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2013 (8) TMI 241 - HC - Income TaxUnexplained gift u/s 68 - Gift from brother in USA - Tribunal held all details disclosed therefore deleted addition - Held that - gift was received from the brother of the assessee. Necessary details were provided to establish the fact. The brother was residing in USA. The gift was received through banking channel. Copies of draft/cheque issued by the donor and the copy of the passport and the acknowledgement of the donor having filed the return in USA were produced - Decided against Revenue. Disallowance of freight charges u/s 40(a)(ia) - TDS not deducted - Tribunal held A.O. failed to establish how Section 40(a)(ia) is applicable therefore deleted disallowance - Held that - AO could not point out any subcontractor in whose case the charges were made in excess on an individual transaction - assessee had produced copy of the accounts of carting paid - On the basis of such document he had from the outset contended with the Assessing Officer that no individual payment exceeded Rs.20, 000/- at a time nor the total to an individual pay exceeded Rs. 50, 000/- in a year. The Assessing Officer without discarding such stand of the assessee proceeded to make disallowance under Section 40(a)(ia) of the Act on the premise that tax was not deducted at source - Decided against Revenue.
Issues:
1. Addition under Section 68 of the Income Tax Act, 1961 for unexplained gift. 2. Disallowance of freight charges under Section 40(a)(ia) of the Income Tax Act, 1961. Issue 1: The first issue involves the addition under Section 68 of the Income Tax Act, 1961 for an unexplained gift. The Assessing Officer added a sum of Rs. 9.86 lacs on account of an unexplained gift, which was later appealed before the Commissioner. The Commissioner reversed the findings of the Assessing Officer, stating that the gift was received from the brother of the assessee, who was residing in the USA. The Commissioner found that necessary details were provided to establish the identity, creditworthiness, and genuineness of the gift. The Tribunal confirmed these observations and conclusions, emphasizing that the assessee had fulfilled the requirements of Section 68 by providing sufficient evidence to identify the donor. The Tribunal held that the CIT(A) had correctly deleted the addition based on the evidence presented. The High Court agreed with the lower authorities, stating that no error was committed as the gift from the brother was found to be genuine, and all details were produced during the assessment. Issue 2: The second issue pertains to the disallowance of Rs. 1.09 crores in freight charges under Section 40(a)(ia) of the Act. The Assessing Officer disallowed this amount due to the failure of the assessee to deduct tax at source for the payment of freight charges. The CIT(A) overturned this disallowance, noting that Section 40(a)(ia) was not applicable as the Assessing Officer did not specify subcontractors in whose case charges exceeded the threshold amounts. The Revenue appealed this decision to the Tribunal, which upheld the CIT(A)'s decision. The Tribunal found that the Assessing Officer failed to establish the applicability of Section 40(a)(ia) as the assessee was not required to deduct tax at source for transactions below the specified thresholds. The High Court concurred with the Tribunal's decision, stating that no error was found in the order of the CIT(A) as the disallowance was made without proper determination of the tax deduction requirements. The Court dismissed the tax appeal, upholding the decision regarding the freight charges disallowance.
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