2013 (12) TMI 1740 - AT - Income Tax

Summary

Issues involved:
1. Interpretation of Section 40(a)(ia) regarding deduction of tax at source on warehousing charges.
2. Valuation of closing stock of Soyabean for assessment purposes.

Issue 1: Interpretation of Section 40(a)(ia) regarding deduction of tax at source on warehousing charges:

The appeal by the Revenue challenged the CIT(A)'s decision regarding the applicability of Section 40(a)(ia) on warehousing charges. The Revenue contended that tax should have been deducted at source on the warehousing charges paid. The CIT(A) had held that since no amount was outstanding at the year-end as "payable," no disallowance under Section 40(a)(ia) could be made. The Revenue argued that the CIT(A)'s decision was not in line with a previous Tribunal decision and should be reversed. The Tribunal agreed with the Revenue, stating that even if no amount was "payable" at the end of the year but was debited to the profit and loss account without tax deduction at source, Section 40(a)(ia) applied. The Tribunal reversed the CIT(A)'s decision and allowed the Revenue's appeal for this issue. However, the CIT(A) had not adjudicated on the applicability of Section 40(a)(ia) to the facts of the case, so the matter was restored to the CIT(A) for further consideration.

Issue 2: Valuation of closing stock of Soyabean for assessment purposes:

The Revenue contested the CIT(A)'s decision to adopt an average value of closing stock of Soyabean at a lower rate compared to the Assessing Officer's valuation. The Assessing Officer had determined the closing stock value based on market rates obtained from APMC, Latur. The CIT(A) upheld an addition to the closing stock value, considering the market price information and average value per quintal. The Tribunal found the CIT(A)'s decision to be reasonable and reasoned, as it was based on the information provided by the Assessing Officer. Therefore, the Revenue's appeal on this issue was dismissed.

Conclusion:
The Tribunal allowed the Revenue's appeal regarding the interpretation of Section 40(a)(ia) on warehousing charges but remanded the matter to the CIT(A) for further consideration. The Tribunal dismissed the Revenue's appeal on the valuation of closing stock of Soyabean, upholding the CIT(A)'s decision.