DCIT Vs Aircom International India Pvt. Ltd. (ITAT Delhi)
CIT(A) Free to Verify Evidence: ITAT Delhi Rejects Rule 46A Objection—All Disallowances Deleted
This Revenue appeal challenged the order of CIT(A)-NFAC deleting disallowances relating to management fee, bad debts, & depreciation in the assessment u/s 143(3) for AY 2014-15. The only ground raised by the Department was that CIT(A) relied on additional evidence without following Rule 46A.
The Tribunal noted that no application for additional evidence was filed by the assessee & , more importantly, the CIT(A) had merely examined & verified evidence already forming part of the record or produced in response to AO’s findings, while exercising powers co-terminus with the AO under section 250(4)/(5). Reliance by the assessee on Kanpur Coal Syndicate (SC), B.L. Choudhury (Orissa HC), & Prabhavati S. Shah (ITAT) was accepted.
Management Fee
CIT(A) verified the Management Services Agreement, email correspondences, & Form 26AS of Aircom UK showing actual payments with TDS. Once nexus & actual rendering of services were verified, deduction u/s 37(1) was rightly allowed.
Bad Debts
Assessee produced invoices for earlier years, showing accrual of income & fulfilment of s.36(2). CIT(A) verified the documents & allowed the claim.
Depreciation
CIT(A) examined bills/vouchers for fixed assets which the AO had claimed were not produced. With proper verification done, the disallowance could not survive.
