2015 (11) TMI 1528 - AT - Income Tax

TDS u/s. 194C - labour charges carriage inward charges and hire charges for non-deduction of TDS - Held that - We are inclined to set aside the issue to the file of the AO and accordingly we direct the AO to verify whether the recipients have included the income in their respective returns and also paid taxes on the same. The assessee will provide the details of recipients i.e. their assessment particulars etc. to the AO so that the AO can verify. In case the recipient parties are not cooperating in providing details the AO can call for the information u/s. 133(6) of the Act for verification of the same. Accordingly this issue is remitted back to the file of AO to decide in terms of the above directions. - Decided in favour of assessee for statistical purposes Disallowance of interest - Held that - At the time of hearing Ld. Counsel for the assessee fairly stated that the issue can be set aside to the file of the AO for verification of availability of interest free funds invested in interest free loans. In view of the above plea of the assessee we remit the issue back to the file of the AO with the direction to follow the decision of Reliance Utilities & Powers Ltd. 2009 (1) TMI 4 - BOMBAY HIGH COURT and accordingly decide the issue.- Decided in favour of assessee for statistical purposes

Summary

Issues:
1. Disallowance of expenses for non-deduction of TDS under section 40(a)(ia) of the Income-tax Act.
2. Disallowance of interest on advances made to certain parties.

Issue 1: Disallowance of expenses for non-deduction of TDS under section 40(a)(ia) of the Income-tax Act:

The appeal pertains to the disallowance of labor charges, carriage inward charges, and hire charges for non-deduction of TDS under section 194C of the Income-tax Act. The AO disallowed these expenses under section 40(a)(ia) of the Act. The CIT(A) upheld the AO's decision, leading to the appeal before the ITAT. The appellant contended that the second proviso to section 40(a)(ia) should be applied retrospectively, citing a Delhi High Court judgment. The ITAT directed the AO to verify if the recipients included the income in their returns and paid taxes on it. The appellant's plea was accepted, and the issue was remitted back to the AO for further examination.

Issue 2: Disallowance of interest on advances made to certain parties:

The AO disallowed interest on advances made to specific parties, stating that no interest was credited by the assessee on these loans. The AO estimated the disallowance of loans advanced to certain parties and added it to the assessee's income. The CIT(A) upheld the AO's decision. During the ITAT proceedings, the appellant requested the issue to be sent back to the AO for verification of interest-free funds available to the assessee. Citing relevant case law, the ITAT found in favor of the appellant, remitting the issue back to the AO for further examination. The appeal was allowed for statistical purposes.

In conclusion, the ITAT allowed the appeal of the assessee for statistical purposes, remitting both issues back to the AO for verification and decision in accordance with the directions provided by the ITAT.