CONTAIN NAME 'DATA PROCESSING EQUIPMENT AND WITHOUT APPRECIATING THE TRUE CHARACTER OF ASSETS. MAJORITY ASSETS AS STATED HEREIN ABOVE ARE COMPUTERS ONLY AND REMAINING ASSET S ARE PART OF COMPUTERS ONLY AS THE SAME CANNOT BE USED SEPARATELY WITHOUT THE USE OF COMPUTER.' ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 15 7.2. THE LEARNED DR AT THE TIME OF HEARING HAS NOT POINTED OUT ANY DEFECT IN THE FINDING OF THE LEARNED CIT(A). 7.3. AT THE TIME OF HEARING, A QUERY WAS RAISED FROM THE BENCH TO THE LEARNED AR FOR THE ASSESSEE WHETHER THE ITEMS OF THE ADDITION UNDER DATA PROCESSING EQUIPMENTS WERE VERIFIED BY THE AUTHORITIES BELOW DURING THE ASSESSMENT PROCEEDINGS. THE LEARNED AR COULD NOT MAKE ANY SATISFACTORY REPLY. ACCORDINGL Y, WE IN THE INTEREST OF JUSTICE AND FAIR PLAY, EXPRESSED TO SET ASIDE THE FINDING OF THE LEARNED CIT (A) TO THE AO TO VERIFY WHETHER THE ITEMS OF ADDITION ARE PART AND PARCEL OF THE COMPUTERS. BUT AT THE TIME OF DICTATION, WE FIND THAT THE LEARNED CIT (A) HAS GIVEN VERY CLEAR FINDING ABOUT THE ADDITION OF THE ITEMS UNDER THE HEAD DATA PROCESSING EQUIPMENTS ARE COMPUTERS/CONNECTED DEVICES WHICH WAS NOT CONTROVERTED BY THE LEARNED DR APPEARING FOR THE REVENUE. THEREFORE, WE FIND THAT THERE IS NO JUSTIFICATIO N TO SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION OF THE ITEMS OF ADDITION FOR RS. 1,18,73,028/ - UNDER DATA PROCESSING EQUIPMENTS. 7.4. WE ALSO NOTE THAT THE APPEAL WAS FILED BY THE REVENUE AND THE ONUS WAS ON IT TO HIGH LIGHTS THE INFI RMITIES IN THE ORDER OF THE LD. CIT - A BUT THE LD. DR APPEARING ON BEHALF OF THE REVENUE FAILED TO DO SO. IN HOLDING SO WE DRAW SUPPORT AND GUIDANCE FROM THE ORDER OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAMA KRISHNA JEWELLERS REPORTED IN 52 TAXMANN.COM 23 WHEREIN IT WAS HELD AS UNDER: 'FURTHER, REVENUE WAS AGGRIEVED BY THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND WAS THE APPELLANT BEFORE THE TRIBUNAL. THEY SHOULD HAVE HIGHLIGHTED AND POINTED OUT THE FACTUAL INACCURACIES AN D THE INCORRECT FINDINGS RECORDED BY THE FIRST APPELLATE AUTHORITY. EVEN BEFORE US, EXCEPT FOR THE REMAND REPORTS, WHICH HAVE BEEN FILED IN SOME APPEALS, NO OTHER DETAILS AND PARTICULARS HAVE BEEN FILED TO CHALLENGE THE FACTUAL FINDINGS RECORDED AS PERVERS E.' 7.5. IN VIEW OF THE ABOVE AND AFTER CONSIDERING THE FACTS IN TOTALITY, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR DEPRECIATION ON DATA PROCESSING EQUIPMENTS AT THE RATE OF 60% FOR THE REASONS AS DISCUSSED ABOVE. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDING OF THE LEARNED CIT (A). HENCE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 27 . THE LEARNED DR AT THE TIME OF HEARING HAS NOT BROUGHT ANYTHING ON RECORD CONTRARY TO THE FINDING OF THE ITAT, AS DISCUSSED ABOVE, SUG GESTING THAT THERE WAS THE CHANGE IN THE FACTS AND CIRCUMSTANCES OR UNDER THE PROVISIONS OF LAW. HENCE, BEING THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES VIZ A VIZ UNDER THE PROVISIONS OF LAW, WE CONFIRM THE ORDER OF THE LD. CIT - A IN VIEW OF THE ORDE R OF THIS TRIBUNAL IN THE OWN CASE OF THE ASSESSEE (SUPRA) . ACCORDINGLY WE DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. HENCE THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED . 28. THE SECOND ISSUE RAISED BY THE REVENUE IS THAT THE LEARNED CIT - A ERRED IN DELETING THE ADDITION IN PART AMOUNTING TO RS. 26,11,804/ - UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF COMMISSION. ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 16 29 . THE ISSUE RAISED BY THE REVENUE HAS ALREADY BEEN DISPOSED OF BY US ALONG WITH THE APPEAL FILED BY THE ASSESS EE BEARING ITA NO. 1817/AHD/2016 VIDE PARAGRAPH NUMBER 15 OF THIS ORDER. AS SUCH, THE GROUND OF APPEAL OF THE REVENUE HAS ALREADY BEEN DISMISSED. FOR THE DETAILED DISCUSSION, PLEASE REFER THE RELEVANT PARAGRAPH. HENCE, THE GROUND OF APPEAL OF THE REVENUE I S DISMISSED. 29.1 IN T HE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. COMING TO THE ITA NO: 2377/AHD/2017 FOR A.Y. 2013 - 14 30 . THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN TREATING GROUND NO. 1 OF THE APPELLANT'S APPEAL, CHALLENGING THE VALIDITY OF THE ASSESSMENT ORDER, AS BEING GENERAL IN NATURE DISMISSING IT. 2. IN LAW AND IN THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND FOR RS.48,990/ - WHEN NO SUCH DISALLOWANCE WAS REQUIRED TO BE MADE. THE SAME IS LIABLE TO BE DELETED. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT 'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT AMOUNTING TO RS.4,21,44,256/ - AS AGAINST THE DISALLOWANCE OF RS.4,40,43,452/ - MADE IN THE ASSESSMENT ORDER ON ACCOUNT OF NON - DEDUCTION OF TDS IN RESPECT O F PROVISION FOR EXPENSES. THE LD. CIT(A) OUGHT TO HAVE APPRECIATED, INTER ALIA: (A) THAT THE PROVISION FOR EXPENSES WAS MADE AT THE END OF THE YEAR IN ACCORDANCE WITH THE MERCANTILE SYSTEM OF ACCOUNTING, WHICH IS MANDATORILY REQUIRED TO BE FOLLOWED BY THE COM PANIES AS PER THE PROVISIONS OF COMPANIES ACT, 1956. (B) THAT THE PROVISION MADE ON 31/03/2013 TOWARDS PROVISIONS FOR EXPENSES WERE NOT LIABLE FOR DEDUCTION OF IDS IN VIEW OF THE FACT THAT AT THE TIME OF MAKING PROVISION FOR EXPENSES THE PARTIES TO WHOM PAYMENTS MADE WERE NOT IDENTIFIABLE AND EVEN APPRECIATING THE FACT THAT THERE WILL NOT BE ANY INCOME ACCRUED TO THE PAYEE AS THE PROVISIONS IN QUESTION WERE REVERSED IN THE BEGINNING OF THE NEXT YEAR AND ACCORDINGLY, THERE WILL BE NO LIABILITY TO DEDUCT TD S ON THE PROVISIONS. (C) THAT THE AMOUNTS ARE CREDITED TO THE ACCOUNTS OF RESPECTIVE PARTIES IN THE NEXT FINANCIAL YEAR ON RECEIPT OF BILLS FROM PARTIES AND TAX DEDUCTED AT SOURCE RELATING TO THE SAME HAS BEEN DULY PAID BEFORE THE DUE DATE OF FILLING THE RETU RN OF INCOME. 4. IN LAW AND IN THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANT'S CASE, LD CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE APPELLANT'S GROUND CHALLENGING LEVY OF PENALTY U/S 271 (1 )(C) OF THE ACT ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 17 5. THE RESPONDENT CRAVES LEAVE TO ADD, ALTER, AME ND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF CROSS OBJECTIONS EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE SAME. 31 . THE FIRST ISSUE RAISED BY THE ASSESSEE IS IN GENERAL NATURE, THUS THE SAME IS NOT ADJUDICATED. WE DISMISS THE SAME. 32 . THE 2 ND ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO FOR 48,990/ - ON ACCOUNT OF DELAY IN THE DEPOSIT OF EMPLOYEE S CONTRIBUTION TOWARDS E PF . 33 . AT THE OUTSET WE NOTE ISSUE RAISED BY THE ASSESSEE IS IDENTICAL TO ISSUE RAISED IN ITA NO. 1817/AHD/2016 FOR A.Y. 2012 - 13 VIDE GROUND NO - 2 WHICH HAS BEEN DECIDED AGAINST THE ASSES SEE BY US IN PARAGRAPH NO. 5 OF THIS ORDER. ACCORDINGLY FOLLOWING THE SAME WE DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 34 . T HE NEXT INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN UPHOLDING THE ORDER OF THE AO BY SU STAINING THE DISALLOWANCE OF 4,21,44,256/ - IN PART UNDER SECTION 40( A )( IA ) OF THE ACT ON ACCOUNT OF NON - DEDUCTION OF TDS WITH RESPE CT TO THE EXPENSES CLAIMED ON PROVISIONAL BASIS. 35 . AT THE OUTSET WE NOTE ISSUE RAISED BY THE ASSESSEE IS IDENTICAL TO THE ISSUE RAISED IN ITA NO. 1817/AHD/2016 FOR A.Y. 2012 - 13 VIDE GROUND NO - 4 WHICH HAS BEEN DECIDED IN FAVOUR OF THE ASSES SEE BY US IN PARAGRAPH NO 20 OF THIS ORDER. ACCORDINGLY FOLLOWING THE SAME WE ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 36 . ISSUE RAISED IN GROUND NO 4 & 5 ARE PREMATURE TO DECIDE. ACCORDINGLY THE SAME ARE DISMISSED. 36.1 IN THE RESULT THE APPEAL FILE D BY THE ASSESSEE IS PARTLY ALLOWED COMING TO THE ITA NO: 2618/AHD/2017 FOR A.Y. 2014 - 15 ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 18 37 . THE ASSESSEE HAS RAISED FOLLOWING GROUND OF APPEAL 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT9A) ERRED IN CONFIRMING DISALLOWANCE OF R S.574 BEING EMPLOYEES CONTRIBUTION TO ESI MADE BY THE ASSESSING OFFICER ON THE GROUND THAT THE AFORESAID PAYMENT WAS MADE AFTER THE DUE DATE PRESCRIBED UNDER THE RELEVANT ESI ACT, EVEN THOUGH THE PAYMENT WS MADE WITHIN THE TIME PRESCRIBED U/S.139(1) OF THE ACT FOR FILING THE RETURN OF INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF PROVISION FOR EXPENSES TO THE EXTENT OF RS.6,54,06,503 FROM OUT OF THE TOTAL DISALLOWANCE OF RS.6,91,12,924 MAD E BY THE ASSESSING OFFICER BY INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE I.T ACT FOR NON - DEDUCTION OF TAX AT SOURCE. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 38. THE 1 ST ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION MADE BY THE AO FOR 574/ - ON ACCOUNT OF DELAY IN DEPOSIT OF EMPLOYEE S CONTRIBUTION TOWARDS E PF 39 . AT THE OUTSET WE NOTE ISSUE RAISED BY THE ASSESSEE IS IDENTICAL TO THE ISSUE RAISED IN ITA NO. 1817/AHD/2016 FOR A.Y. 2012 - 13 VIDE GROUND NO - 2 WHICH HAS BEEN DECIDED AGAINST THE ASSES SEE BY US IN PARAGRAPH NO 5 OF THIS ORDER. ACCORDINGLY FOLLOWING THE SAME WE DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 40. T HE NEXT ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN UPHOLDING THE ORDER OF THE AO BY SU STAINING THE DISALLOWANCE OF 6,54,06,503/ - IN PART UNDER SECTION 40( A )( IA ) OF THE ACT ON ACCOUNT OF NON - DEDUCT ION OF TDS WITH RESPECT TO THE EXPENSES CLAIMED ON PROVISIONAL BASIS. 41. AT THE OUTSET WE NOTE ISSUE RAISED BY THE ASSESSEE IS IDENTICAL TO THE ISSUE RAISED IN ITA NO. 1817/AHD/2016 FOR A.Y. 2012 - 13 VIDE GROUND NO - 4 WHICH HAS BEEN DECIDED IN FAVOUR OF T HE ASSES SEE BY US IN PARAGRAPH NO 20 OF THIS ORDER. ACCORDINGLY FOLLOWING THE SAME WE ALLOW THE GROUND OF APPEAL OF THE ASSESSEE. 41.1 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA NOS.1817/AHD/2017 AND 3 OTHERS ASSTT. YEARS 2012 - 13 19 42 . IN THE COMBINED RESU LTS, THREE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED AND APPEAL OF THE REVENU IS DISMISSED. O RDER PRONOUNCED IN THE COURT ON 04 /01 / 2021 AT AHMEDABAD. SD/ - SD/ - (MAHAVIR PRASAD ) (WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER (TRUE COPY) A HMEDABAD; DATED 04 / 01/2021 MANISH