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2016 (1) TMI 614 - AT - Income TaxTDS u/s 194C - non deduction of tds - payment of preservation charges - Held that - It is an undisputed fact that Assessee has paid preservation charges to the cold storage, the aggregate of the payments/credit to the account. During the relevant time, subsection (5) and proviso of Section 194C provided that no deduction of TDS was required from the amounts paid or credited if the sum did not exceed ₹ 20,000/- or the aggregate of the amounts of sums credited or paid or likely to be credited or paid during the financial year did not exceed ₹ 50,000/-. In the present case, we are of the view that since the amount credited/paid during the year was ₹ 1,96,945/-, which was in excess of the monetary limit prescribed under subsection (5) and in proviso, the exemption from non-deduction of TDS would not be applicable. - Decided in favour of assessee. Deemed dividend u/s. 2(22)(e) - Held that - We find that Hon ble Delhi High Court in the case of CIT vs. Rajkumar (2009 (5) TMI 17 - DELHI HIGH COURT ) has held that trade advances which are in the nature of money transacted to give effect to a commercial transaction would not fall with the ambit of the provision of Section 2(22)(e) of the Act. Hon ble Delhi High Court in the case of CIT vs. Creative Dyeing & Printing Pvt. Ltd. (2009 (9) TMI 43 - DELHI HIGH COURT ) has also held that amount advanced for business transaction do not fall within the definition of Section 2(22)(e) of the Act. Before us, no material has been placed on record by the Revenue to demonstrate that the agreement entered by the Assessee with Vaibhav Corporation was not a genuine agreement. In view of these facts, we are of the view that in the present case no addition u/s.2(22)(e) could be made. We therefore set aside the addition made by A.O. and thus this ground of Assessee is allowed - Decided in favour of assessee.
Issues:
1. Disallowance of TDS under section 40(a)(ia) for storage charges paid for agricultural product. 2. Addition as deemed dividend under section 2(22)(e) of the Act. 3. Non-consideration of explanations and submissions by lower authorities. 4. Justification of penalty under sections 234A, 234B, and 234C of the Act. 5. Initiation of penalty proceedings under section 271(1)(c) of the Act. Issue 1 - Disallowance of TDS under section 40(a)(ia) for storage charges: The Assessee filed an appeal against the order of CIT(A) confirming the disallowance of Rs. 1,96,945 under section 40(a)(ia) for non-deduction of TDS from storage charges paid for agricultural products. The Assessee argued that TDS was not required as the charges were not in the nature of renting a cold storage facility. However, the tribunal upheld the disallowance, stating that the aggregate payment exceeded the prescribed limits for TDS exemption. The tribunal found no infirmity in the CIT(A)'s order and dismissed the Assessee's appeal. Issue 2 - Addition as deemed dividend under section 2(22)(e) of the Act: The Assessee appealed against the addition of Rs. 1,30,205 as deemed dividend under section 2(22)(e) of the Act. The AO added this amount based on a loan received from a corporation where the Assessee was a director. The Assessee argued that the amount was received under a development agreement, not as a loan or advance. The tribunal agreed with the Assessee, noting that the transaction was a commercial one, supported by a valid agreement. Citing relevant case law, the tribunal held that the addition under section 2(22)(e) was unwarranted. Consequently, the tribunal allowed the Assessee's appeal and set aside the addition made by the AO. Issue 3 - Non-consideration of explanations and submissions by lower authorities: The Assessee contended that the lower authorities failed to consider various explanations, submissions, and evidence in the proper perspective, breaching the Principles of Natural Justice. However, the tribunal did not provide detailed analysis or specific relief related to this issue in the judgment. Issue 4 - Justification of penalty under sections 234A, 234B, and 234C of the Act: The tribunal did not provide a detailed analysis or specific relief related to the justification of penalties under sections 234A, 234B, and 234C of the Act in the judgment. Issue 5 - Initiation of penalty proceedings under section 271(1)(c) of the Act: The tribunal did not provide a detailed analysis or specific relief related to the initiation of penalty proceedings under section 271(1)(c) of the Act in the judgment. In conclusion, the tribunal partially allowed the Assessee's appeal concerning the addition as deemed dividend under section 2(22)(e) of the Act. The tribunal upheld the disallowance of TDS under section 40(a)(ia) for storage charges paid for agricultural products. The judgment did not provide detailed analysis or specific relief for the other issues raised by the Assessee.
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