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2018 (5) TMI 499 - AT - Income TaxAddition of staff welfare expenses - expenses are supported with the self-made vouchers and the details of payee are not mentioned - CIT-A deleted addition observing that the accounts of assessee was duly audited and the amount of such expenses claimed by assessee are reasonable in comparison the volume of the business of assessee - Held that - There is no allegation from the Assessing Officer that the expenses claimed by assessee are unreasonable. We also observe that external documents in such kind of expenses are not normally available. We uphold the order of CIT(A) and this ground of Revenue is dismissed. Addition on account of foreign travel expenses - as per revenue assessee failed to provide the documentary evidence such as, air tickets, boarding passes of travelling expenses, purpose of visit, place of visit and persons with whom assessee met during his visit - Held that - We note that assessee has furnished all details of bills in respect of foreign travel expenses, purpose of such visit, place of visit etc., which have been duly filed in the paper book filed before us. AO during the course of assessment proceedings has not brought anything on record pointing out any defect in such documents. In this regard, DR has also not brought anything on record contrary to the finding of Ld. CIT(A). - Decided against revenue Addition under the provision of Section 14A r.w.r 8D - sufficiency of own funds - Held that - There is no ambiguity with regard to own fund available with the assessee. In such facts and circumstances a presumption can be drawn that investment has been made out of own fund of assessee. Therefore no disallowance on account of interest expense should be made under Rule 8D(2)(ii) of IT Rules. See Reliance Utilities and Power Ltd. 2009 (1) TMI 4 - BOMBAY HIGH COURT - no disallowance of interest expense claimed by the assessee can be made under the provision of Section14A of the Act r.w.r. 8D - Decided in favour of assessee Addition on account of contribution to the employees P.F. - assessee failed to deposit the employee s contribution within the due date specified under the Provident Fund Act - Held that - From the assessment order we find that all the payment of employees contribution were made before the due date of filing of Income Tax Return as specified u/s 139(1) of the Act. Now, this issue stands covered in favour of assessee and against the Revenue by the decision in the case of CIT v. M/s Vijay Shree Limited 2011 (9) TMI 30 - CALCUTTA HIGH COURT as held deletion of the amount paid by the Employees Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act - Decided in favour of assessee. Non deduction of tax deducted at source (TDS) u/s. 195 w.r.t.194A - payment on account of interest to certain parties based outside India have been made without deducting TDS u/s 195 - Held that - Assessing Officer misunderstood the certificate issued in Form 15CA. As per Form 15CA the assessee was not liable for the deduction of TDS on the expense of interest. The AO has not brought anything on record suggesting that assessee has incurred expenses without the deduction of TDS as per the provision of the Act. The AO has just relied on the Form 15CA/15CB issued by the CA and treated the assessee in default. As such, in our considered view the basis of disallowance of interest expenses made by AO does not hold good - Decided in favour of assessee Non deduction of TDS u/s. 194J - Held that - Interest include the service fee charge by the bank in respect of money borrowed. Therefore, the impugned processing fee will be treated as payment to the bank in the nature of interest expense. As per the Section 194A of the Act there is no liability to deduct the TDS on the interest payment made to banking company to which the Banking Regulation Act, 1949 applies. A plain look at the above statutory provision makes it clear that assessee was not under obligation to deduct the TDS on account of loan processing charges paid to the bank. We find no reason to interfere with the finding arrived by the Ld. CIT(A). Decided in favour of assessee
Issues Involved:
1. Deletion of addition on account of staff welfare expenses. 2. Deletion of addition on account of foreign travel expenses. 3. Deletion of addition under Section 14A read with Rule 8D. 4. Deletion of addition on account of employees' provident fund contribution. 5. Deletion of addition on account of non-deduction of TDS under Section 195. 6. Deletion of addition on account of non-deduction of TDS under Section 194J. Detailed Analysis: 1. Deletion of Addition on Account of Staff Welfare Expenses: The Revenue challenged the deletion of ?2,50,938/- added by the Assessing Officer (AO) under Section 37(1) of the Income Tax Act, 1961. The AO disallowed 50% of the staff welfare expenses due to self-made vouchers lacking payee details. The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, noting that the accounts were audited, the expenses were reasonable and meager compared to the business volume, and such expenses typically lack external vouchers. The Tribunal upheld the CIT(A)'s order, agreeing that the expenses were reasonable and adequately supported by internal vouchers. 2. Deletion of Addition on Account of Foreign Travel Expenses: The Revenue disputed the deletion of ?13,91,404/- added by the AO for foreign travel expenses. The AO disallowed the expenses due to missing boarding passes and other documentary evidence. The CIT(A) deleted the addition, observing that the expenses were for business purposes, supported by detailed submissions, and the accounts were audited without adverse remarks. The Tribunal upheld the CIT(A)'s decision, noting that the expenses were reasonable and necessary for the business, and the AO did not find any defects in the provided documents. 3. Deletion of Addition Under Section 14A Read with Rule 8D: The Revenue contested the deletion of ?20,25,329/- added by the AO under Section 14A read with Rule 8D. The AO disallowed interest expenses, assuming they were related to exempt income. The CIT(A) deleted the addition, noting that the assessee's own funds exceeded the investments and no borrowed funds were used for investments. The Tribunal upheld the CIT(A)'s order, citing the presumption that investments were made from interest-free funds, supported by the Bombay High Court's judgment in Reliance Utilities and Power Ltd. 4. Deletion of Addition on Account of Employees' Provident Fund Contribution: The Revenue challenged the deletion of ?58,121/- added by the AO for delayed employees' provident fund contributions. The AO disallowed the amount as it was not deposited within the due date under the Provident Fund Act. The CIT(A) deleted the addition, following the jurisdictional Calcutta High Court's decision in CIT v. Shree Vijayshree Ltd., which allowed contributions deposited before the due date of filing the Income Tax Return. The Tribunal upheld the CIT(A)'s decision, noting the contributions were made before the due date under Section 139(1). 5. Deletion of Addition on Account of Non-Deduction of TDS Under Section 195: The Revenue disputed the deletion of ?3,33,789/- added by the AO for non-deduction of TDS on interest payments to non-residents. The AO disallowed the interest expenses based on Form 15CA/15CB certificates. The CIT(A) deleted the addition, noting that the payments were made to Indian banks, which are not subject to TDS under Section 194A. The Tribunal upheld the CIT(A)'s order, finding no liability for TDS on the interest payments to banks. 6. Deletion of Addition on Account of Non-Deduction of TDS Under Section 194J: The Revenue contested the deletion of ?8,28,655/- added by the AO for non-deduction of TDS on loan processing fees paid to ICICI Bank. The AO disallowed the expenses under Section 40(a)(ia) read with Section 194J. The CIT(A) deleted the addition, noting that loan processing fees are not in the nature of professional charges and are not subject to TDS. The Tribunal upheld the CIT(A)'s decision, citing Section 2(28A) and Section 194A, which exclude such payments to banks from TDS obligations. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletions of the additions on all grounds. The Tribunal found the CIT(A)'s decisions well-reasoned and supported by relevant legal provisions and judicial precedents. The Revenue's grounds of appeal were dismissed, and the CIT(A)'s order was affirmed.
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