2014 (1) TMI 1240 - AT - Income Tax

Deduction u/s 80IB - Held that - Following assessee s own case for A.Y. 2004-05 - When complete facts are not evident from the relevant orders while the learned CIT(A) have not recorded any findings on the specific issues - The issue has been restored for fresh adjudication. Unsecured loan taken - Held that - The ld.CIT(A) has given a finding that the ld.AR failed to put up the details of confirmation and creditworthiness of these parties - However, the contention of the assessee is that all the confirmations were duly placed on record of the ld.CIT(A) - The order of the ld.CIT(A) is cryptic and, therefore, in the interest of justice - The issue has been restored for fresh adjudication. Disallowance u/s 40(a)(ia) - Held that - The appellant had deducted TDS on commission and interest expenses and the payment has been made before the due date - As regards freight and octroi it is seen from the ledger account produced before him that the sum paid on each occasion is not exceeding Rs.20,000/- and not liable for deduction of TDS - The order of CIT(A) was justified in deleting addition - Decided against Revenue. Addition on account of capital introduced - Held that - The appellant submitted before him evidences like copy of receipt of income-tax of all the partners along with statement of total income and copy of accounts of the partners as appearing in the books of account of the appellant firm in support of capital introduced by the appellant which has been verified - Decided against Revenue. Penalty u/s 271(1)(c) - Held that - Following COMMISSIONER OF INCOME-TAX Versus RELIANCE PETROPRODUCTS PVT. LTD 2010 (3) TMI 80 - SUPREME COURT - Any details supplied by the assessee in its return were not found to be incorrect or erroneous or false there is no question of inviting the penalty under section 271(1)(c) - A mere making of a claim, which is not sustainable in law, by itself, will not amount to furnishing inaccurate particulars regarding the income of the assessee. Such a claim made in the return cannot amount to furnishing inaccurate particulars - Decided against Revenue.

Summary

Issues Involved:
1. Disallowance of deduction under Section 80IB.
2. Addition of unsecured loans as unexplained cash credit under Section 68.
3. Deletion of addition made under Section 40a(ia).
4. Deletion of addition made on account of capital introduced by partners.
5. Penalty under Section 271(1)(c).

Issue-Wise Detailed Analysis:

1. Disallowance of Deduction under Section 80IB:
The assessee contested the disallowance of its claim for deduction under Section 80IB. The Tribunal noted that in a prior assessment year (2004-05), the issue had been restored to the CIT(A) for fresh adjudication. The CIT(A) had not decided the issue. Since the facts and circumstances remained unchanged, the Tribunal restored the issue back to the CIT(A) for a fresh decision, ensuring sufficient opportunities for both parties. The Tribunal allowed the grounds for statistical purposes only.

2. Addition of Unsecured Loans as Unexplained Cash Credit under Section 68:
The assessee challenged the addition of Rs. 14,00,000 as unexplained cash credit. The CIT(A) had partly allowed the appeal, deleting Rs. 11,35,000 but upholding Rs. 14,00,000 due to lack of confirmation and creditworthiness. The Tribunal found the CIT(A)'s order cryptic and restored the issue back to the CIT(A) for fresh adjudication after verifying the details submitted by the assessee. The ground was allowed for statistical purposes.

3. Deletion of Addition Made under Section 40a(ia):
The Revenue contested the deletion of an addition of Rs. 5,43,619 under Section 40a(ia). The CIT(A) had found that the assessee deducted TDS on commission and interest expenses and made payments before the due date. For freight and octroi, the payments did not exceed Rs. 20,000 each, thus not liable for TDS. The Tribunal upheld the CIT(A)'s findings, dismissing the ground.

4. Deletion of Addition Made on Account of Capital Introduced by Partners:
The Revenue appealed against the deletion of an addition of Rs. 3,35,000 related to capital introduced by partners. The CIT(A) had verified the evidence provided by the assessee, including income tax receipts and banking transactions. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the ground.

5. Penalty under Section 271(1)(c):
The Revenue challenged the deletion of a penalty of Rs. 7,85,600 levied under Section 271(1)(c). The Tribunal noted that in a prior year (2004-05), a similar penalty had been deleted by the ITAT, as the issue involved a debatable claim under Section 80IB. The Tribunal found no change in facts and circumstances and upheld the CIT(A)'s decision to delete the penalty, dismissing the Revenue's appeal.

Summary of Results:
1. Assessee's appeal for AY 2005-06 is partly allowed for statistical purposes.
2. Revenue's appeal for AY 2005-06 is partly allowed for statistical purposes.
3. Assessee's appeal for AY 2006-07 is partly allowed for statistical purposes.
4. Revenue's appeal for AY 2006-07 is dismissed.