2015 (12) TMI 495 - AT - Income Tax

Addition on account of non-deduction of TDS - invoking the provisions of sec.40(a)(ia) - Held that - Admittedly, in this case, the assessee paid audit fee of ₹ 25,000/- without deducting TDS, though the assessee is liable to deduct TDS on this payment. Being so, invoking the provisions of sec.40(a)(ia) of the Act, by the lower authorities are justified - Decided against assessee. Allowability of depreciation at 15% as against 50% claimed by the assessee on crates - Held that - The plea of the ld. AR is totally misplaced. As per Index 1 to item (4), containers made of glass, plastic as refills entitled for depreciation at 50%. The crates cannot be included as bottles made of plastic or glass. As such, the lower authorities are justified in restricting depreciation at 15% - Decided against assessee. Addition to the extent of 20% of the cash purchases of old used bottles - Held that - These are admitted disallowances as cash vouchers are not bearing full address and these are not verifiable. The ld. AR submitted that earlier, gross profit rate and net profit rate was lower than this assessment year. Considering this, we direct the AO to compare the GP and NP of earlier years and if it is so as argued by the ld. AR, the addition to be sustained only to the extent of 5% of cash purchases towards this discrepancies. In other words, the disallowance should be sustained to the extent of 5% of cash purchases. With this observation, we remit this issue to the file of the AO for consideration. - Decided partly in favour of assessee for statistical purposes.

Summary

Issues:
1. Validity of notice u/s.148 and assessment order.
2. Validity of notice u/s.143(2) and limitation.
3. Disallowance of TDS under sec.40(a)(ia).
4. Allowability of depreciation on crates.
5. Addition on cash purchases of old used bottles.

Analysis:
1. The first issue raised was regarding the notice u/s.148 being against the provisions of the Act and the assessment order being opposed to law. The appellant decided not to press this ground, and it was dismissed accordingly.

2. The next issue was the validity of the notice u/s.143(2) and its limitation, which the appellant did not press either. The grounds related to notices u/s.142 & 143(2) were also not pressed and dismissed.

3. The disallowance of TDS under sec.40(a)(ia) for non-deduction of TDS on audit fee was justified as per the Act, and the ground was dismissed.

4. The question of allowing depreciation at 15% instead of the claimed 50% on crates was analyzed. The lower authorities were deemed correct in restricting depreciation at 15% based on the specific provisions, and the ground was dismissed.

5. Lastly, the addition on cash purchases of old used bottles was discussed. The Assessing Officer disallowed 25% of cash purchases, which was reduced to 20% by the CIT(A). The Tribunal directed the AO to consider the GP and NP of earlier years and sustained the disallowance at 5% of cash purchases if the rates were lower in the previous years. The issue was remitted to the AO for further consideration, and the appeal was partly allowed for statistical purposes.

This comprehensive analysis covers all the issues raised in the judgment, detailing the arguments presented and the Tribunal's decisions on each matter.