2011 (4) TMI 1423 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of addition of profit on sale of shares as business profit, disallowance of interest payment to creditors, disallowance of interest paid to the bank, and disallowance of telephone and vehicle expenses.

Deletion of addition of profit on sale of shares as business profit:
The Revenue appealed against the CIT(A)'s order deleting the addition of profit on sale of shares as business profit. The Revenue's appeal was dismissed as the tax effect was less than the threshold set by C.B.D.T. Instruction No.5 of 2008. The Tribunal found the appeal not maintainable due to contravention of the said Instruction, resulting in dismissal of the Revenue's appeal.

Disallowance of interest payment to creditors:
The Assessing Officer disallowed &8377; 1,07,375/- under section 40(a)(ia) as the assessee did not deduct tax at source on interest paid to creditors. The CIT(A) upheld the disallowance, citing relevant provisions of section 40(a)(ia) and section 194. The Tribunal affirmed the CIT(A)'s decision, stating that the charges were in the nature of interest and the assessee failed to deduct tax at source, hence dismissing this ground.

Disallowance of interest paid to the bank:
The Assessing Officer disallowed &8377; 10,900/- as proportionate interest on a bank loan, considering only a portion was used for business purposes. The CIT(A) upheld the disallowance after verifying the balance sheet details. The Tribunal confirmed the CIT(A)'s order, finding no contrary evidence to warrant a different view, and dismissed this ground of cross objection.

Disallowance of telephone and vehicle expenses:
A 10% disallowance was made by the Assessing Officer on telephone and vehicle expenses due to personal use elements. The CIT(A) restricted the disallowance to 10% based on past assessments and personal use considerations. The Tribunal found no evidence to refute personal use and upheld the CIT(A)'s decision, dismissing this ground of cross objection.

In conclusion, both the Revenue's appeal and the assessee's cross objection were dismissed by the Tribunal based on the respective issues raised and the findings of the CIT(A) in each case.