Ajay Enterprises Pvt Ltd Vs DCIT (ITAT Delhi)
ITAT Delhi on account of applicability of TDS provisions on unfinished work it is held that once assessee claims, while following percentage of completion method, at 100% of the revenue of project has been recognized it was incumbent to also account, expenditures by deducting TDS instead of making provisions.
Facts- The assessee had filed return of income of Rs.92,06,590 which was selected for complete scrutiny and during the course of assessment proceedings, AO had examined the expenses debited in regard to the sets under consideration. AO observed that assessee was following percentage method of accounting in respect of construction business being done by him. AO taking into consideration that completion certificate was received and disallowed Rs.5,36,19,000 towards the provisions made for unfinished work and claimed as expenditure. AO also made an addition of Rs.38,93,000 on account of a provision made for land development etc. Non-deduction of TDS was the major reason for alleged addition.
Conclusion- Held that there is no error in the findings of the learned CIT (Appeals) in regard to both the counts of disallowances under Section 40A(ia) and section 40B of the Act. Once the assessee claims that while following percentage of completion method at 100% of the revenue of the project has been recognized, it was incumbent to also account, expenditures by deducting TDS instead of making provisions. However, as complete details of payment after the close of the accounts and TDS deducted and deposited there from in subsequent years was filed before the learned CIT (Appeals) on 25.04.2022 and which have not been taken into consideration. We consider it appropriate to restore the issue to that extent before the learned CIT (Appeals).
