The Tax Publishers2021 TaxPub(DT) 0479 (Chen-Trib)

INCOME TAX ACT, 1961

Section 35D

Where AO had disallowed fees and service charges paid to two parties for the assessment year 2008-09 on ad-hoc basis and has also applied provisions of section 35D and amortized remaining expenditure over a period of five years and issue in present appeal was linked to disallowance made by AO towards fees and service charges paid to said two concerns for the assessment year 2008-09, further, finding or outcome of the appeal for assessment year 2008-09 would have bearing on present appeal, therefore, CIT(A) was directed to reconsider the issue in accordance with law.

Business deduction under section 35D - Fees and service charges paid - Service charges and fees paid to related concerns of assessee - Amortization of expenses

Assessee was engaged in the business of manufacturing of various construction products like gypsum plasterboards, ceiling tiles, jointing and finishing products. The case was taken up for scrutiny and during the course of assessment proceedings, AO noticed that assessee had claimed fees and service charges paid to SGMDC and SG Placo and expenditure incurred under the head fees and service charges is in the nature of deferred revenue expenditure and accordingly, following order for assessment year 2008-09, disallowed a sum under section 40(a)(ia) for failure to deduct tax at source under section 195. CIT(A) had dismissed the appeal filed by assessee, where additions made by AO towards 20% of ad hoc disallowance of fees and service charges and remaining 80% of amortisation of deferred revenue expenditure has been upheld. Held: AO had disallowed fees and service charges paid to above two parties for the assessment year 2008-09 on ad hoc basis and has also applied provisions of section 35D and amortized remaining expenditure over a period of five years. The appeal filed by assessee for assessment year 2008-09 was set aside by the Tribunal and directed CIT(A) to decide issue after considering additional evidences filed by assessee. Issue in present appeal was linked to disallowance made by AO towards fees and service charges paid to said two concerns for the assessment year 2008-09 and finding or outcome of appeal for assessment year 2008-09 would have bearing on present appeal. Therefore, CIT(A) was directed to reconsider the issue in accordance with law, after considering outcome of appeal filed by assessee for assessment year 2008-09.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2012-13



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