2018 (8) TMI 1048 - AT - Income Tax

Additions u/s 68 for unexplained cash credit - Addition son account of bogus lease rental expenses - sale and lease-back - non- payment of the entire sale proceeds at the time of sale arrangement - Held that - CIT(A) observed that the assessee has explained all the points raised by the AO quite satisfactorily in its written submission filed in the course of assessment proceeding, however, the AO has not mentioned as to why the explanations of the assessee are not satisfactory, therefore, the CIT(A) deleted both the additions - Order of CIT(A) confirmed - Decided against the revenue. Additions on account of transmission charges. - Additions on account of travelling expenses - Additions on account of Director s remuneration. - Additions for non-deduction of TDS u/s 40(a)(i) - Additions for prior period expenses. - Held that - CIT(A) has considered the issues and deleted the additions - ld. DR could not bring out any new material/cogent facts to controvert the above observations of the CIT(A). - Decided against the revenue. Disallowance of deduction by invoking 43B - deposit of electricity duty in a designated account - Payment of crystallized liability - declaration under Section 158A(1) of the Act, 1961 to be made by an assessee claiming that identical question of law is pending before the High Court or the Supreme Court. - Held that - Matter restored before AO to consider based on the final outcome of the assessee s appeal in identical issue pending before the Hon ble High Court for the assessment ear 2009-2010 as mentioned in the Form No.8 - Decided partly in favor of assessee.

Issues Involved:
1. Deletion of addition made under Section 68 of the Income Tax Act.
2. Deletion of addition on account of bogus lease rental expenses.
3. Deletion of addition on account of transmission charges.
4. Deletion of addition on account of Director's remuneration.
5. Deletion of addition on account of prior period expenses.
6. Disallowance under Section 43B of the Income Tax Act.
7. Disallowance of foreign travel expenses.
8. Disallowance of entertainment expenses.
9. Disallowance of miscellaneous expenses.
10. Disallowance of petty balances written off.
11. Disallowance of deduction for advisory services, export commission, and VMI charges.
12. Levy of interest under Section 234C of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 68:
The Revenue contested the deletion of an addition of ?33,28,47,561/- made under Section 68. The CIT(A) observed that the assessee satisfactorily explained the identity, creditworthiness, and genuineness of the transaction. The AO did not provide reasons for finding the explanations unsatisfactory. The Tribunal upheld the CIT(A)'s decision, stating the AO's suspicion could not substitute for evidence.

2. Deletion of Addition on Account of Bogus Lease Rental Expenses:
The Revenue challenged the deletion of an addition of ?49,01,411/- for bogus lease rental expenses. The CIT(A) found the sale and lease-back arrangement legally valid and commercially acceptable. The Tribunal upheld this finding, noting the AO's failure to provide concrete reasons for rejecting the assessee's explanations.

3. Deletion of Addition on Account of Transmission Charges:
The Revenue appealed against the deletion of ?7,77,82,376/- on transmission charges. The Tribunal referred to its earlier decision in Gridco Ltd. vs. ACIT, where it held that Section 194-I was not applicable to transmission charges, and thus, no disallowance under Section 40(a)(ia) could be made. The Tribunal upheld the CIT(A)'s decision.

4. Deletion of Addition on Account of Director's Remuneration:
The Revenue contested the deletion of ?1,60,00,000/- for Director's remuneration. The CIT(A) found the addition by the AO not based on evidence or legal proposition. The Tribunal upheld the CIT(A)'s decision, finding no new material presented by the Revenue.

5. Deletion of Addition on Account of Prior Period Expenses:
The Revenue challenged the deletion of ?8,70,167/- out of ?13,59,500/- for prior period expenses. The CIT(A) found the assessee's explanation reasonable and logical. The Tribunal upheld this decision, noting no new facts were presented by the Revenue.

6. Disallowance under Section 43B:
The assessee contested the disallowance of ?9,10,34,665/- under Section 43B. The Tribunal restored the issue to the AO to consider based on the final outcome of a similar issue pending before the High Court for the assessment year 2009-2010.

7. Disallowance of Foreign Travel Expenses:
The assessee appealed against the disallowance of foreign travel expenses. The CIT(A) had restricted the disallowance to 20%. The Tribunal upheld the CIT(A)'s decision, finding no new material presented by the assessee.

8. Disallowance of Entertainment Expenses:
The assessee contested the disallowance of ?11,12,200/- for entertainment expenses. The CIT(A) had partly allowed the expenses. The Tribunal upheld the CIT(A)'s decision, finding no new material presented by the assessee.

9. Disallowance of Miscellaneous Expenses:
The assessee appealed against the disallowance of ?9,71,082/- for miscellaneous expenses. The CIT(A) had partly allowed the expenses. The Tribunal upheld the CIT(A)'s decision, finding no new material presented by the assessee.

10. Disallowance of Petty Balances Written Off:
The assessee contested the disallowance of ?97,285/- for petty balances written off. The Tribunal upheld the CIT(A)'s decision, finding no new material presented by the assessee.

11. Disallowance of Deduction for Advisory Services, Export Commission, and VMI Charges:
The assessee appealed against the disallowance of ?4,91,78,071/- for advisory services, export commission, and VMI charges. The Tribunal found the issue covered by its earlier decision in Paradeep Phosphates Limited and CIT vs. Eon Technology P. Ltd., and deleted the addition.

12. Levy of Interest under Section 234C:
The assessee contested the levy of interest under Section 234C. The Tribunal upheld the CIT(A)'s decision, finding no new material presented by the assessee.

Conclusion:
The Tribunal dismissed the Revenue's appeals and partly allowed the assessee's appeals for statistical purposes, restoring certain issues to the AO for reconsideration based on pending High Court decisions. The Tribunal upheld the CIT(A)'s findings on most issues, emphasizing the lack of new material or cogent facts presented by the Revenue to controvert the CIT(A)'s observations.

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