Income Tax Appellate Tribunal - Ahmedabad
Ascendum Kps Pvt. Ltd.,(Formerly Known ... vs The Income Tax Officer, Ward-4(3),, ... on 6 September, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "D" BENCH
Before: Shri Rajpal Yadav, Judicial Member
And Shri Amarjit Singh, Accountant Member
ITA No. 2479 & CO No. 272/Ahd/2014
Assessment Year 2011-12
The ITO, Ascendu m KPS Pvt. Ltd.,
W ard-4(3), A/7, Ground Floor, Safal
Ah medabad-380014 Vs Profitaire, Off 100ft.
(Appellant/Respondent) Prahlad Nagar, Satellite,
A'bad-15
PAN: AAACI8432 K
(Respondent/Cross
Objector)
Reve nue by: Dr. Ba nwarilal, CIT -D.R.
Assessee by: Shri Va rtik Chokshi, AR
Date of hearing : 04-07-2018
Date of pronounce ment : 06-09-2018
आदेश /ORDER
PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This revenue's appeal and assessee's cross objection for A.Y. 2011-12, arise from order of the CIT(A)-VIII, Ahmedabad dated 13-06-2014, in proceedings under section 143(3) of the Income Tax Act, 1961; in short "the Act".
2. The revenue has raised following grounds of appeal:-
"1. a) The Ld. CIT(A) has erred in law and in facts in deleting the addition of Rs. 3,21,66,204/- made by the AO u/s 28(iv) of the Act without appreciating the fact that the assessee has considered the ceased liability as its income and taken the same in its P & L A/c, as such.
b) The Id. CIT(A) has further erred in admitting the assessee's argument that the ceased liability was relating to capital assets when such an argument was never raised before I.T.A No. 2479 & CO No. 272/Ahd/2014 A.Y. 2011-12 Page No 2 ITO vs. Ascendum KPS Pvt. Ltd.
the AO and the assessee also failed to give any supporting evidences before the Ld. CIT(A).
2. a) The Ld. CIT(A) has erred in law and on facts to delete the disallowance of Rs.3,44,78,600/- on account of employee benefits claimed by the assessee not proved to be genuine either during the course of assessment proceedings or before CIT(A) nor proved to have been incurred for the purpose of assessee's business.
b) The CIT(A) has erred in law and on facts to decide the appeal on the basis of additional evidence in violation of provisions of Rule 46A of 1.1. Rules.
3. The Ld. CIT(A) has erred in law and on facts to delete the disallowance of Rs.33,30,790/- on account of consultancy fee expenses not proved to be genuine and incurred for the purpose of assessee's business.
4. On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer.
5. It is, therefore, prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing Officer may be restored to the above extent."
3. In this case, return of income declaring loss of Rs. -59,94,740/- was filed on 29th Nov, 2011. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act dated 26th Sep, 2012. The assesse company carries on the business of providing information technology services which includes medical and judicial transcription, call centre, Insurance Claim for processing, back office operations, coding page making, pre-press publicity and other related areas. The further facts of the case are discussed under the different grounds of appeal filed by the revenue. The grounds of appeal no.2.1(a) to 2.2(b) are interconnected therefore for the sake of convenience the same are adjudicated together.
Ground No. 2.1(a) to 2.2(b) (Deleting the addition of Rs. 3,21,66,204/- made by the assessing officer u/s. 28(iv) of the act)
4. During the assessment the assessing officer noticed that assessee has shown an amount of Rs. 3,21,66,204/- being liability ceased to exist. The assessing officer has asked the assesssee to explain why the aforesaid amount should not be treated as income u/s. 28(iv) of the act. The assessee explained that there was an outstanding loan liability due to M/s. Adani Agro Pvt. Ltd of Rs. 7,00,25,697/- out of this outstanding loan an amount of Rs. 3,21,66,204/- was no longer required to be paid therefore the same was credited to Profit and Loss I.T.A No. 2479 & CO No. 272/Ahd/2014 A.Y. 2011-12 Page No 3 ITO vs. Ascendum KPS Pvt. Ltd.
Account for the year ending on 31st March, 2011. It was also submitted that the said amount was written back as loan and it was never routed through the profit and loss account in any preceding years . The assessee has also placed reliance on the decision of Hon'ble Gujarat High Court in the case of CIT vs. Chetan Chemical Pvt. Ltd. 267 ITR 770. The assessing officer has not accepted the explanation of the assessee and treated the ceased liability as its income.
5. Aggrieved assessee filed appeal before eh ld. CIT(A). The ld. CIT(A) has deleted the addition made by the assessing officer. Relevant part of the decision of ld. CIT(A) is reproduced as under:-
"3.3 Decision:
I have carefully considered the assessment order and the submission filed by appellant. The Assessing officer has observed that appellant had taken loan of Rs. 7,00,25,697/- from Adani Agro Limited in earlier years which was partially repaid and balance amount of Rs. 3,21,66,204/- was ceased to exist and same was shown as income in Profit & loss account but not offered to fax in computation of total income on the ground that such write back was capital in nature. The Assessing Officer has observed that though loan received is capita! in nature but when it ceased to exist the same was shown as income in books of account hence appellant cannot take stand that it is not income while filing Return of Income. Thus, amount was correctly considered as cessation of liability and such amount is liable to be taxed as income u/s 28(iv) r.w.s 41 (1) of the Act.
On the other hand, appellant has argued that loan was taken in the initial years of the company for setting up the requisite infrastructure i.e. for capital expansion purposes and for setting up of-the company and therefore, the loan write back was capital in nature and hence not taxable. The fact that the waiver of loan amounted to capital in nature was also accepted by the AO. Therefore, waiver of principal amount of loan was not covered by section 28(iv) or section 41(1) of the Act. It has also been submitted that accounting treatment in books of account was as per relevant accounting principles and Accounting Standards whereas treatment of such income in computation of total income was as per provisions Tncome Tax Act. The appellant has referred to provisions of section 28(iv) of the Act and argued that any transaction where money is involved, section 28(iv) does not app|y for which reliance is placed on decision of Hon'ble Gujarat High Court in the case of Alechmic Pvt. Limited, 130 1TR 168 and Hon'ble Madra High Court in the case of Iskraemeco Regent Limited, 331 1TR 317.
On careful consideration of entire facts, it is noted that Appellant Company had taken loan from Adani Agro Pvt. Limited in A.Y. 2004-05. The Appellant Company has shown outstanding loan as on 1st April, 2010 for Rs. 7 crores and out of which Rs. 2.72 crores was paid during the year. During the year under consideration, management of the Appellant Company was taken over by Ascendum Group from Adani Group and in such process balance loan of Rs. 3.22 crores was waived off and liability was no longer required to be paid. Hence such amount was shown as income in audited profit and loss account filed along with Return of Income. However, while computing total income, this amount was considered as capital receipt which was assessed as Revenue Receipt by Assessing Officer invoking Provisions of Section 28(iv) r.w.s. 41(1) of the Act. If is an undisputed fact that loon taken by Appellant was for capital purposes. When loan was not taken for meeting trading liability, remission of such loan cannot be taxed as revenue I.T.A No. 2479 & CO No. 272/Ahd/2014 A.Y. 2011-12 Page No 4 ITO vs. Ascendum KPS Pvt. Ltd.
receipt in the hands of Appellant Company. The character of loan at the time of borrowing as well as at the time of writing off has not changed. It remained capital in nature. The appellant has also not claimed any deduction on account of that loan from the income. The loan was not taken for trading purposes. The appellant company is also not in the business of borrowing and lending money in normal course. The Hon'ble Gujara't High Court in the case of Chetan Chemicals 267 ITR 077 has held that if no allowance of deduction has been claimed in any of the preceding years, in respect of the liability cease to exist, then there is no question of applying the..' Provisions of Section-28(iv) r.w;s. 41 (1) of the Act. Reliance is also placed on the judgemtn of Hon'ble Bombay High Court I the ca eof Hahindra & Mahindra Ltd. 261 ITR 501.
Further, on examination of Provisions of Section 28(iv) of the Act show that Section 28(iv) speaks about the benefit or perquisite received in kind such as benefit or perquisite received in kind other than in cash would be an income as defined under section 2(24). Thus, any transaction which involves money, section 28(iv)has got no application. Reliance is placed on the decision of Hon'ble Madras High Court in the case of Iskraemeco Reagent Co. Ltd., 331 ITR 317 and decision of Hon'ble Gujarat High Court in the case of Alchemic Pvt. Limited 130 ITR 168. Hon'ble Madras High Court, referred supra, has held as under:
"...Therefore, the transaction in the instant case being a loan transaction having no application with respect to section 28(iv), the same could not be termed as an income within the purview of section 2(24), in other words, inasmuch as section 28(iv) was not applicable to the transaction on hand, if could not be termed as income which could be made taxable as receipt. Hence., such a receipt which did not have any character of an income being that of a loan could not be made exigible to tax. [Para 29] Similarly, section 41(1)(a) also could not have any application inasmuch as the said provision would be applicable only to a trading liability. Accordingly, a loan feceived for the purpose of capital asset would not constitute a trading liability and, hence, section 41(1) had no application. [Para 30] Further, Hon'ble Court in the said decision has elaborately considered the decision of Hon'ble Supreme Court in the case of CIT vs. T.V. Sundaramlyengar & Sons Ltd 222 ITR 344 relied upon by Assessing Officer and observed as under:
"In T.V. Sundaramlyengar& Sons Ltd.'s case (supra),the Apex Court has clearly held that when in the course of a trading transaction, the assessee becomes entitled to the money, such an amount would become a taxable income at the hands of the assesse. [para 21] In the instant case, admittedly, the assessee was not trading in money transactions. A grant of loan by a bank cannot be termed as a trading transaction and it cannot a/so be construed in the course of business. Indisputably, the assessee obtained the loan for the purpose of investing in its capital assets. A part of that loan amount along with the interest was waived by way of an agreement between the parties. Therefore, the facts involved in the instant case were totally different in the facts involved in T.V. Sundaramyengar & Sons Ltd. 's case 'supra', in the said case, admittedly, there was a trading transaction whereas, in the instant case, it was rot so. What had been done in the instant case was a mere waiver of loan. It was only a waiver which had been effected by the bank in favour of the assessee. There was no change of character with regard to the original receipt which was capital in nature into that of a trading transaction. [Para 22] it is a well-established principle of law that every deposit of money would not constitute a trading receipt. Broadly speaking, even though a receipt may be -in connection with the business, it cannot be said that every such receipt is a trading receipt. Therefore, the amount referable to the loans obtained by the I.T.A No. 2479 & CO No. 272/Ahd/2014 A.Y. 2011-12 Page No 5 ITO vs. Ascendum KPS Pvt. Ltd.
assessee towards the purchase of its capital asset would not constitute a trading receipt. [Para 24] 'Therefore, the ratio laid down in T.V. Sundaramlyengar & Sons Ltd.'s case supra had no application at all to the facts and circumstances of the instant case. Hence, the authorities below had wrongly applied the ratio laid down in said decision and, therefore, the orders passed by them could not be sustained. [Para 26]"
In the present case, as discussed herein above, loan was taken for investing in capital assets and enjoyed the capital nature as observed by Assessing Officer hence decision referred supra are squarely applicable on facts of Appellant's case. There is no fact on record which indicates that the loan has been taken for trading purposes. Further, accounting treatment followed while preparing annual accounts does not decide true character or nature of income and same is required to be decided on the basis of relevant Provisions of the I.T. Act, 1961. No addition to the income can be made merely on the ground that the appellant has treated the same as income in the books of accounts. The actual decision has to be taken after examining the nature of entry and the Provisions of Income tax Act Further, the decision of Hon'ble Bombay High Court in the case of Solid Container Limited V/s DCIT relied upon by Assessing Officer is not applicable to the facts of Appellant's case as in that case loan itself was taken for trading activity hence waiver of such loan was taxed as business income. On the contrary, decision of Hon'ble Bombay High Court in the case of Mahindra & Mahindra Limited V/s CIT 261 1TR 501 relied upon by Appellant squarely applies as in that case amount was borrowed for capital acquisition and it was held that waiver of such principal amount cannot be taxed either under Section 28(iv) nor Section 41(1) of the Act.
Considering the above mentioned facts and circumstances and the discussion, the ceased loan liability should be taken as capita! receipt not liable to tax. The addition made by Assessing Officer for Rs. 3,21,66,204/- is therefore, directed to be deleted.
The ground of appeal is accordingly allowed."
6. We have heard the rival contentions of both the sides on this issue and perused the material on record carefully. During the course of assessment the assessing officer has added the ceased loan liability of Rs. 3,21,66,204/- as income of the assessee. It is undisputed fact that the amount written back was actually an outstanding loan which was never routed through the P & L account of any previous year. The ld. CIT(A) has deleted the addition stating that waiver of loan amounted to capital in nature. During the year under consideration management of the assessee company was taken over by Ascendum Group form Adani Group and in such process balance loan of Rs. 3.22 crores was waived off and liability was no longer required to be paid. He has also placed reliance on the decision of Hon'ble Gujarat High Court in the case of Chetan Chemical 267 ITR 077 wherein it is held that if no allowance of deduction has been claimed in any of the preceding years in respect of liability cases to exist I.T.A No. 2479 & CO No. 272/Ahd/2014 A.Y. 2011-12 Page No 6 ITO vs. Ascendum KPS Pvt. Ltd.
then there is no question of applying the provisions of section 28(iv) r.w.s. 41(i) of the act. In the light of the above facts, it is noticed that the assesse company has taken a loan from Adani Agro Pvt. Ltd for the purpose of investment in capital assets and a part of the loan as mentioned above was written off during the year under consideration. The Ld. Counsel has also placed reliance on the decision of Hon'ble Supreme Court in the case of (2018)93 taxman.com 32 (SC) Commissioner vs. Mahindra And Mahindra Ltd. dated 24th April, 2018 wherein it is held that on waiver of loan on account of liability other than trading liability to which provision of section 41(i) are not applicable. The assessee has credited the amount written off to the P & L a/c for the year under consideration for the purpose of ascertaining the total income including capital receipt and subsequently reduced the amount of waving of loan amount as a capital receipt for the purpose of charging of tax. It is undisputed fact that the loan was taken for the purpose of investing in the capital assets because of change in management a part of the loan was waived off, which was claimed as deduction because of being receipt of capital nature. During the course of assessment before the assessing officer the assessee has placed reliance on the decision of Jurisdictional High Court in the case of CIT vs. Chetan Chemical 267 ITR 077 wherein it is held that if no allowance of deduction has been claimed in any of the preceding years in respect of the liability cases to exist, then, there is no question of applying the provision of section 28 (iv) r.w.s. 41(i) of the Act. The assessing officer has not disproved the applicability of the above judicial pronouncement of Hon'ble Jurisdictional High Court to the facts of the case of the assessee. During the course appellate proceedings before us, the ld. departmental representative has placed reliance on the decision Delhi High Court in the case of Steel Authority of India Ld. vs. CIT (2012) 20 taxman. com 198 (Delhi) and decision of High Court of Madras in the case of CIT vs. Ramaniyan Homes Pvt. Ltd. (2016) 68 taxmann.com 289 (Madras). We have noticed that facts of case of the assessee are distinguishable from the above cases. The case of the Steel Authority of India Ltd. pertains to subsidy granted by the Central Government in I.T.A No. 2479 & CO No. 272/Ahd/2014 A.Y. 2011-12 Page No 7 ITO vs. Ascendum KPS Pvt. Ltd.
respect of certain tangible and intangible assets in which the assessee claimed depreciation u/s. 32 of the act and the case was covered by provisions of section 43(i) of the act. The other case of Ramaniyam Homes (P) Ltd. is pertained to waivers of loan by bank under one time settlement scheme wherein the bank has waived certain amount of interest and principal amount out of total dues. However in the case of the assesse the loan was taken in the initial year of the company for capital expansion and the loan was written off as capital in nature and assessee had also not claimed any deduction on account of that loan from the income. After considering the above facts and the findings, we do not find any infirmity in the decision of the ld. CIT(A). Therefore, the appeal of the Revenue is dismissed.
Ground No. 2 (Deleting the disallowance of Rs. 3,44,78,600/- on account of employee's benefits)
7. During the course of assessment proceedings, the assessing officer observed that assessee had debited an amount of Rs. 6,09,24,425/- being payment and provisions for employee's as against such expenditure incurred for last year was amounting to Rs. 2,14,06,378/-. Accordingly, the assessing officer has issued show cause notice to the assessee to justify the increase in the provision for the employees during the year under consideration as compared to the preceding years. The assesssee has explained the same by giving year wise comparative break-up of the expenses and increase in salary, wages and bonus and staff welfare expenses for the year under consideration as compared to the preceding years. The said details has been elaborated at page 6 of the order of the assessing officer. The assessee has also submitted the copy of ledger account , details of TDS deduced and salary etc. It was further submitted that assesse is engaged in providing business processes outsourcing services which essentially require additional manpower. It was further stated that the number of employees hired in the year has been increased in compared to the earlier years. For instance, the total number of employees hired by the assessee on 31st March, 2010 was 1504 whereas this no. has been increased to 2108 as on 31st I.T.A No. 2479 & CO No. 272/Ahd/2014 A.Y. 2011-12 Page No 8 ITO vs. Ascendum KPS Pvt. Ltd.
March, 2011. The assessee company's management was transferred to ASCEDUM Group, therefore, due to differences in the system of running the business various expenses were incurred. The assessing officer has not accepted the explanation of the assessee stating that disproportionate expenditure under the head payment and provisions for employees cannot be considered as genuine. Consequently the assessing officer has disallowed the amount of Rs. 3,44,78,600/- considering as not genuine and added to the total income of the assessee.
8. In the appeal, the ld. CIT(A) deleted the said addition made by the assessing officer. Relevant part of the decision of the ld. CIT(A) is reproduced as under:-
"4.3 Decision:
I have carefully considered the assessment order and submission filed by appellant. The Assessing Officer has observed that appellant has claimed expenditure of "Payment and provision for employees" for Rs. 6,09,24,425/-as against expenditure claimed for Rs. 2,14,06,287/- in immediately previous year and expenditure claimed is not commensurate with total receipt shown by appellant, it is observed that ratio of salary expenditure to total receipt is 75.98% in comparison of 27.59% in A.Y. 2010-2011 It is observed by Assessing Officer that as appellant failed to give explanation for increase of employees during the year when there is no increase in clients as well as increase in receipt during the year and no prudent businessman does incur -huge expenditure of Rs.395.18 lacs when increase in revenue is just Rs.26.12 lacs, appellant has claimed non genuine expenditure in year under consideration. The Assessing Officer estimated 33% of gross receipt as genuine expenditure towards payment and provision for employees which works out to Rs.2,64,60,231/- and balance expenditure of Rs. 3,44,78,600/- was disallowed.
On the other hand, appellant has submitted that during the course of assessment proceedings, it has submitted, breakup of payment towards employees, salary register, ledger accounts of IDS on salary, challan of IDS payments, stipend salary and staff training register, bank payment to prove genuineness of expenditure. It was also explained that it had acquired new client- Idea cellular as well as it had acquired new export projects from its existing clients in export business of its accounting domain U.K. and Mortgage Loan processing domain in USA, for which it had to hire new employees-, trainees etc, and therefore, there was an increase in payment towards salary. It was also argued that revenue generated during the year was from different clients in comparison with immediately preceding years and nature of work carried out by required more manpower hence it had to employ more employees trainees and Apprentice which has led to increase in salary & other expenditure and such expenditure cannot be disallowed merely on presumption without pointing out any defects in details submitted by appellant.
On careful consideration of entire facts, it is noted that it is an undisputed fact that Appellant is engaged in business of outsourcing and depending upon the nature of I.T.A No. 2479 & CO No. 272/Ahd/2014 A.Y. 2011-12 Page No 9 ITO vs. Ascendum KPS Pvt. Ltd.
outsourcing activities carried out by it, requirement of number of employees and other trainees depends upon the contractual agreement with the clients. The appellant has explained to Assessing Officer that during the year under consideration, it has received new contract from Idea Cellular Limited (ICL) which require more manpower pool with basic skill sets like able to communicate in basic Gujarati/English/Hindu language and the ability to work on computer. The nature of contract received from ICL requires 24 hours manpower at the call centre hence more recruitments were carried out by Appellant Company. Further, Appellant has also procured new contracts from its existing clients in export business of accounting domain in UK and mortgage loan processing domain in USA and as per requirement of such contracts, it has employed more personnel. The nature of outsourcing activity carried out by Appellant is different in your Accounting Years hence contention appellant that depending on these activities, Appellant has to recruit or employ "more personnel is found to be correct, in the year under consideration Appellant has earned major revere from ICL for Rs. 3.08 crores and from Aditya Corpex Pvt. Limited for Rs. 78.57 lacs whereas in immediately preceding year there was no income from ICL and only small income of Rs. 8.94 lacs from the other party. Further, in A.Y. 2010-11 Appellant has earned Rs. 3.00 crores revenue from Standard Chartered Bank and GSEC whereas in year under consideration, no income has been earned from said party. Further, for earning the income from these two clients in A.Y. 2010-11, Appellant had to employ only 12 to 15 personnel whereas the work contract received from ICL being labour intensive contract and required to be performed in three shifts on 24-hour a day basis, Appellant had to employ more employees. Thus, the contention of Appellant that nature of contract received during the year under considerations different in year under consideration and depending on this contract, it has employed more employees deserves to be accepted. Since the nature of work is different as compared to earlier year, the AO was not justified in making an estimate by comparing proportion of expenses to income and compare it with that of earlier year.
The margins in each contract of outsourcing are different and in this very line, one contract may require more employees and another contract may require lesser employees and even by employing lesser employees, Assessee can earn huge revenue or margin. The observation of Assessing Officer that Appellant is paying a meager salary to number of employees which is unlikely in the business of outsourcing cannot be accepted as requirement of employees in outsourcing business solely depends upon the nature of work carried out by Assessee as discussed herein above. During the year under consideration Appellant has employed more employees towards ICL project and in such contract Appellant has to employ more employees on shift basis and they may not be professionals like CAs or MBAs but employees with basic communication skills and education qualifications also meet the requirements. Even during the course of Appellate Proceedings Appellant has given complete details of entire salary payment including salary register, TDS payment, stipend and staff training register, etc.. Further, salary register includes information like names of employees, their designations, bank account details, number of working days, details of salary paid along with other benefits, etc., and while passing Assessment Order, Assessing Officer has not pointed out any single defect in these details given by Appellant. Even entire payment has been made through banking channel and necessary tax has been deducted by Appellant Company hence Assessing Officer was not justified in estimating reasonable salary expenditure in the case of Appellant just on comparison of expenditure in ratio of income earned in both the years. if is therefore, clear from the above facts that entire disallowance has bee-: made on presumption and on comparison of figures of two years and without bringing any corroborative evidence to justify unreasonableness of the expenditure.
It would not be out of place to mention here that the books of accounts of the appellant are audited and the audit report also does not mention any qualifying remark regarding the expenditure on employees, in absence of any defects in the books of I.T.A No. 2479 & CO No. 272/Ahd/2014 A.Y. 2011-12 Page No 10 ITO vs. Ascendum KPS Pvt. Ltd.
accounts no disallowance of expenditure can be made merely on the basis of comparison and estimate. The reliance is placed on the judgement of The Hon'ble Delhi High Court in the case of Dalmia Cement Pvt. Ltd., 121 Taxman 706 where it has been held that:
For the allowance under section 37(1), following conditions are to be satisfied, i.e.,(a) there must be expenditure, (b) such expenditure of the nature- described in sections 30 to 36 (c) expenditure must not be in the nature of capital expenditure or personal expenses of the assessee, (d) the expenditure must have been laid out or expended wholly and exclusively for the purposes of the business or profession. The word 'wholly' refers to the quantum of expenditure, while the word 'exclusively' refers to the motive, one cannot apply an empirical or subjective standard is to be judged from the point of view of a businessman and it is relevant to consider how the businessman himself treats a particular item of expenditure. The term 'commercial expediency' is not a term of or. It means everything that serves to promote commerce and includes every means suitable to that end. In applying the test of commercial expediency, for determining whether the expenditure was wholly and exclusively laid out for the purpose of the business, reasonableness of the expenditure has to be judged from the point of view of the businessman and not of the revenue. But it must not suffer from the vice of collusiveness or colourable devices."
In view of the above discussion the disallowance of Rs. 3,44,78,600/- made by Assessing Officer is directed to be deleted.
This ground of appeal is accordingly, allowed."
9. We have heard the rival contentions and perused the material on record carefully. On perusal of the detailed furnished by the assessee, we find that assessee had demonstrated that increase in salary and other related expenditure was because of the business requirement of the assessee during the year under consideration. The main factors connected to the increase in the impugned expenditure are briefly described that assessee has received new contract Idea Cellular which require more manpower as compared to earlier years. There is a change of management of the company which resulted in different business planning and business philosophy which resulted in providing more remuneration to the employees. The assessee has also provided comparative details of salary payment during the year under consideration compared to the preceding years. We observe that assessing officer has not found any defect in the books of accounts and bills and vouchers furnished by the assessee in support of its claim. In the light of the above facts and detailed findings of the ld. CIT(A), we observe that assessing officer has disallowed these expenses on presumption basis without disproving the evidences and document/ material furnished by the assessee. In view of the above, we do not find any error in the I.T.A No. 2479 & CO No. 272/Ahd/2014 A.Y. 2011-12 Page No 11 ITO vs. Ascendum KPS Pvt. Ltd.
decision of ld. CIT(A), therefore, the appeal of the revenue on this issue is dismissed.
10. In the result, the appeal of the revenue is dismissed.
11. The assessee has raised following grounds in the cross objection:-
"1. On the facts and in the circumstances of the case, the CIT(A) erred in confirming disallowance to the extent of Rs. 1,26,000 from out of total disallowance made by the Assessing Officer amounting to Rs.5,70,413 being provision in respect of accrued expenses."
12. At the time of hearing, ld. counsel of the assessee has not pressed the cross objection, therefore, the same is dismissed as not pressed.
13. In the combined result, the appeal of the revenue and the cross objection of the assessee both are dismissed.
Order pronounced in the open court on 06-09-2018
Sd/- Sd/-
(RAJPAL YADAV) (AMARJIT SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad : Dated 06/09/2018
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. Assessee
2. Revenue
3. Concerned CIT
4. CIT (A)
5. DR, ITAT, Ahmedabad
6. Guard file.
By order/आदेश से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण,
अहमदाबाद