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2018 (7) TMI 943 - AT - Income TaxTDS u/s 194C - payment to transporters - disallowance made u/s 40(a)(ia) - Held that - There is no evidence on record to prove as to on which date the assessee herein had submitted the PAN before the competent authority as mandated in section 194C(7) of the Act, which aspect requires factual verification by the ld AO. It is also not clear from the records as to whether the assessee had indeed submitted the PAN of transporters before the competent authority as prescribed in section 194C(7) which also requires factual verification. We are not able to appreciate the various case laws relied upon by the ld AR with regard to section 194C(6) and 194C(7) in as much as in all those cases, the PAN was indeed submitted to the competent authority but belatedly. Hence in the interest of justice and fairplay, we deem it fit and appropriate to remand this issue to the file of the ld AO for verification of this aspect and decide the issue in accordance with law. Addition on account of undisclosed receipt based on difference in receipt as per Form 26AS and profit and loss account - Held that - It is not borne out from the records before us as to whether the assessee had claimed the full TDS credit in the return and assessment as reflected in Form 26AS. It is well settled that TDS is related to income offered thereon i.e the TDS could be claimed in the year in which the corresponding income is offered to tax by the assessee. No finding in this regard is given by both AO and the ld CITA for better appreciation of the facts. In our considered opinion, this requires factual verification by the ld AO. In these facts and circumstances, we deem it fit and appropriate, in the interest of justice and fairplay, to remand this issue to the file of the ld AO for denovo adjudication in accordance with law. The assessee is also directed to furnish proper reconciliation with Form 26AS in respect of each of the party and also given liberty to furnish further evidences in support of its contentions. Accordingly, the ground no. 2 raised by the revenue is allowed for statistical purposes. Addition addition made towards share capital as unexplained cash credit - Held that - We find that the three shareholders had duly confirmed the factum of making investments in cash as well as cheques in the assessee company. They had also filed their respective balance sheets and income tax returns to prove their credit worthiness. We find that no finding is given by the authorities below to explain the sources of three shareholders to make investments in cash with facts and figures by clearly proving that as on the date of making the investments in assessee company, whether the three shareholders had sufficient cash balances as per books. This has to be verified from their cash book or from their cash flow statement. AO is accordingly directed to make factual verification of the same in the manner known to law to ascertain the veracity of their creditworthiness. Addition made towards service tax u/s 43B - Held that - DR was not able to provide any contrary case law before us nor was he able to controvert the claim of the assessee that no deduction per se was claimed by the assessee towards service tax so as to fall outside the ambit of section 43B of the Act. The ld AR argued that service tax portion is kept as a liability in the books and as and when the same is paid , the liability account gets knocked off. Hence it does not enter the profit and loss account at all. We find no infirmity in the order of the ld CITA granting relief to the assessee by placing reliance on various decisions. Accordingly, the Ground No. 4 raised by the revenue is dismissed. Disallowance of interest u/s 36(1)(iii) - Held that - We find that the ld CITA had deleted the disallowance after recording a factual finding that the assessee was having sufficient own funds to advance interest free funds to related parties. This factual finding remain uncontroverted before us by the revenue. Hence we find no infirmity in the order of the ld CITA applying the decision of Hon ble Bombay High Court supra to the facts of the instant case.
Issues Involved:
1. Deletion of disallowance under section 40(a)(ia) of the Income Tax Act. 2. Addition based on undisclosed receipt due to the difference in receipt as per Form 26AS and profit and loss account. 3. Addition towards share capital as unexplained cash credit. 4. Addition towards service tax under section 43B. 5. Disallowance of interest under section 36(1)(iii). Issue-wise Detailed Analysis: 1. Deletion of Disallowance under Section 40(a)(ia): The first issue concerns whether the CIT(A) was justified in deleting the disallowance made under section 40(a)(ia) of the Income Tax Act. The assessee, a private limited company engaged in logistics and warehousing, had claimed transportation and handling charges amounting to ?5,57,26,122/-. The Assessing Officer (AO) disallowed ?4,73,98,745/- due to non-compliance with section 194C(7), despite the assessee obtaining PANs from transporters as per section 194C(6). The CIT(A) deleted the disallowance, arguing that the decision to deduct TDS is based on section 194C(6) and not section 194C(7). However, the Tribunal remanded the issue back to the AO for verification of compliance with section 194C(7), emphasizing that sections 194C(6) and 194C(7) should be read together. 2. Addition Based on Undisclosed Receipt: The second issue pertains to the addition of ?90,10,087/- based on the difference between turnover as per Form 26AS and the profit and loss account. The AO added the difference to the total income, while the CIT(A) deleted the addition, noting that the overall turnover declared by the assessee was higher than that reflected in Form 26AS. The Tribunal found that the AO had selectively picked cases with higher 26AS figures and remanded the issue for de novo adjudication, directing the assessee to reconcile the turnover with Form 26AS for each party. 3. Addition Towards Share Capital as Unexplained Cash Credit: The third issue involves the addition of ?71,85,000/- towards share capital and share premium as unexplained cash credit under section 68. The AO accepted investments made by cheque but questioned cash contributions. The CIT(A) deleted the addition, stating that the AO should not have questioned cash contributions after accepting cheque contributions. The Tribunal remanded the issue to the AO for factual verification of the shareholders' creditworthiness and the sources of their cash investments. 4. Addition Towards Service Tax Under Section 43B: The fourth issue is the addition of ?23,23,380/- towards service tax under section 43B. The AO added this amount as it was paid after the due date of filing the return. The CIT(A) deleted the addition, noting that the assessee had not claimed any deduction towards service tax, and the amount was a liability in the books. The Tribunal upheld the CIT(A)'s decision, finding no infirmity and noting that the DR could not provide any contrary case law. 5. Disallowance of Interest Under Section 36(1)(iii): The fifth issue concerns the disallowance of ?29,67,423/- as interest under section 36(1)(iii) due to interest-free loans to related parties. The AO disallowed the interest, but the CIT(A) deleted the disallowance, noting that the assessee had sufficient own funds to advance interest-free loans. The Tribunal upheld the CIT(A)'s decision, finding no infirmity and noting that the factual finding of sufficient own funds was uncontroverted. Other Issues: - The revenue's ground regarding a small amount was dismissed as not pressed. - The general ground raised by the revenue required no specific adjudication. - The cross objections of the assessee were dismissed as not pressed. Conclusion: The Tribunal partly allowed the revenue's appeal for statistical purposes and dismissed the assessee's cross objections as not pressed.
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