SAHARAYN UNIVERSAL MULTIPURPOSE SOCIETY LIMITED,BHOPAL V. THE COMMISSIONER OF INCOME TAX (APPEALS), BHOPAL

ITA 425/IND/2024

AI Insights

The case involves Saharayn Universal Multipurpose Society Limited, which appealed against the order of the Commissioner of Income-Tax (Appeals) confirming the AO's disallowance of certain expenses claimed as deductions under the Mercantile System of accounting. The primary contention was regarding the non-consideration of a revised computation of income filed during the assessment proceedings, which included claims for deferred cooperative educator expenses. The ITAT examined whether the AO and CIT(A) were justified in not allowing these claims and whether the Tribunal could entertain such claims despite the absence of a revised return under section 139(5) of the Income-tax Act, 1961.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314451 (ITAT-INDORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Other Referred Cases: Goetze (India) Ltd. Vs. CIT, CIT vs. Pruthvi Brokers & Shareholdings Ltd., CIT vs. Jai Parabolic Springs Ltd., Raj Rani Gulati vs. CIT, CIT vs. Sam Global Securities Ltd., National Thermal Power Company Ltd. Vs. CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: FORASSESSEEEXPLAINEDTHEPRECISEFACTSRELATINGTOTHISISSUE; FORREVENUEALSOMADEORALSUBMISSION; FORASSESSEEISCONTENDINGTHATTHEVALIDCLAIMOF; FORREVENUEISOPPOSINGASSESSEESPRAYERWITHTHE; FORREVENUEISNOTDISPUTINGTHELD.SSUBMISSIONINTHISREGARD; FORASSESSEEMADEORALSUBMISSIONS; FORREVENUEALSOMADEORALSUBMISSIONSAND; SHRIRAM KUMAR YADAV
• Assessee Lawyers: SHRIPRAVINKUMARBANSAL
• Keywords: Revised return; Revenue expenditure; Question of law; TDS; Assessment record; Non-deduction of tax
• Section: 143(3); 40(a)(ia); 139(5)

Judgement Text

"Page 1 of 28 आयकरअपीलीयअिधकरण, इंदौरɊायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.425/Ind/2024 Assessment Year:2015-16 Saharayn Universal Multipurpose Society Limited, 195, Zone 1, In front of DB Mall, M.P. Nagar, Bhopal बनाम/ Vs. ITO, 1(2), Bhopal (Assessee/Appellant) (Revenue/Respondent) PAN: AAKAS6209A Assessee by Shri Pravin Kumar Bansal, AR Revenue by Shri Ram Kumar Yadav, CIT-DR Date of Hearing 13.02.2025 Date of Pronouncement 07.05.2025 आदेश/ O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by order of first-appeal dated 28.03.2024 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 30.12.2017 passed by learned ITO-1(2), Bhopal [“AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2015-16, the assessee has filed this appeal on following grounds: Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 2 of 28 “1. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in not considering the fact that the case was selected for limited scrutiny under CASS whereas the Assessing Officer has travelled beyond the reasons recorded for which the case was reopened and as such, the order passed was void ab-initio and bad in law and deserves to be quashed. 2. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in confirming the order passed by the Assessing Officer ignoring the claim made by the appellant in respect of expenses which were claimed in the revised computation filed during the course of assessment proceedings and were allowable as per the Mercantile System of accounting. 3. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in not appreciating that the appellant has made a legal claim during the course of assessment proceedings and, therefore, the Assessing Officer is not justified in not considering the same. 4. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in confirming the disallowance of the claim made by the appellant in the revised computation filed during the course of assessment proceedings although, it is the duty of the Assessing Officer to assess the correct taxable income of the appellant as per the guidelines of the C.B.D.T. 5. That the Ld. CIT(A) has failed to appreciate that the appellant has made a legal claim before the completion of assessment and, therefore, he is not justified in confirming the action of the Assessing Officer in ignoring the same, while at the same time taxing the voluntary offer made by the appellant, whereby the taxable income had increased on ‘pick and choose’ method. 6. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in holding that the disallowance under section 40(a)(ia) of the Income-tax Act, 1961 of Rs. 193,28,93,248/- in respect of Co-operative Educator Expenses, made under section 40(a)(ia) of the Income-tax Act, 1961 is correct. 7. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in confirming the addition of Rs 12,75,60,094/- made under section 40(a)(ia) of the Income-tax Act, 1961 in respect of Co-operative Educator Expenses paid to individual, which qua individual does not exceed the threshold limit under section 194H of the Income-tax Act, 1961 and did require any deduction of tax at source. 8. That in any view of the matter the Ld. CIT(A) has erred in law and on facts and circumstances of the case in confirming the action of the Assessing Officer in not allowing the claim of Cooperative Educator Expenses of Rs. 644,29,77,492/- made in the revised computation as the same were related to the year under assessment and were allowable as per the Mercantile System of accounting. 9. That the Ld. CIT(A) has erred in law and on facts and circumstances of the case in confirming the action of the Assessing Officer whereby he has only considered part of the revised computation filed by the appellant during the course of assessment proceedings wherein income was offered to tax by the appellant, while he has remained silent and not allowed the claim of the expenses which were forming part of the same revised computation filed by the appellant. Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 3 of 28 10. That the appellant craves leave to add, alter, amend or withdraw any or all grounds of appeal at any time before or during the course of the hearing.” 2. The background facts leading to present appeal are such that the assessee is a society governed under the provisions of Multi State Co- operative Societies Act, 2002. For AY 2015-16 under consideration, the assessee filed return declaring a total income of Rs. 8,23,095/- (rounded off to Rs. 8,23,100/-) which was subjected to scrutiny assessment through notices u/s 143(2)/142(1). During scrutiny proceedings, vide notice dated 04.12.2017 u/s 142(1), the AO asked assessee to furnish certain details/documents. The assessee filed reply dated 20.12.2017. After considering assessee’s reply, the AO made certain disallowances and assessed total income at Rs. 1,95,69,61,360/- as under: Particulars Amount Income shown in the return of income 8,23,100 Add: Disallowance under section 40(a)(ia) - 30% of the expenses on which TDS was not deducted (i) Rent & Utility charges 1,29,43,872 (ii) Salary Expenses 85,34,595 (iii) Co-operative Educator Expenses 193,28,93,248 (iv) Payment to Contractors 1,86,718 (v) Professional Charges 15,79,826 Assessed income 1,95,69,61,359 Rounded off 1,95,69,61,360 Aggrieved the assessee carried matter in first-appeal and succeeded partly. Now, the assessee has come in next appeal before us for redressal of grievances mentioned in the grounds re-produced in the beginning. Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 4 of 28 3. Before us, Ld. AR did not press Ground No. 1 and further submitted that Ground No. 10 is general. Therefore, these grounds do not require any adjudication from us. We proceed to adjudicate all other grounds in subsequent discussions. Ground No. 2 to 5, 8 & 9: 4. In these grounds, the assessee is precisely claiming that the CIT(A) was not justified in upholding the AO’s action of not allowing assessee’s claim of deduction of Rs. 6,44,29,77,492/- in respect of “deferred co- operative educator expenses”. 5. Ld. AR for assessee explained the precise facts relating to this issue. He submitted that during assessment-proceeding, in the reply-letter dated 20.12.2017 filed to AO, the assessee filed a revised “Computation of Total Income” (such revised Computation of Total Income is incorporated in Ld. AR’s Written-Submission re-produced in next Para No. 6 of this order) making two-fold adjustments, (i) one by of claiming deduction for “deferred co-operative educator expenses” of Rs. 6,44,29,77,492/- and (ii) other by way of accepting a total disallowance of Rs. 1,81,94,73,157/- u/s 40(a)(ia) on account of non-deduction of tax at source (TDS) out of various payments aggregating to Rs. 6,06,49,10,523/- (which included disallowance of Rs. 1,80,53,33,154/- being 30% of Rs. 6,01,77,77,180/- out of “deferred co- operative educator expenses” paid without TDS). So far as the first adjustment of “deferred co-operative educator expenses” is concerned, the assessee incurred total expenditure of Rs. 6,48,46,95,661/-, out of which Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 5 of 28 expenditure of Rs. 4,17,18,169/- was already debited to P&L A/c and claimed as deduction but the rest of expenditure amounting to Rs. 6,44,29,77,492/- was treated as a “deferred revenue” in Balance-Sheet and not claimed as deduction. The assessee, however, submitted to AO that the expenditure of Rs. 6,44,29,77,492/- though shown as “deferred revenue expenditure” was relatable to the year under assessment; was in respect of business undertaken during the year; and was prima facie verifiable from records. The assessee prayed AO to allow the same as deduction while framing assessment. In assessment-order, however, the AO has remained silent qua the first adjustment and thus did not grant deduction of assessee’s claim of “deferred co-operative educator” expenses of Rs. 6,44,29,77,492/-. But the AO made second adjustment by making a disallowance of Rs. 1,93,28,93,248/- u/s 40(a)(ia) equivalent to 30% of the very same expenditure of Rs. 6,44,29,77,492/- for failure to deduct TDS. During first-appeal, the assessee made a detailed submission to CIT(A) claiming that the assessee’s valid claim of deduction of Rs. 6,44,29,77,492/- needs to be allowed but the CIT(A) rejected assessee’s submission and approved AO’s action with the reasoning that the Hon’ble Apex Court has held in Goetze (India) Vs. CIT (SC) 284 ITR 323 that the AO cannot allow the claim made by assessee through revised Computation of Total Income without filing return/revised return of income. This is the crux of issue. 6. Having explained the issue, Ld. AR made a detailed submission to show that the claim of assessee deserves to be allowed. Subsequently after Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 6 of 28 hearing, as per liberty granted by Bench, the Ld. AR also filed a Written- Submission incorporating very same submission as under: Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 7 of 28 Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 8 of 28 Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 9 of 28 Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 10 of 28 Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 11 of 28 Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 12 of 28 Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 13 of 28 Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 14 of 28 7. Replying to same, Ld. DR for revenue also made oral submission during hearing and subsequently after hearing, as per liberty granted by Bench, he also filed a Written-Submission incorporating very same submission as under: “GROUND NO.2 TO 5 AND 8 & 9 1.00 Through these grounds the assessee has challenged the act of the assessing officer and the CIT(A) in not considering the revised computation of income filed by the assessee during the course of assessment proceedings Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 15 of 28 regarding the claim of deduction of deferred revenue expenditure of Rs.644,29,77,492/- in respect of co-operative educator expenses. 2.00 In this regard, it is submitted as under: (i) The learned CIT(A), at para 9.1 & 9.2, has dealt with the issue of allowability of deferred revenue expenditure claimed by the assessee through filing of revised computation of income before the assessing officer. The CIT(A) has upheld the act of the AO in not allowing such claim in absence of revised return of income by relying the rationale laid by the Hon’ble Apex Court in the case of Goetze (India) vs. CIT (SC) 284 ITR 323. (ii) Your Honours, the law provides a specific remedy for an assessee to revise a return of income under section 139(5) of the Act. If they failed to do so, they cannot bypass this statutory requirement by merely submitted a revised computation before the AO or the Appellate Authorities. Reliance is placed on the following judicial pronouncements: a. Goetze (India) Ltd. Vs. CIT (2006) 284 ITR 323 (SC) i. The Hon’ble Supreme Court held that the AO cannot entertain fresh claims unless they are made through a revised return of income ii. Since, the assessee has only filed a revised computation and not a revised return of income the AO was correct in rejecting the claim. b. Kerala Chemicals & Proteins Ltd. (2010) 323 ITR 584 (Ker HC) c. CIT vs. MiteshImpex (2014) 367 ITR 85 (Guj HC) (iii) Your Honours, the assessee seeks to rely upon a line of judicial authorities to contend that a new legal claim may be raised at any stage of appellate proceedings. At the outset, we do not dispute the proposition that appellate authorities enjoy wide powers under the Income-tax Act, including the power to admit legal claims not raised before the lower authorities. However, with utmost respect, it is submitted that the reliance placed on the judgments by the assessee is misconceived in the factual matrix of the present case, and overlooks the distinction between legal and factual claims, a distinction that is not merely academic but jurisprudentially vital. (iv) In CIT vs. Pruthvi Brokers & Shareholdings Ltd. (2012) 349 ITR 336 (Bom), the Hon’ble Bombay High Court has held that appellate authorities are not constrained by the limitation that binds the Assessing Officer in Goetze (India) Ltd. However, the judgment itself clearly qualifies the principle by stating that appellate authorities may entertain purely legal claims, provided the necessary facts are already on record. However, in the present case, the assessee seeks to introduce a fresh, substantial claim of Rs. 644 crore, styled as “deferred revenue expenditure,” which was not disclosed in the original return and not supported by a revised return. This is not a mere legal plea. It is a composite factual claim, requiring a thorough enquiry into Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 16 of 28 the nature, timing, treatment, and evidentiary basis of the expenditure. Such a claim is not covered by the protection of Pruthvi Brokers. (v) In CIT vs. Jai Parabolic Springs Ltd. (2008) 306 ITR 42 (Del), the Hon’ble Court dealt with an appellate claim based on material already part of the assessment record. The Hon’ble Court permitted the claim because it did not necessitate any factual verification beyond what was already available. In contradistinction, the claim here involves significant evidentiary scrutiny — an exercise never undertaken by the Assessing Officer, precisely because the assessee did not invoke the correct legal procedure by filing a revised return under Section 139(5). The decision is, therefore, inapplicable. (vi) The judgment of Raj Rani Gulati vs. CIT (2012) 249 CTR 51 (All), reiterates that legal grounds can be raised at any stage. However, the term \"legal ground\" cannot be stretched to encompass a new factual claim of the magnitude and complexity sought to be introduced here. A fresh deduction of over Rs. 644 crore cannot be characterized as a “legal ground” merely because it is couched in statutory terminology. The claim demands a factual inquiry, and as such, is outside the purview of what appellate authorities may consider in the absence of adequate record. (vii) Once again in CIT vs. Sam Global Securities Ltd. (2014) 360 ITR 682 (Del) this judgment turns on the limited premise that appellate forums may entertain new legal pleas. It does not and cannot override the settled principle that factual claims requiring examination of fresh material must be properly raised before the Assessing Officer, following the prescribed statutory route. The assessee here has sought to bypass this mandate, which is impermissible. 3.00 Your Honours, the Hon’ble Supreme Court in Goetze (India) laid down with clarity that a claim not made in the return of income, and not revised through the statutory route, cannot be entertained by the Assessing Officer. The Hon’ble Court, however, clarified that this limitation does not curtail the powers of appellate forums under Section 254.But, crucially, Goetze (India) is not merely about forum competence, it is about discipline in procedure. When a statutory mechanism exists for making a revised claim, that mechanism must be honoured. To allow a massive and fact-laden claim to be admitted casually via a revised computation is to render otiose the legislative intent behind Section 139(5). 4.00 In view of the above, it is respectfully submitted that while appellate authorities may have the jurisdiction to entertain new legal grounds, that jurisdiction must be exercised judiciously and not so liberally as to dilute statutory discipline. The assessee's claim:  is not a legal plea in the narrow sense.  involves substantial factual elements and requires investigation. Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 17 of 28  was never made through a revised return despite the availability of such remedy. Accordingly, the Assessing Officer was correct in rejecting the claim, and the learned CIT(A) has rightly upheld that rejection. The invocation of judicial precedents in support of a fundamentally procedurally defective and factually intensive claim is wholly untenable.” 8. Thus, the Ld. AR for assessee is contending that the valid claim of assessee, even if not allowed by AO, deserves to be allowed by this Tribunal which is an appellate authority. He submits that a legal claim can be admitted by appellate authorities and the decision of Goetze (India) does not come in the way of CIT(A) or ITAT which are appellate authorities. For this proposition, he relies upon following decisions: (i) CIT Vs. Jai Parabolic Springs Ltd. 306 ITR 42 (Del) (ii) Raj Rani Gulati Vs. CIT 249 CTR 51 (All) (iii) CIT Vs. Pruthvi Brokers & Shareholdings 349 ITR 336 (Bom) (iv) CIT Vs. Sam Global Securities Ltd. 360 ITR 682 (Del) Ld. AR also takes support from National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC). 9. However, Ld. DR for revenue is opposing assessee’s prayer with the reasoning that the assessee’s claim is not a legal plea only, it involves substantial factual investigation and that the claim was never made through a revised return. 10. We have carefully considered rival submission of both sides. There is no quarrel on the proposition laid down by the Hon’ble Supreme Court in Goetze (India) (supra) that the claim for deduction not made in the return Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 18 of 28 of income cannot be entertained by AO in absence of a revised return. However, the decision of Hon’ble Supreme Court does not stop here. The Hon’ble Supreme Court has further held in para 4 of same judgment as under: “However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income- tax Appellate Tribunal u/s 254 of the Income-tax Act, 1961.” From this, it is very clear that the restriction has been placed on the power of AO for not entertaining any claim of deduction otherwise in absence of revised return. However, this judgement does not lay down that the appellate authority shall have any fetters on its powers in entertaining a claim made without filing a revised return which is otherwise sustainable in law. 11. The Hon’ble Supreme Court has held in National Thermal Power Company Ltd. Vs. CIT (1998) 229 ITR 383 (SC) that the Tribunal has jurisdiction to examine a question of law which arises from the facts as found by the authorities below and having a bearing on tax liability of the assessee notwithstanding the fact that it was not raised before CIT(A). Further, when we consider the judgement of the Hon’ble Supreme Court in Goetze (India) (supra) in juxtaposition to National Thermal Power Company Ltd. (supra), it becomes quite clear that although the assessee cannot make a claim before AO otherwise than through the return of income, but there are no restrictions on the power of the Tribunal to entertain such claim for examination provided the facts exists on record. The decision of Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 19 of 28 Goetze (India) (supra) has also been analysed in various decisions relied by Ld. AR as mentioned by us in earlier Para 8 of this order, the relevant paras of those decisions have already been extracted in Ld. AR’s Written- Submission re-produced by us in earlier Para 6 of this order. In those decisions, it has been categorically held that the Goetze (India) (supra) only restricts the power of AO but does not restrict the power of appellate authorities to admit a valid claim of assessee. Futhermore, these are also settled judicial propositions that (i) no tax shall be levied or collected except by authority of law [Article 265 of Constitution] and (ii) the purpose of assessment proceedings is to assess correct tax payable by an assessee in accordance with law [CBDT Circular No. 14-XL(35) dated 11.04.1955]. Therefore, these authorities are clear point that the ITAT can very well admit claim of assessee provided the facts are available on record. 12. Now, reverting to the facts of instant case, we find that the assessee’s audited accounts were available before AO wherein “Note 13 - Other Expenses” depicts “Co-operative Educator Expenses – Rs. 4,17,18,169/-” and “Note 8 – Short term Loans & Advances” depicts “Co-operative Educator Expenses (Deferred) – Rs. 6,44,29,77,492/-”. These both entries are of the same expenditure, the only difference is that the first part has been debited in P&L A/c and claimed as deduction in return of income whereas the second part has been treated as “deferred expenditure” in Balance-Sheet and not claimed as deduction in return of income. Therefore, the claim is very much apparent from records. It is also noteworthy that the AO has Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 20 of 28 himself invoked section 40(a)(ia) and made disallowance of Rs. 1,93,28,93,248/-, equivalent to 30% of the very same expenditure of Rs. 6,44,29,77,492/- on the footing of non-deduction of TDS out of same. Under such a situation, in our considered view, the revenue cannot take a stand that the facts of the issue are not on record. 13. As far the allowability of deduction of impugned expenses treated by assessee as “deferred expenses” in books of account, the Ld. AR has placed reliance on following decisions: (i) CIT Vs. Lila Sons Breweries Pvt. Ltd. 306 ITR 314 (MP) (ii) DCIT Vs. Core Health Care Ltd. 308 ITR 263 (Guj) (iii) Silc on Graphs Systems (P) Ltd. Vs. DCIT 17 SOT 29 (Del) (URO) (iv) DCIT Vs. Godrej Tea Ltd. (Mum ITAT) 29 CCH 135 (v) CIT Vs. Casino India Ltd. (Delhi) 335 ITR 196 (vi) CIT Vs. Berger Paints (India) Ltd. (Cal) 254 ITR 503 (vii) Kedar Nath Jute Manufacturing (SC) 82 ITR 363. The Ld. AR has also extracted the decision of Godrej Tea Ltd. (supra) in his Written-Submission reproduced by us in earlier Para 6 of this order. Ld. DR for revenue is not disputing the Ld. AR’s submission in this regard. 14. Therefore, we restore this issue to the file of AO to look into the claim of “deferred co-operative educator expenses” made by assessee and grant appropriate deduction after carrying out such exercise as the AO may consider necessary. While doing so, the AO shall also take into account that the assessee has not claimed deduction of impugned expenditure Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 21 of 28 in any subsequent year(s). We also direct the assessee to extend full participation and co-operative to AO as and when called upon. These grounds are allowed with these directions. Ground No. 6 & 7: 15. In these grounds, the assessee is challenging the disallowance made by AO u/s 40(a)(ia) and upheld by CIT(A). 16. Let us first understand the precise facts of these issues. As noted earlier, the assessee filed a revised Computation of Total Income making two-fold adjustments, (i) one by of claiming deduction for “deferred co- operative educator expenses” of Rs. 6,44,29,77,492/- and (ii) other by way of accepting a total disallowance of Rs. 1,81,94,73,157/- u/s 40(a)(ia) on account of non-deduction of tax at source (TDS) out of various payments aggregating to Rs. 6,06,49,10,523/- (which included disallowance of Rs. 1,80,53,33,154/- being 30% of Rs. 6,01,77,77,180/- out of “deferred co- operative educator expenses” paid without TDS). The AO did not allow deduction of Rs. 6,44,29,77,492/- on account of “deferred co-operative educator expenses” but, however, made disallowance of Rs. 1,93,28,93,248/- u/s 40(a)(ia) equivalent to 30% of Rs. 6,44,29,77,492/-. Thus, the AO made disallowance of Rs. 1,93,28,93,248/- although the assessee proposed disallowance of Rs. 1,80,53,33,154/- only in revised computation. In short, the AO made excessive disallowance by Rs. 12,75,60,094/- [Rs. 1,93,28,93,248 (-) Rs. 1,80,53,33,154]. Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 22 of 28 17. Now, in Ground No. 6, the assessee is firstly attacking the entire disallowance of Rs. 1,93,28,93,248/- made/upheld by lower-authorities for the reason that when the authorities have not allowed deduction of “deferred co-operative expenditure” of Rs. 6,44,29,77,492/- in computing taxable income of business, how can they make disallowance u/s 40(a)(ia)? Thereafter, in Ground No. 7, the assessee is also challenging the quantum of disallowance made by AO. It is being contended that the AO has made disallowance of Rs. 1,93,28,93,248/- u/s 40(a)(ia) equivalent to 30% of entire expenditure of Rs. 6,44,29,77,492/- as against disallowance of Rs. 1,80,53,33,154/- proposed by assessee. Here, the assessee’s grievance is such that the AO has not given the benefit of payments made below the threshold limit of section 194H. 18. During hearing before us, Ld. AR for assessee made oral submissions qua these issues. Subsequently after hearing, as per liberty granted by the Bench, Ld. AR filed a Written-Submission incorporating very same pleadings as under: Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 23 of 28 Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 24 of 28 Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 25 of 28 19. In reply, Ld. DR for revenue also made oral submissions and subsequently after hearing, as per liberty granted by Bench, Ld. DR also filed a Written-Submission incorporating his submission as under: “GROUND NO. 6 & 7 1.00 At the threshold, it is respectfully submitted that the assessee’s alternate argument under Ground Nos. 6 & 7 that the disallowance under section 40(a)(ia) of the Act does not arise since the claim of Rs.644.29 crores was not allowed by the CIT(A), is misconceived, both on a plain reading of the statute and on settled principles of tax law. 2.00 Section 40(a)(ia) is a non obstante provision, which overrides sections 30 to 38. The relevant portion reads: “Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head ‘Profits and gains of business or profession’...” Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 26 of 28 3.00 On a plain reading of the provision, it would be observed by Your Honour that this construction makes it amply clear that section 40(a)(ia) is not contingent upon an allowance being made, it is a preliminary disqualification clause. The Assessing Officer is duty-bound to examine any expenditure against this bar before allowing the same. 4.00 The assessee's submission that the section 40(a)(ia) disallowance \"does not arise\" unless the claim is first allowed is, with respect, legally untenable. The disallowance under section 40 is a screening mechanism, not a consequence. It operates independently of the allowability under other sections. 5.00 It is further submitted that the assessee has attempted to rely upon a revised computation furnished during the course of assessment to justify the alternate quantum of disallowance. However, as held by the Hon’ble Supreme Court in Goetze (India) Ltd. v. CIT [(2006) 284 ITR 323 (SC)], a revised computation cannot substitute a revised return under section 139(5). The Assessing Officer, therefore, was under no obligation to entertain or act upon the revised computation. 6.00 In fact, the entire quantification of Rs.180.53 crores by the assessee, which seeks to carve out amounts purportedly falling below the threshold limit under section 194H is based solely on this unauthorised computation. There is no evidentiary trail, no transaction-wise or recipient-wise breakup, and no credible documentation placed on record to support this figure. 7.00 The burden of establishing that TDS was not deductible in certain cases due to threshold exemption rests squarely on the assessee. In the absence of detailed ledgers, party lists, payment amounts, and contract copies, the mere assertion that some payments fall below the limit cannot be accepted. 8.00 Moreover, the treatment of Rs.644.29 crores as deferred revenue expenditure in the books of account stands in direct conflict with the assessee’s alternate prayer for deduction in the same year. It is well-settled that the assessee cannot approbate and reprobate having capitalized the amount in its audited balance sheet, it cannot now assert revenue deductibility without reopening its own accounts. 9.00 The reliance on the mercantile system of accounting also does not assist the assessee, as consistency in method and presentation is a foundational requirement. One cannot follow mercantile principles selectively to claim deductions not recognized as expenses in the books themselves. 10.00 In sum and substance, the disallowance under section 40(a)(ia) is: (i) Valid in law; (ii) Based on amounts debited to the P&L and/or identified from the assessee’s replies; (iii) Independently sustainable irrespective of whether the full deduction was granted; Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 27 of 28 (iv) Not undermined in any manner by the alternate computation now offered. 11.00 In view of the above, the Revenue most respectfully submits that Grounds 6 and 7, as raised by the assessee does not require any merit interference. The disallowance under section 40(a)(ia) of the Act, as upheld by the learned CIT(A), is legally correct, factually grounded, and therefore, the same may please be sustained in full.” 20. We have considered rival submissions of both sides and carefully perused the orders of lower-authorities. In so as these grounds are concerned, we extract the following prayer made by Ld. AR in his Written- Submission re-produced above: 21. Since, in earlier part of this order while adjudicating Ground No. 2 to 5, 8 & 9, we have directed the AO to allow assessee’s claim of “deferred co- operative educator expenses” after necessary examination, we agree to Ld. AR’s prayer that the issue of disallowance u/s 40(a)(ia) out of those expenses, shall have to be re-visited by AO only if the AO ultimately allows the deduction of those expenses. Further, the AO shall restrict disallowance to an appropriate amount after giving benefit of threshold limit prescribed in Saharayn Universal Multipurpose Society Limited, ITA No. 425/Ind/2024 - AY 2015-16 Page 28 of 28 section 194H. Accordingly, we remand these Ground No. 6 & 7 to the file of AO for consideration afresh taking into account these aspects. 22. Resultantly, this appeal is allowed for statistical purposes. Order pronounced by putting up on notice board as per Rule 34 of ITAT Rules, 1963 on 07/05/2025 Sd/- Sd/- (PAWAN SINGH ) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/Dated : 07/05/2025 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPYSr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore "