2021 (10) TMI 393 - AT - Income Tax

Unverifiable sundry creditors - CIT-A deleted addition unconfirmed sundry creditors by admitting additional evidence - HELD THAT - As evidences in the form of confirmation were forwarded to the Assessing Officer for his Remand Report, therefore, due opportunity was given to the Assessing Officer. Having perused the material available on record, we do not see any infirmity in the order of Ld.CIT(A) as the assessee has filed confirmation which has been verified by Ld.CIT(A) hence, Ground No.1 raised by the Revenue is dismissed. Addition of expenses as treated as capital in nature - DR treated the expenditure as of capital nature since the assessee had obtained secured loan in the form of terms loans for the purpose of financing future assets - HELD THAT - CIT(A) has pointed out that from the computation of interest disallowance, the AO had considered investment of ₹ 75,75,35,000/- against ₹ 83,17,32,000/-. This fact is not rebutted by the Revenue. It is seen that Ld.CIT(A) has computed the income at ₹ 28,76,084/- against computation made by the Assessing Officer at ₹ 1,49,86,193/-. The Revenue could not point out any error in the computation by Ld.CIT(A). Therefore, we do not see any infirmity into the finding of Ld.CIT(A), the same is hereby affirmed. Ground No.2 raised by the Revenue is, thus rejected. Short payment of TDS - CIT-A allowed claim - HELD THAT - CIT(A) while deleting the addition has relied upon the decision in the case of CIT vs S.K.Tekriwal 2012 (12) TMI 873 - CALCUTTA HIGH COURT and the case of UE Trade Corporation (India) Ltd 2012 (8) TMI 700 - ITAT DELHI -The Revenue has not pointed out any contrary binding precedents therefore, we do not see any infirmity in the finding of Ld.CIT(A) and the same is hereby affirmed.

Summary

Issues Involved:
1. Admission of additional evidence and deletion of amounts related to sundry creditors.
2. Deletion of expenses treated as capital in nature.
3. Deletion of disallowance made on account of short payment of TDS.

Issue-wise Detailed Analysis:

1. Admission of Additional Evidence and Deletion of Amounts Related to Sundry Creditors:
The Revenue contended that the Ld. CIT(A) erred in admitting additional evidence and deleting the amounts of ?11,70,000/- and ?11,44,415/- related to sundry creditors. The Assessing Officer (AO) had added these amounts due to the absence of confirmations from suppliers during the assessment. The Ld. CIT(A) admitted the additional evidence after providing the AO an opportunity to respond. The Tribunal found no infirmity in the Ld. CIT(A)’s decision, noting that confirmations were verified and the AO had been given due opportunity. Thus, the deletion of the additions related to Symatic Engineering Pvt. Ltd. and Surya Industries was upheld, while the addition related to Clarke Energy Ltd. was confirmed as no confirmation was furnished.

2. Deletion of Expenses Treated as Capital in Nature:
The AO had disallowed ?1,49,86,193/- of interest expenses, treating them as capital in nature, arguing that the loans were for financing future assets. The Ld. CIT(A) re-computed the disallowance, considering the correct figures of fixed assets and capital work in progress (CWIP). The Tribunal upheld the Ld. CIT(A)’s decision, noting that the AO had used incorrect figures and that the Ld. CIT(A) had correctly computed the disallowance at ?2,01,096/-, with the balance of ?1,47,85,097/- being deleted. The Tribunal found no error in the Ld. CIT(A)’s computation and affirmed the deletion.

3. Deletion of Disallowance Made on Account of Short Payment of TDS:
The AO had made an ad-hoc disallowance of ?1,34,545/- under Section 40(a)(ia) due to short deduction of TDS on legal and professional charges paid to M/s. Gensol Consultants Pvt. Ltd. The Ld. CIT(A) deleted the disallowance, noting that the TDS deduction made in the earlier year by the transferor company had not been considered by the AO. The Tribunal upheld the Ld. CIT(A)’s decision, referencing the Hon’ble Calcutta High Court’s decision in CIT vs. S.K. Tekriwal and the Co-ordinate Bench’s decision in UE Trade Corporation (India) Ltd. vs. DCIT, which held that Section 40(a)(ia) isn’t applicable to short deduction of TDS.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the Ld. CIT(A)’s decisions on all grounds. The deletions of additions related to sundry creditors, interest expenses treated as capital in nature, and disallowance due to short payment of TDS were upheld. The Tribunal found that due process was followed, and the Ld. CIT(A) had correctly interpreted and applied the law.