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2018 (5) TMI 2170 - AT - Income TaxAddition u/s 68 - assessee has shown the amount received as share capital and share premium , while the other party has shown it as deposits - share subscriber has accounted the same as deposits in the books of account and not as share investment - HELD THAT - This is a matter requiring clarification only. We also notice that the AO has called for explanations on 27-03-2014 and the assessment order has been passed on 31.03.2014. Hence we are of the view that the assessee may be provided with one more opportunity to prove the cash credits. Accordingly we set aside the order passed by CIT(A) on this issue and restore the same to the file of the AO for examining it afresh. Disallowance of Sales promotion expenses for non-deduction of TDS - DR submitted that the amount cannot be allowed even if TDS was deducted, if the expenditure is hit by Explanation to sec. 37(1) - HELD THAT - We find merit in the submissions of Ld D.R. With regard to the disallowance we notice that the AO did not furnish the details of those expenses and did not also mention as to how those expenses were hit by the Explanation given u/s 37(1) of the Act. We notice that the AO has made only general observations. We notice that the CIT(A) has confirmed the disallowance with general observations. Hence both the disallowances require fresh examination at the end of AO. As submitted by D.R, the amount of Rs.6.57 lakhs cannot be allowed even if TDS was deducted if the expenditure is hit by Explanation to sec. 37(1) of the Act. Accordingly we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining it afresh. Disallowance of workshop expenses - Since the assessee did not produce supporting evidences, the AO disallowed the same - HELD THAT - We notice that the assessee has failed to furnish the evidences to prove the genuineness of claim. Before Ld CIT(A) also, the assessee has furnished Ledger account copies only. These are not sufficient to prove the genuineness of claim. Though the Ld A.R has contended that TDS has been deducted from the above said payment, yet we are of the view that it is the duty of the assessee to explain the nature of services offered by Shri Sardar Singh Kattar Singh towards the payment of Rs.39.00 lakhs and genuineness of expenses. Accordingly we restore this issue to the file of the AO for examining this issue afresh and accordingly the order passed by CIT(A) is set aside. The AO may take appropriate decision in accordance with law after examining the evidences that may be furnished by the assessee. Disallowance of Sundry Balances written off by the assessee - Since the assessee did not prove that the above said amount was offered as income in the earlier years, the AO disallowed the claim. - AR submitted that all the above said amount has been offered as income in the earlier years and in support of the same, he invited our attention to the copies of ledger accounts placed in the paper book, accordingly he prayed for an opportunity to demonstrate the same before the AO - HELD THAT - Having regard to the submissions made by Ld A.R, we are of the view that there is merit in his submissions. Accordingly we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining this issue afresh. AO may take appropriate decision in accordance with law after examining the evidences that may be furnished by the assessee. Preliminary expenses u/s 35D - AO noticed that provisions of sec. 35D limits the deduction to 5% of the paid up capital. Accordingly the AO restricted the claim to Rs.1.10 lakhs and disallowed the remaining amount - HELD THAT - Plea of the Ld A.R is that the expenditure related to Training and Development and the said claim has not been examined by the AO. We find merit in the said argument. Hence this aspect requires examination at the end of AO. D.R pointed out the observations of Ld CIT(A) that the Training and development expenses relate to FY 2007-08 also and submitted that if it is not related to the year under consideration, the same should be disallowed. There is merit in this contention of D.R also. Accordingly we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO for examining this issue afresh.
Issues involved:
1. Addition of Rs.1.00 crore under section 68 of the Act - Source of money doubted by tax authorities. 2. Disallowance of Sales promotion expenses for non-deduction of TDS. 3. Disallowance of workshop expenses of Rs.39.00 lakhs due to lack of supporting evidence. 4. Disallowance of Sundry Balances of Rs.23.87 lakhs written off by the assessee. 5. Disallowance of Preliminary expenses of Rs.4.30 lakhs under section 35D of the Act. 6. Disallowance of undisclosed income for AY 2012-13. 7. Disallowance of Sales Promotion expenses for non-deduction of TDS under section 40(a)(ia) of the Act. Analysis: 1. The first issue pertains to the addition of Rs.1.00 crore under section 68 of the Act. The assessing officer raised concerns regarding the source of money received by the assessee as share capital and share premium. The share subscriber confirmed the transaction but accounted for it as "deposits." The tribunal noted that clarification was needed as the discrepancy was a matter of interpretation. The order was set aside for fresh examination to allow the assessee to provide further evidence. 2. The next issue involved the disallowance of Sales promotion expenses for non-deduction of TDS. The AO disallowed a portion of the expenses citing legal prohibitions and non-deduction of tax at source. The tribunal found that specific details and explanations were lacking in the assessment, leading to a decision to remand the issue for a fresh examination by the AO. 3. Regarding the disallowance of workshop expenses of Rs.39.00 lakhs, the AO disallowed the amount due to insufficient supporting evidence provided by the assessee. The tribunal emphasized the burden of proof on the assessee and directed a re-examination by the AO to substantiate the claim with necessary evidence. 4. The disallowance of Sundry Balances of Rs.23.87 lakhs written off by the assessee was challenged as the assessee claimed the amount had been offered as income in earlier years. The tribunal found merit in the submission and remanded the issue for the AO to reevaluate based on the evidence provided. 5. The issue of disallowance of Preliminary expenses of Rs.4.30 lakhs under section 35D of the Act was raised due to discrepancies in the nature of the claimed expenses. The tribunal directed a fresh examination by the AO to determine the validity of the claim based on the specific details provided. 6. Lastly, the disallowance of undisclosed income for AY 2012-13 was not pressed by the assessee, leading to its dismissal. Additionally, the disallowance of Sales Promotion expenses for non-deduction of TDS under section 40(a)(ia) of the Act was remanded for further examination by the AO, emphasizing the need for the assessee to substantiate the expenses with proper evidence. In conclusion, the tribunal allowed the appeal for AY 2011-12 and partly allowed the appeal for AY 2012-13, directing a fresh examination of various disallowances and additions by the assessing officer.
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