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2016 (1) TMI 245 - AT - Income TaxDisallowance u/s 40(a)(ia) - payment of transport charges - Held that - As decided in assessee s own case for the assessment year 2008-09 nature of between assessee & M/s. Sachin Cargo Movers, C&F Agent, was for reimbursement of expenses. Besides, the TDS thereon has been deducted by the agent as mentioned above. By now, it has been settled by various Courts that reimbursement of expenses are not liable for deduction u/s 40(a)(ia) of the Act. In any case the agent has deducted the TDS a fact not disputed by revenue, in this eventuality also the case laws cited by the ld. AR supports this proposition. In view thereof, we hold that the expenses paid to M/s. Sachin Cargo Movers, C&F Agent, being for reimbursement of expenses cannot be disallowed u/s 40(a)(ia) - Decided in favour of assessee. Assessee is entitled to deduction under section 10BA for this year on non duty draw back DEPB claim and ld. CIT (A) has rightly allowed the same to assessee. Delay in TDS payment on job work - Held that - It has not been disputed that the requisite TDS was paid by assessee before due date of return. In view thereof this claim of the assessee is allowed. Increase in valuation of the closing stock - whether to be allowed in next year as increase in opening stock in next year i.e. 2010-11 - Held that - It has not been disputed that the assessee has not claimed any benefit by increase in valuation of stock in subsequent year. Hence, the addition becomes revenue neutral. Consequently, respectfully following the decision of Hon ble Supreme Court in the case of CIT vs. Excel Industries Ltd. (2013 (10) TMI 324 - SUPREME COURT ) the addition being tax neutral and the assessee having not derived any benefit, the addition is deleted.
Issues Involved:
1. Deduction under Section 10BA. 2. Disallowance under Section 40(a)(ia) for TDS not deposited by due date. 3. Rejection of books of accounts and application of G.P. rate. 4. Addition under Section 40A(3). 5. Treatment of excess stock as unexplained investment under Section 69. Detailed Analysis: 1. Deduction under Section 10BA: - Revenue's Appeal: The Revenue contended that the CIT(A) erred in allowing the deduction under Section 10BA after adjusting for the amount of DEPB. - Assessee's Appeal: The assessee argued that the duty drawback received should be eligible for deduction under Section 10BA. - Judgment: The Tribunal upheld the CIT(A)'s decision, referencing the ITAT's previous orders in the assessee's own case for earlier assessment years (2006-07, 2007-08, and 2008-09), confirming that the assessee is entitled to the deduction under Section 10BA. Thus, the Revenue's ground was dismissed. 2. Disallowance under Section 40(a)(ia) for TDS not deposited by due date: - Revenue's Appeal: The CIT(A) directed that the disallowance should be restricted to payments still outstanding at the end of the year. - Assessee's Appeal: The assessee argued that the transport charges were reimbursed to an agent who had already deducted TDS, and payments to job work contractors were made before the due date of filing the return. - Judgment: The Tribunal found that the assessee was not liable for TDS on transport charges as the agent had already deducted and deposited the TDS. For job work payments, since the TDS was paid before the due date of the return, the disallowance was deleted. Thus, the assessee's ground was allowed, and the Revenue's ground was dismissed. 3. Rejection of books of accounts and application of G.P. rate: - Assessee's Appeal: The assessee contested the rejection of books of accounts and the application of a higher G.P. rate of 17.20% instead of the declared 12.03%. - Judgment: The Tribunal noted that the assessee did not press this ground during the hearing, and thus it was dismissed. 4. Addition under Section 40A(3): - Assessee's Appeal: The assessee argued that the disallowed amount under Section 40A(3) should increase the profits eligible for deduction under Section 10BA. - Judgment: The Tribunal agreed with the assessee, stating that the disallowance of business expenses under Section 40A(3) would increase the eligible profits under Section 10BA. Thus, this ground was allowed. 5. Treatment of excess stock as unexplained investment under Section 69: - Assessee's Appeal: The assessee contended that the excess stock found during the survey should not be treated as unexplained investment and that any addition should be revenue-neutral. - Judgment: The Tribunal acknowledged the merit in the assessee's argument, noting that the increase in closing stock should be allowed as an increase in opening stock in the next year, making the addition revenue-neutral. Consequently, the addition was deleted, following the Supreme Court's decision in CIT vs. Excel Industries Ltd. Conclusion: The assessee's appeal was partly allowed, and the Revenue's appeal was partly allowed for statistical purposes. The Tribunal provided a detailed analysis of each issue, ensuring that the legal principles and precedents were appropriately applied. The order was pronounced in the open court on 16/10/2015.
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