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2024 (6) TMI 422 - AT - Income TaxAddition based on Form No. 26AS - assessee explained that certain difference was found between the amount received and the TDS credit as per 26AS statement of the assessee and the amount as appearing in the books of accoun t - HELD THAT - As assessee had not denied the quantum of transaction and the TDS of Urbanize Developers India Pvt. Ltd. as reported in Form No. 26AS, rather the difference of TDS of Rs. 1,40,028/- was carried forward in the return. Under the circumstances, the assessee was duty bound to reconcile the difference in the quantum of transaction as per 26AS and as appearing in the books of accounts. The assessee has also not filed any confirmation from Urbanize Developers India Pvt. Ltd. that ledger account appearing in its own account which was filed before the AO, was correct. The ledger account as appearing in the books of the assessee is a self-serving document and it does not explain the difference in transaction as noted in the case of Urbanize Developers India Pvt. Ltd. AO has not made any enquiry from Urbanize Developers India Pvt. Ltd. on the basis of ledger account as filed by the assessee. The matter is, therefore, set aside to the file of the AO to re-examine the matter once again by making necessary enquiry from Urbanize Developers India Pvt. Ltd. The assessee may also be allowed another opportunity to reconcile the difference in respect of Urbanize Developers India Pvt. Ltd. and the AO may decide the matter after making a proper enquiry as indicated above. The ground is allowed for statistical purpose. No wrong with the direction of the CIT(A) to make enquiry from Vijaya Bank and re-decide the matter in respect of difference as appearing in 26AS. Any mismatch between the accounts of the assessee and Form No.26AS has to be properly explained and enquired into. A direction to make specific enquiry from the bank and to re-decide the matter does not tantamount to setting aside the order of the AO. In view of discussions in respect of Ground No.1 as above, the direction of the CIT(A) is held as proper and Ground No.2 is dismissed. Proportionate disallowance u/s. 35AC - assessee has paid a sum to Health Management and Research Institute, Hyderabad (HMRI), an approved institution - approved institute has applied the funds towards ineligible project - AR had contended that for wrong application of funds by the recipient institute, no disallowance can be made in the hand of the donor and he has drawn our attention to Explanation to Section 35AC(2) - HELD THAT - Deduction to the donor cannot be denied even in a case where the approval of the institute is withdrawn after the date of payment by the donor or where the notification in respect of eligible project or scheme is also withdrawn. Thus, the prime requirement for deduction under this section is that the payment is made by an assessee to an approved institute for carrying out any eligible project or scheme. It is found that this condition is fulfilled in the case of the assessee. Merely because the approved institute has applied the funds towards ineligible project or scheme, this cannot be a ground to deny the deduction in the hands of the assessee . The provision of Section 35AC(6) of the Act further stipulates that where the approval granted to the institute is withdrawn or where the approval for project or scheme is withdrawn then the amount received by the approved institute will be treated as deemed income of such approved institute only. It is, thus, crystal clear from this provision that for the default of not spending amount for eligible projects, action can be taken only in the hands of the done institute and not in the hands of the donor. As held in the case of Gujarat Co-op Milk Marketing Federation Ltd. 2014 (2) TMI 79 - GUJARAT HIGH COURT that if the donee trust doesn t fulfil the conditions as stipulated u/s. 80G of the Act, it will not have any effect on the deduction in the hands of the donor. Though, this decision was rendered in the context of deduction u/s. 80G of the Act, the ratio of this decision is equally applicable in respect of deduction u/s. 35AC of the Act. No disallowance of claim u/s. 35AC of the Act should have been made in the hands of the assessee for the default on the part of the approved institute. Accordingly, the addition made on account of proportionate disallowance of claim u/s. 35AC of the Act is deleted. The ground is allowed. Disallowance of guarantee commission - AO disallowed 50% of corporate guarantee commission paid to the associate concern who had extended guarantee for various loans taken by the assessee from HFDC Bank, Kotak Bank, Axis bank, IndusInd Bank SBICAP Trustee Co. etc. - AO found that the rate of guarantee commission was excessive and, therefore, disallowed 50% of the guarantee commission paid, which has been upheld by the Ld. CIT(A) -HELD THAT - AO has treated the guarantee commission as excessive and disallowed 50% of the claim without bringing on record any comparable case. As rightly pointed out by the assessee the onus was on the department to demonstrate that the expenditure incurred was excessive or unreasonable by brining on record guarantee commission payment in comparable cases. AO has also not given any reason for disallowing 50% of guarantee commission payment. Further, the provision of Section 40A(2)(b) of the Act was not invoked before making adhoc disallowance of 50% of guarantee commission. Even in the case where the provision of Section 40A is invoked, the AO has to establish that the expenditure was excessive or unreasonable having regard to fair market value of the payment made or the legitimate needs of the business. The fact that similar guarantee commission was claimed in the past years which was allowed by the department has also not been disputed. The disallowance made by the AO is based on mere assumption and presumption, which cannot be upheld. Accordingly, 50% disallowance out of corporate guarantee commission made by the Revenue is deleted. Short credit of TDS - AR submitted that full credit of tax deducted at source as claimed in the return of income was not allowed by the AO - assessee had filed reconciliation of TDS as per Form 26AS and TDS as claimed in the return - HELD THAT - The assessee had also filed a rectification application u/s. 154 of the Act dated 12.12.2016 for allowing full credit of TDs claim. AO is directed to verify the claim of TDS as made in Income Tax Return and also the re-conciliation statement filed by the assessee. The credit for TDS claim should be allowed in accordance with provision of Section 199 of the Act. The ground is allowed for statistical purpose. Levy of interest u/s.234A - AR submitted that the due date of filing of Income Tax Return for this year was extended by the CBDT - assessee had paid all the taxes within the original due date of filing of return i.e. before 30th September, 2017. Under the circumstances, no interest u/s. 234A of the Act should have been charged - HELD THAT - The due date of filing of return for A.Y. 2014-15 was 30th September, 2014, which was extended by the CBDT. While extending the date of filing of return, interest chargeable u/s. 234A of the Act for late filing of return was still permissible. The Hon ble Gujarat High Court in All Gujarat Federation of Tax Consultants 2014 (9) TMI 784 - GUJARAT HIGH COURT had directed that in case of tax payers who have paid the entire amount of tax on or before 30th September, 2014, no interest for late filing of return may be levied despite their filing of return after 30 September, 2014. As the decision of the Jurisdictional High Court is binding, the department is directed to verify whether the entire amount of tax was paid by the assessee by 30 September, 2014 and if yes, then follow the direction of the Hon ble Court regarding non-charging of interest u/s. 234A of the Act. The ground is allowed for statistical purpose.
Issues Involved:
1. Addition of income based on Form 26AS. 2. Acting beyond powers vested u/s 251 of the Act. 3. Proportionate disallowance of deduction claimed u/s 35AC. 4. Denial of deduction u/s 80G. 5. Disallowance of guarantee commission. 6. Grant of short credit of TDS. 7. Levy of interest u/s 234A. Summary: 1. Addition of Income Based on Form 26AS: The assessee contested the addition of Rs. 14,00,285/- based on a mismatch in Form 26AS. The Tribunal noted that the assessee failed to reconcile the difference and did not provide a confirmation from Urbanize Developers India Pvt. Ltd. The matter was remanded to the AO for re-examination and proper enquiry. The direction of the CIT(A) to verify the transaction with Vijaya Bank was upheld as proper. 2. Acting Beyond Powers Vested u/s 251: The CIT(A)'s direction to the AO to make enquiries regarding the alleged receipt of Rs. 1,35,694/- from Vijaya Bank was challenged. The Tribunal found the direction appropriate and dismissed this ground, emphasizing the need for proper explanation and enquiry into any mismatch between the accounts and Form 26AS. 3. Proportionate Disallowance of Deduction u/s 35AC: The AO disallowed Rs. 2,36,08,173/- of the deduction claimed u/s 35AC, citing that the contribution was spent on non-eligible projects. The Tribunal ruled that the deduction should not be denied to the donor for the recipient's misapplication of funds, referencing Section 35AC(6) and the Gujarat High Court's decision in CIT vs. Gujarat Co-op Milk Marketing Federation Ltd. The disallowance was deleted. 4. Denial of Deduction u/s 80G: This ground was an alternate claim in case the deduction u/s 35AC was not allowed. Since the Tribunal allowed the deduction u/s 35AC, this ground became infructuous and was dismissed. 5. Disallowance of Guarantee Commission: The AO disallowed 50% of the guarantee commission paid to Piramal Enterprises Ltd., deeming it excessive. The Tribunal found no basis for the disallowance, noting the AO's failure to provide comparable cases or invoke Section 40A(2)(b). The disallowance was deleted. 6. Grant of Short Credit of TDS: The assessee claimed short credit of TDS amounting to Rs. 1,57,78,615/-. The Tribunal directed the AO to verify the TDS claim and the reconciliation statement filed by the assessee, allowing the ground for statistical purposes. 7. Levy of Interest u/s 234A: The assessee argued that no interest u/s 234A should be charged as all taxes were paid before the original due date, referencing the Gujarat High Court's decision in All Gujarat Federation of Tax Consultants vs. CBDT. The Tribunal directed the department to verify if taxes were paid by the due date and follow the High Court's direction, allowing the ground for statistical purposes. Conclusion: The appeal was partly allowed, with specific grounds remanded for re-examination and others decided in favor of the assessee.
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