2015 (12) TMI 452 - AT - Income Tax

TDS u/s. 194C - Disallowance u/s 40(a)(ia) - repairs and maintenance - CIT(A) deleted disallowance - Held that - We find that a sum pertains to purchase of electrical items for which obviously no deduction of tax at source is warranted and hence no disallowance u/s 40(a)(ia) of the Act could be invoked on the same. Hence we are not inclined to interfere with the findings of the Learned CITA in this regard - Decided in favour of assessee. TDS u/s. 194C - Disallowance u/s 40(a)(ia) - printing charges - CIT(A) delted disallowance - Held that - We find that a sum pertains to purchase of diaries for business directory for which obviously no deduction of tax at source is warranted and hence no disallowance u/s 40(a)(ia) of the Act could be invoked on the same. Hence we are not inclined to interfere with the findings of the Learned CITA in this regard - Decided in favour of assessee. Addition u/s 68 - Held that - We find that the assessee had given the names and addresses of the parties from whom loans were received by him together with the confirmations and PAN details of those parties. However, we find that the Learned AO had doubted the creditworthiness of the parties who had advanced monies to the assessee. We find that the entire loans have been received only by account payee cheques which fact is not disputed by the revenue. We find that the assessee had filed confirmations from all the five parties. However, in respect of confirmation from last three parties namely Babcock Engineering Services, Ms. Nitasha Shah and Nevada Udyog, the same were filed before the Learned AO after the completion of assessment. Hence obviously the same were not available for verification by the Learned AO. In respect of confirmation filed from first two parties filed before the Learned AO, no verification was carried out on the same by him. Hence we deem it fit and appropriate in the interest of justice and fair play, to set aside this issue to the file of the Learned AO and verify the veracity of the confirmations filed by the assessee from the five parties and decide this issue afresh uninfluenced by earlier decision after giving adequate opportunity of being heard to the assessee. The assesee is given liberty to adduce fresh evidences and documents to support his contentions. - Decided in favour of assessee for statistical purposes. Addition under the head Business Promotion Expenses - CIT(A) deleted addition - Held that - We find that the Learned CITA had deleted the addition after obtaining the remand report from the Learned AO in this regard. We also find from the remand report, no adverse remarks were made by the Learned AO with regard to the subject mentioned business promotion expenses. The revenue had not refuted the findings of the Learned CITA that the said expenditure were incurred wholly and exclusively only for the business purposes of the assessee. In view of these facts and circumstances, we hold that the order of the Learned CITA in this regard does not require any interference - Decided in favour of assessee.

Summary

Issues:
1. Disallowance under section 40(a)(ia) for repairs and maintenance charges.
2. Disallowance under section 40(a)(ia) for printing charges.
3. Addition under section 68 for unexplained cash credit.
4. Addition under business promotion expenses.

Issue 1 - Repairs and Maintenance Charges:
The appeal concerned the disallowance under section 40(a)(ia) for repairs and maintenance charges. The appellant argued that the disallowance of Rs. 1,85,714 made by the AO should not be deleted by the CIT(A). However, the ITAT found that the amount pertained to the purchase of electrical items, not subject to TDS, and thus upheld the CIT(A)'s decision to delete the disallowance. The ITAT dismissed the revenue's appeal on this ground.

Issue 2 - Printing Charges:
The second issue involved the disallowance under section 40(a)(ia) for printing charges. The revenue contested the deletion of the disallowance of Rs. 7,39,000 by the CIT(A). The ITAT upheld the CIT(A)'s decision as the amount pertained to the purchase of diaries for business directory, not subject to TDS. The ITAT dismissed the revenue's appeal on this ground as well.

Issue 3 - Unexplained Cash Credit:
Regarding the addition under section 68 for unexplained cash credit, the ITAT found that the assessee had provided details of loans received, including confirmations and PAN details. However, the AO doubted the creditworthiness of the parties. The ITAT remanded the issue back to the AO to verify the confirmations and decide afresh, allowing the assessee to provide additional evidence.

Issue 4 - Business Promotion Expenses:
The last issue concerned the addition under business promotion expenses. The AO disallowed Rs. 12,44,819 for lack of bills and high expenses compared to turnover. The CIT(A) deleted the addition after verifying the expenses. The ITAT found no adverse remarks in the remand report and upheld the CIT(A)'s decision, stating the expenses were incurred for business purposes. The revenue's appeal on this ground was dismissed.

In conclusion, the ITAT partly allowed the revenue's appeal, addressing each issue comprehensively and providing detailed reasoning for their decisions.