9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (11) TMI 476 - AT - Income TaxTDS u/s 194C - contract of supply of material/food - non deduction of tds - assessee-company has purchased Chinese food from M/s Zen Chinese Food and sells those Chinese foods to its customers and charges the VAT thereon - Held that - In preceding A.Ys. 2006-2007 and 2007-2008, ITAT, Delhi Bench in the case of assessee dismissed the departmental appeals on the same ground considering the Explanation-III to Section 194C of the I.T. Act noted that the transactions relate to sale of material which cannot be termed as contract for work and labour. Hence, Section 194C is not applicable in assessee s case. Since assessee had paid VAT on sale of goods to its customers, Section 194C of the Act is not applicable. Therefore, provisions of section 40(a)(ia) applied by the A.O. is not justified. Entire addition have been deleted. - Decided in favour of assessee. Addition u/s 14A - absence of any expenditure shown for earning dividend income - Held that - As onus is upon A.O. to record satisfaction that interest bearing funds have been used for investment to earn tax free income . Since no borrowed funds have been used by assessee to make investment, therefore, Ld. CIT(A) correctly deleted the addition - Decided in favour of assessee.
Issues:
1. Disallowance under section 40(a)(ia) of the I.T. Act, 1961. 2. Addition under section 14A of the I.T. Act, 1961. Issue 1: Disallowance under section 40(a)(ia) of the I.T. Act, 1961: The Revenue challenged the deletion of disallowance made under section 40(a)(ia) of the I.T. Act amounting to ?2,33,50,158. The assessee argued that the transactions were of purchase and sale nature, not subject to Section 194C. The Ld. CIT(A) agreed, noting that the transactions were sales of material, not work contracts, and thus, Section 194C did not apply. The Ld. CIT(A) also observed that since the assessee paid VAT on sales, Section 194C was inapplicable. The Tribunal referred to previous decisions supporting the assessee's position and upheld the deletion of the disallowance. Issue 2: Addition under section 14A of the I.T. Act, 1961: The Revenue contested the deletion of an addition of ?68,288 under section 14A of the I.T. Act. The Ld. CIT(A) found that no borrowed funds were used for share investments, hence Rule 8D disallowance did not apply. The Tribunal upheld the Ld. CIT(A)'s decision, citing precedents where disallowance under section 14A was not justified without evidence of expenses for earning dividend income or use of borrowed funds for investments. As the Revenue failed to prove the use of borrowed funds, the deletion of the addition was upheld. In conclusion, the Tribunal dismissed the Revenue's appeal, affirming the decisions of the Ld. CIT(A) on both issues.
|
