2023 (5) TMI 117 - AT - Income Tax

Disallowance of transport expense - HELD THAT - As assessee has provided PAN of the transporter and the details of transport expenses. The genuineness of said expense is not doubted either by Assessing Officer or Ld. CIT(A). As per Section 194C(6) that the assessee has provided PAN of the transporter and the transaction is not disputed and no disallowances of such transport expense is warranted. Similarly, the view taken in the case of South India Freight Carriers 2019 (12) TMI 363 - ITAT BANGALORE . Interest disallowance on account of interest paid to three parties - As find that assessee has filed copy of ITR of recipients of the interest along with certificate of Chartered Accountant as required Rule 31ACB in Form 26A. Therefore, this part of ground is allowed subject to verification by Assessing Officer. This part ground of assessee is allowed in above terms. Disallowance of machines salary expense - assessee submits that Assessing Officer disallowed 20% of machine salary expenses, which was restricted to 10% by Ld. CIT(A) - assessee further submits that lower authorities disallowed the expense without doubting genuineness of such expenses and assessee filed cash book for such expense - HELD THAT - As assessee has shown expense of Rs.24.69 lakh, which was paid in cash and no justification was given before AO. AO reasonably disallowed only 20%. The Ld. CIT(A) further reduced it to 10%, thereby granted further relief of 50%. Entire expense assessee has shown in cash. Therefore, no reason to interfere with the finding of Ld. CIT(A). This ground of assessee s appeal is dismissed. Disallowance of interest expense u/s 57 - assessee submits that Assessing Officer made addition by taking view that assessee has not furnished any details and Ld. CIT(A) confirmed the action of Assessing Officer by holding that no certificate as per Rule 31ACB in Form 26A is furnished - HELD THAT - As the assessee failed to prove the nexus between the interest income offered in the return of interest expense made. Thus, this ground of appeal is dismissed.

Summary

Issues Involved:
The judgment involves issues related to disallowance under section 40(a)(ia) of the Income Tax Act, disallowance of machinery salary expenses, and disallowance of interest expenses claimed under section 57 of the Act.

Disallowance under Section 40(a)(ia):
The appeal by the assessee was against the order of the Ld. Commissioner of Income-Tax (Appeals) confirming the action of the Assessing Officer in making a disallowance of Rs.3,45,378/- under section 40(a)(ia) of the IT Act 1961. The assessee had not deducted Taxes at Sources (TDS) on various expenses, leading to the disallowance. The Ld. CIT(A) partially confirmed the disallowance, holding that the conditions for relief under proviso to Section 40(a)(ia) were not met due to the absence of required certificates. The addition on transport expenses was upheld due to insufficient evidence provided by the assessee.

Disallowance of Machinery Salary Expenses:
The Assessing Officer disallowed 20% of the machinery salary expenses, which was later restricted to 10% by the Ld. CIT(A). The Ld. AR for the assessee argued for the deletion of the entire disallowance, stating that the lower authorities had not doubted the genuineness of the expenses. However, the Tribunal upheld the 10% disallowance, finding that the Assessing Officer had validly disallowed the expense due to lack of justification provided by the assessee.

Disallowance of Interest Expenses under Section 57:
The Assessing Officer disallowed interest expenses claimed under section 57 of the Act, as the assessee failed to furnish required certificates. The Ld. CIT(A) confirmed this disallowance, emphasizing the lack of evidence proving the nexus between interest income and expenses. The Tribunal dismissed the appeal on this ground, as the assessee could not establish the connection between the interest income offered and the interest expenses claimed.