Deputy Commissioner of Income Tax Circle-2(1)(1), Bangalore V. M/s Canbank Computer Services Limited , Bangalore

ITA 98/BANG/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8168 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 14-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RISHABH SINGHVI
• Keywords: TDS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.98/BANG/2019 ASSESSMENT YEAR : 2010-11 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-2(1)(1), BENGALURU. VS. M/S CANBANK COMPUTER SERVICES LTD., NO.281, JP ROYALE, 1 ST FLOOR, SAMPIGE ROAD, 2 ND MAIN, MALLESWARAM, BENGALURU-560 003. PAN AAACC 5921 F APPELLANT RESPONDENT APPELLANT BY : SHRI R.N SIDDAPPAJI, ADDL. CIT RESPONDENT BY : SHRI RISHABH SINGHVI, C.A DATE OF HEARING : 09.07.2019 DATE OF PRONOUNCEMENT : 09.07.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 30/10/2018 PASSED BY LD CIT(A)-2, BANGALORE A ND IT RELATES TO ASST. YEAR 2010-11. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD C IT(A) IN DELETING THE DISALLOWANCES RELATING TO PROVISION F OR TDS MADE BY THE AO. ITA NO.98/BANG/2019 PAGE 2 OF 6 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH E ASSESSMENT IN THE HANDS OF THE ASSESSEE WAS COMPLET ED U/S 143(3) OF THE ACT ON 14/12/2012. SUBSEQUENTLY, THE AO REO PENED THE ASSESSMENT ON THE REASONING THAT THE ASSESSEE HAS C LAIMED EXPENDITURE OF RS.99.95 LAKHS AND RS.13.28 LAKHS ME NTIONED AS PROVISION FOR TDS UNDER THE HEADS OUTSOURCING EX PENSES AND ATM CONSUMABLES RESPECTIVELY, WHICH IS NOT AN ALL OWABLE EXPENDITURE. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS MADE PROVISION FOR OUTSTANDING EXPENSE S RELATING TO OUTSOURCING AND ATM CONSUMABLES. SINCE THEY ARE LIABLE FOR DEDUCTION ON TAX DEDUCTED AT SOURCE, FOLLOWING ENTR Y WAS PASSED:- ACCOUNT NAME DEBIT CREDIT DEBIT OUTSOURCING EXPENSES RS.99,95,044/- DEBIT ATM CONSUMABLE RS.13,28,249/- DEBIT OTHER EXPENSES UNDER VARIOUS HEADS DR. RS. 9,43,114/- CREDIT PROVISION FOR TDS RS.2,40,740/- CREDIT PROVISION FOR EXPENSES RS.1,20,25,667/- TOTAL RS.1,22,66,407/- 4. ACCORDINGLY IT WAS SUBMITTED THAT AMOUNT OF RS. 99.95 LAKHS REPRESENTED OUTSOURCING EXPENSES AND THE AMOUNT OF 13.20 LAKHS REPRESENTED AS ATM CONSUMABLES. ACCORDINGLY IT WAS SUBMITTED THAT THE ASSESSEE HAS NOT CLAIMED ANY PROVISION FOR TDS AS DEDUCTION. IT WAS SUBMITTED THAT THE ASSESSEE IS M AINTAINING ITS ACCOUNTS UNDER TALLY SOFTWARE, WHEREIN THE NAME OF CONTRA LEDGER ACCOUNT HEAD IS MENTIONED IN THE NARRATION. ACCORDI NGLY, THE ITA NO.98/BANG/2019 PAGE 3 OF 6 PROVISION FOR TDS WAS REFLECTED IN THE OUTSOURCIN G EXPENSES AND ATM CONSUMABLES. THE ABOVE SAID EXPLANATION WAS NO T CONVINCING TO THE AO. ACCORDINGLY HE ADDED RS.99.95 LAKHS AND RS.13.28 LAKHS REFERRED ABOVE. THE LD CIT(A) DELETED THE AD DITIONS AND HENCE THE REVENUE IS FILED THIS APPEAL BEFORE US. 5. WE NOTICED THAT THE LD CIT(A) HAS DELETED THE AD DITIONS WITH THE FOLLOWING OBSERVATIONS:- 6. I HAVE CONSIDERED THE ABOVE GROUNDS OF APPEAL, STATEMENT OF FACTS AND WRITTEN SUBMISSIONS FILED BY THE APPELLANT AND ALSO PERUSED THE ASSESSMENT ORDER. THE APPELLANT HAS BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE THE PAYMENTS PAYABLE TOWARDS OUTSOURCING EXPENSES AND ATM CONSUMABLES ARE ACTUALLY DEBITED TO THE P&L ACCOUNT AND THE TDS MADE AS SHOWN AS PROVISION FOR TDS IN THOSE ACCOUNTS INADVERTENTLY DUE TO DESIGNING OF TALLY ERP ACCOUNTING SOFTWARE. THE ENTIRE AMOUNT SHOWN AS PROVISION FOR TDS IS THEREFORE NOTHING BUT THE ACTUAL EXPENSES ACCRUED IN RESPECT OF AY 201011. TO THIS EFFECT THE MANAGING DIRECTOR OF THE COMPANY GIVEN AN AFFIDAVIT UNDERTAKING ANY TAX LIABILITY. IT IS SEEN FROM ABOVE ACCOUNTING ENTRY PASSED ON 31 MARCH 2010 THAT AMOUNT PERTAINING TO PROVISION FOR TDS IS MERELY RS.2,40,740/- AND NOT T O THE TUNE OF RS.1,13,23,293/-. THE BOOKS OF ACCOUNTS WERE DULY AUDITED AND FINANCIAL STATEMENTS ARE DRAWAN AS PER GENERALLY ACCEPTED ACCOUNTING PRINCIPAL IN INDIA. THE LEDGER ACCOUNT SHOWS ABOVE ENTRY WHERE IN EXPENSES RELATING THAT LEDGER ACCOUN T ARE REFLECTED AS PROVISION FOR TDS. THIS GROUND IS ALLOWED. 6. WE NOTICED THAT THE LD CIT(A) HAS APPRECIATED TH E FACT THAT THE ASSESSEE HAS ACTUALLY MADE PROVISION FOR OUTSOURCIN G EXPENSES AND ITA NO.98/BANG/2019 PAGE 4 OF 6 ATM CONSUMABLES AND ALSO MADE PROVISION FOR TDS DED UCTIBLE THERE FROM. AS PER THE DESIGN OF TALLY ACCOUNTING SOFTWARE, THE NAME OF CONTRA LEDGER HEAD APPEARED IN THE NARRATIO N PART OF THE TRANSACTION. ACCORDINGLY HE APPRECIATED THAT THERE IS MERIT IN THE SUBMISSION OF THE ASSESSEE AND DELETED THE ADDITION . WE NOTICED THAT THE LD CIT(A) HAS PASSED THE ORDER BY DULY EXA MINING THE FACTS. THE ACCOUNTING ENTRY PASSED BY THE ASSESSEE IS EXTR ACTED SUPRA BY US. A PERUSAL OF THE SAME WOULD SHOW THAT THE EXPE NSES OF RS.99.95 LAKHS AND RS.13.28 LAKHS REFERRED ABOVE RE PRESENT OUTSOURCING EXPENSES AND ATM CONSUMABLES RESPECTIVE LY. THE JOURNAL ENTRY WOULD ALSO SHOW THAT THE ASSESSEE HAS MADE PROVISION FOR TDS DEDUCTIBLE THERE FROM AND ACCORDINGLY CREDI TED THE BALANE AMOUNT ONLY UNDER THE HEAD PROVISION FOR EXPENSES . HENCE WE ARE OF THE VIEW THAT THE AO WAS NOT CORRECT IN PRES UMING THAT THE ASSESSEE HAS CLAIMED OUTSTANDING AMOUNT RELATING TO PROVISION FOR TDS. IN FACT, THE PROVISION FOR TDS IS SHOWING CREDIT BALANCE AND HENCE IT COULD NOT HAVE BEEN CLAIMED AS EXPENSES. A CCORDINGLY WE CONFIRM THE ORDER PASSED BY LD CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 9TH JULY, 2019. SD/ - (BEENA PILLAI) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 9 TH JULY, 2019. /VMS / ITA NO.98/BANG/2019 PAGE 5 OF 6 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3 . THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER A SST. REGISTRAR, ITAT, BANGALORE.