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2015 (3) TMI 1015 - AT - Income TaxUnsecured loans - CIT(A) deleted the addition - Held that - The details of parties from whom the assessee received loans on behalf of Mudra Exports and paid the same to its creditors is available in the paper book. It is apparent from such details that all the amounts were received by means of demand drafts which were directly issued in favour of the assessee s creditors. Such amounts received by the assessee from the debtors of Mudra Exports are duly recorded by Mudra Exports in its books of account. In view of the above overwhelming evidence filed by the assessee establishing the genuineness of the amounts received by the assessee from or on behalf of Mudra Exports, we have no hesitation in upholding the impugned order deleting this addition. - Decided in favour of assessee. For receipt from S.V. Liquor India Ltd. it is unable to understand as to how the payment of ₹ 46.10 lac made by S.V. Liquor India Ltd. vide cheque dated 4.4.2007 can be received by the assessee before that date on 30.3.2007 and recorded with the narration of the amount received and paid to Railway. One can understand if the amount is paid by A to B and the A records transaction in his books of account on the date of making of draft or issuance of cheque and B records the same in his books of account later on at the time of its actual receipt. However, the position in the instant case is converse inasmuch as the payer is claiming to have made payment on 4.4.2007 and payee, that is the assessee, is showing to have received this amount on 30.3.2007. Under such circumstances, we cannot accept the genuineness of loan transaction to the tune of ₹ 46.10 lac unless the facts are properly considered and appreciated. Overturning the impugned order on this score, we send the matter back to the file of AO for verifying the genuineness of credit to the extent of ₹ 46.10 lac claimed to have been received from S.V. Liquor India Ltd. - Decided in favour of revenue for statistical purposes. For receipts from Mudra Ceramics Pvt. Ltd.Though apparently there is no separate entry for any loan and advance of ₹ 15 lac appearing on the asset side of the balance sheet of the assessee, but the ld. AR contended that this amount may have been included in the list of Loans and advances. It was attempted to show that this payment is a part of the several transactions undertaken by the assessee with this party. Unless the position becomes clear about the receipt or payment of the sum of ₹ 15 lac, we cannot accept the view point of the ld. CIT(A) on its face value. The obvious reason is that the auditor of the assessee reported in the tax audit report that a sum of ₹ 15 lac was received as amount of loan or deposit taken by the assessee from Mudra Ceramics Pvt. Ltd. We, therefore, overturn the impugned order on this issue and send the matter back to the file of AO for examining this issue afresh.- Decided in favour of revenue for statistical purposes. For receipts from Anshu Hospital. ld. CIT(A) deleted this addition by accepting the assessee s contention that the same was in the nature of loan advanced and not loan taken. This amount of ₹ 20 lac claimed to have been advanced to Anshu Hospital is not directly traceable from the face of the balance sheet. The ld. AR gave the same explanation as given for Mudra Ceramics above. Following the view taken hereinabove in the context of Mudra Ceramics Pvt. Ltd., we set aside the impugned order on this issue and send the matter to the AO for deciding it in conformity with our above directions. - Decided in favour of revenue for statistical purposes. Disallowance of freight and transportation charges - non deduction of TDS - CIT(A) deleted the disallowance - Held that - In so far as payment of ₹ 3,16,50,188/- is concerned, it was directly made by the assessee to Railways for which there can be no default for non-deduction of tax at source. As regards the payment for a sum of ₹ 3,14,414/- paid to Kolkata Port Trust, the same was towards freight for carriage of goods by Railways. The assessee filed a copy of bill showing that the payment was made to the Railway Division of the Port Trust for freight charges relating to hired wagons. Since this payment is also towards carriage of goods by Railways, it would not attract section 194C. As regards the remaining amount disallowed by the AO, the assessee filed evidence before the ld. CIT(A) showing deduction of tax at source @ 2.24% amounting to ₹ 8,258/- in respect of freight payment amounting to ₹ 3,68,015/- made to M/s Lakshmi Transport. Since the assessee deducted tax at source from the payments made to Lakshmi Transport, there can be no question of applying section 40(a)(ia) of the Act. The AO did not make any disallowance in respect of transportation charges paid by the assessee to M/s Jyothi Transport. It, therefore, becomes abundantly apparent that the assessee deducted tax at source from the freight payments wherever it was required under law. In view of this position, we uphold the impugned order deleting the disallowance made u/s 40(a)(ia) of the Act. - Decided in favour of assessee. Disallowance of service tax - assessee did not file proof of payment of service tax before filing the return - CIT(A) deleted the disallowance - Held that - In the absence of any adverse comments made by the AO and the fact that the assessee did pay service tax before the close of the year itself, we hold that the ld. CIT(A) was right in deleting this addition. - Decided in favour of assessee.
Issues Involved:
1. Deletion of addition of Rs. 5,66,44,000/- on account of unsecured loans. 2. Deletion of addition of Rs. 15,80,000/- on account of pending share application money. 3. Deletion of disallowance of Rs. 3,22,90,536/- on account of freight and transportation charges. 4. Deletion of disallowance of Rs. 82,224/- on account of service tax. Issue-wise Detailed Analysis: 1. Deletion of Addition of Rs. 5,66,44,000/- on Account of Unsecured Loans: The Revenue challenged the deletion of the addition made by the Assessing Officer (AO) concerning unsecured loans amounting to Rs. 5,66,44,000/-. The AO had added this amount due to the assessee's failure to provide sufficient documentation for loans received from four entities: M/s S.V. Liquor India Ltd., M/s Mudra Exports, M/s Mudra Ceramics Pvt. Ltd., and M/s Anshu Hospital. The CIT(A) had deleted this addition after considering additional evidence provided by the assessee during the appellate proceedings. - Mudra Exports: The AO had added Rs. 3,35,34,000/- received from Mudra Exports. However, the CIT(A) found that the balance after repayment was Rs. 3,15,14,000/-, which was confirmed by Mudra Exports. The Tribunal upheld the deletion, noting that Mudra Exports' assessment did not dispute the genuineness of the transaction. - S.V. Liquor India Ltd.: The AO added Rs. 1,96,10,000/- received from S.V. Liquor India Ltd. The Tribunal found that Rs. 1.50 crore was received by the assessee and confirmed by S.V. Liquor India Ltd. However, for the remaining Rs. 46.10 lac, there was a discrepancy in dates. The Tribunal remanded this issue back to the AO for verification. - Mudra Ceramics Pvt. Ltd.: The AO added Rs. 15,00,000/- based on the tax audit report. The CIT(A) deleted this addition, stating the assessee had advanced this amount to Mudra Ceramics Pvt. Ltd. The Tribunal remanded this issue back to the AO for further examination. - Anshu Hospital: The AO added Rs. 20,00,000/- based on the tax audit report. The CIT(A) deleted this addition, stating the assessee had advanced this amount to Anshu Hospital. The Tribunal remanded this issue back to the AO for further examination. 2. Deletion of Addition of Rs. 15,80,000/- on Account of Pending Share Application Money: The AO had added Rs. 15,80,000/- as cessation of liability under section 41(1) of the Income Tax Act. The CIT(A) deleted this addition, and the Tribunal upheld the deletion, stating that share application money does not constitute a trading liability and hence cannot be considered under section 41(1). Additionally, the amount was received in an earlier year and shares were issued against it in the subsequent year. 3. Deletion of Disallowance of Rs. 3,22,90,536/- on Account of Freight and Transportation Charges: The AO disallowed Rs. 3,22,90,536/- under section 40(a)(ia) for non-deduction of tax at source on freight payments. The CIT(A) deleted this disallowance, and the Tribunal upheld the deletion, noting that the majority of the amount was paid to Indian Railways, which is exempt from TDS under section 194C. The remaining payments had TDS deducted appropriately. 4. Deletion of Disallowance of Rs. 82,224/- on Account of Service Tax: The AO disallowed Rs. 82,224/- for non-submission of proof of service tax payment. The CIT(A) deleted this disallowance after verifying the payment before 31.3.2007. The Tribunal upheld the deletion, noting the absence of adverse comments from the AO. Conclusion: The Tribunal partly allowed the appeal for statistical purposes, remanding the issues related to S.V. Liquor India Ltd., Mudra Ceramics Pvt. Ltd., and Anshu Hospital back to the AO for further verification. The deletions concerning share application money, freight and transportation charges, and service tax were upheld.
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