Case Law Details
DCIT Vs. HDFC Sales Pvt. Ltd. (ITAT Mumbai)
Before us the ld. DR for the revenue in his submissions vehemently submitted that the projected estimation of the provisions of expenses is projected purely on estimation and that there is mismatch of projected figures of expenses and the actual expenses incurred on various counts, which we have recorded above. Second contention of the ld. DR for the revenue is that no TDS was made on such provisions. The ld. DR for the revenue also relied on the decisions of Ahmedabad Tribunal in Hardik Jigishbhai Desai (supra) and the decision of Cochin Tribunal in Abad Builders (P.) Ltd. (supra). In Hardik Jigishbhai Desai (supra), the assessee debited the provision of commission expenses to the Profit & Loss Account without making TDS. The Assessing Officer disallowed the expenses by taking view that debiting the commission expenses resulted in deduction of profit and TDS should have been made on such expenses. The ld. CIT(A) confirmed the disallowance made by Assessing Officer. On appeal before the Tribunal, the disallowance was maintained. In the said case, the recipient of commission was identifiable. However, fact of the present case is quite different. The assessee made provision with regard to 31 different items. The Assessing Officer has not brought any fact on record that recipient were certain or identifiable. The assessee has made provision in the last month the Financial Year only on the basis of estimation of earlier month of the Financial Year. The Assessing Officer has not examined whether the provision made for the month of March 2015 was not a reliable estimate on account of past obligations. Similarly, in case of Abad Builders (P.) Ltd. (supra), the Assessing Officer made disallowance under section 40(a)(ia) as the assessee has not made TDS on provision of sundry creditor. The assessee claimed deduction of the same amount in subsequent AY. The ld. CIT(A) confirmed the disallowance by taking view that the assessee cannot claim double deduction of a very same amount on which assessee deducted and paid TDS. In the said case, the recipient was identifiable and the assessee has not pleaded that such obligation was a result of past events. We may further reiterate that in both the case law relied by ld. DR for the revenue a recipient was identifiable, however, in the case in hand, no such recipient were identifiable, moreover, the provisions were made for multiple purposes. The assessee made provision of Rs. 10.24 crore and ultimately made expenses of Rs. 10.46 crore, which clearly demonstrate that assessee made the provision after due diligence which cannot be said to be an adhoc provision.
FULL TEXT OF THE ITAT JUDGEMENT
1. This appeal by revenue is directed against the order of learned Commissioner of Income Tax (Appeals)-2 [ld. CIT(A)], Mumbai dated 18.12.2018 for Assessment Year (AY) 2015-16.
2. Brief facts of the case are that the assessee is a company engaged in the business of marketing and selling of home loans and other financial products, carrying out operations of HDFC Realty Limited, providing Corporate Agency services to HDFC Standard Life Insurance Company Limited. The assessee is part of HDFC group. The assessee while filing its return of income for AY 2015-16 declared loss of Rs. 6.21 crore. The case was selected for scrutiny. The assessing officer during the assessment noted that assessee in the statement of accounts has made a provisions of Rs. 10.24 crore for under 31 heads of expenses for one month expenses (March 2015). The assessee has made provision in respect of expenditure pertaining to the previous year ending 31 March 2015. The Assessing Officer issued show-cause notice, if any tax was deducted (TDS) on such provisions or such provisions are disallowed for computation of income under the normal provision as well as under the provision of section 115JB (para-4.2 of assessment order).
Please become a Premium member. If you are already a Premium member, login here to access the full content.
