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2021 (6) TMI 258 - AT - Income TaxDisallowance u/s 40A(3) - freight payments made to transporters and truck operator inter-alia for purchase of paddy - HELD THAT - This issue is already covered against the assessee in assessee s own case in A.Y. 2008-09 2021 (1) TMI 783 - ITAT DELHI wherein the Tribunal upheld the disallowance under Section 40A(3) to the extent of Freight payments made to transporters and truck operator .In the present assessment year i.e. 2009-10 also there is no distinguishing facts brought out by the assessee. Thus, this addition is sustained Disallowance being depreciation on capital expenditure - This aspect is covered in favour of the assessee in assessee s own case for A.Y. 2008-09 I 2021 (1) TMI 783 - ITAT DELHI . Disallowance u/s 14A read with Rule 8D - HELD THAT - In the present case, the satisfaction is recorded while invoking Rule 8D of the Income Tax Rules, 1962. But the Assessing Officer considered exempt income earned as share in profit from partnership firm for the purpose of disallowance under Section 14A of the Act. The investments was made out of own funds and not borrowed funds and therefore, the assessee has not made any disallowance out of interest expenditure. AR s contentions that under Rule 8D (2)(iii), what is disallowable is an amount equal to percentage of the average value of investment, the income from which does not or shall not form part of the total income, is right. Therefore, as per the chart given by the Ld. AR, at the time of hearing, we direct the AO to verify the same and thereafter restrict the disallowance only if the contentions of the assessee are found correct, otherwise proceed according to the provisions of Income Tax Act and Rules. Disallowance of expenses on account of non deduction and short deduction of TDS u/s 40(a)(ia) - HELD THAT - As the issue relating to non deduction of TDS is decided against the assessee in its own case for A.Y. 2008-09 wherein the Tribunal while relying upon the decision of Hon ble Supreme Court in case of Shree Choudhary Transport Compan 2020 (8) TMI 23 - SUPREME COURT held that the amendment made to provisions of Section 40(a)(ia) of the Act vide Finance Act, 2014 do not have retrospective application and thus, confirmed the disallowance made by the Assessing Officer under Section 40(a)(ia) of the Act. Non-deduction of TDS is decided against the assessee in this year as well as the facts are identical in the present assessment year. As regards to short-deduction of TDS, the Ld. AR submitted that the issue is covered in assessee s own case by the Tribunal in A.Y. 2008-09 in ITA No. 4158/Del/2013 vide order dated 19.01.20121 wherein it is held that no disallowance under Section 40(a)(ia) is sustainable in cases of short-deduction of TDS. Thus, the issue relating to disallowance on account of short deduction of TDS is allowed. Hence, Ground No. 10 to 13 are partly allowed. Addition on account of alleged undisclosed sales/difference in stock valuations - HELD THAT - There was no discrepancy revealed in sales or purchase of the company during the course of search as per the books of accounts and stock. In fact, the stock registers, reveals that the opening stock and closing stock completely tallied with the stock and closing stock as certified in the tax audit report. Even sales tax department has accepted the sales made by the assessee during the year under consideration and no adverse inference has been drawn on this account. The books of accounts have also been statutorily audited with no adverse comments by the auditors. The assessee is following consistent method of valuation of stock which is in accordance with the well accepted principle of accounting propounded by the ICAI, and also has been approved/accepted for the purpose of the computing the taxable income by various Courts and Tribunals from time to time - no evidence for undisclosed sale which was pointed out by the Assessing Officer or by the CIT(A) in their respective orders. Thus, the addition made by the Assessing Officer which was confirmed by the CIT(A) does not sustain. Ground No. 15 to 17 are allowed. Deduction u/s 80IB (11A) - HELD THAT - CIT(A) has rightly allowed the claim of deduction under Section 80IB(11A) of the Act. It is pertinent to note that all the conditions which have been stipulated in the statute have been fulfilled i.e. all the three activities of handling, storing and transportation have been undertaken on an integrated basis by the assessee.
Issues Involved:
1. Deletion of addition under Section 69. 2. Deletion of 50% of the total addition by applying the G.P. rate on undisclosed sales. 3. Deduction under Section 80IB(11A) of the Income Tax Act, 1961. 4. Disallowance under Section 40A(3) of the Income Tax Act, 1961. 5. Disallowance under Section 14A read with Rule 8D. 6. Disallowance of expenses on account of non-deduction and short-deduction of TDS under Section 40(a)(ia). 7. Addition on account of alleged undisclosed sales/difference in stock valuation. Detailed Analysis: 1. Deletion of Addition under Section 69: The Revenue's appeal contended that the CIT(A) erred in deleting the addition of ?49,04,354 made by the Assessing Officer under Section 69. The Tribunal observed that this issue was already addressed under Section 40A(3) in the assessee's appeal and dismissed the Revenue's ground as redundant. 2. Deletion of 50% of the Total Addition by Applying the G.P. Rate on Undisclosed Sales: The Tribunal found that the issue of undisclosed sales/difference in stock valuation was connected to the assessee's grounds 15 to 17, which were decided in favor of the assessee. Therefore, the Revenue's ground on this issue was dismissed. 3. Deduction under Section 80IB(11A): The Revenue argued that the CIT(A) erred in allowing the deduction under Section 80IB(11A). The Tribunal upheld the CIT(A)'s decision, noting that the assessee demonstrated that it met the conditions for integrated business of handling, storage, and transportation of food grains. The Tribunal referenced a similar case of L T Foods Ltd., where the deduction was allowed. Hence, the Revenue's grounds 3 to 5 were dismissed. 4. Disallowance under Section 40A(3): The assessee's appeal included grounds 6 and 7, challenging the disallowance under Section 40A(3) for payments made to transporters and truck operators. The Tribunal noted that this issue was previously decided against the assessee for A.Y. 2008-09 and upheld the disallowance for ?5,58,296. However, disallowance for ?66,333 (depreciation on capital expenditure) was allowed based on the assessee's own case for A.Y. 2008-09. Therefore, the grounds were partly allowed. 5. Disallowance under Section 14A read with Rule 8D: The assessee contested the disallowance of ?5,10,020 under Section 14A read with Rule 8D. The Tribunal directed the Assessing Officer to verify the assessee's claim that the disallowance should be restricted to ?23,264, based on the average value of investments yielding exempt income. The grounds were partly allowed for statistical purposes. 6. Disallowance of Expenses on Account of Non-Deduction and Short-Deduction of TDS under Section 40(a)(ia): The assessee challenged the disallowance of expenses due to non-deduction and short-deduction of TDS. The Tribunal upheld the disallowance for non-deduction of TDS, referencing the Supreme Court's decision in Shree Choudhary Transport Company. However, it allowed the grounds related to short-deduction of TDS, citing the Tribunal's decision in the assessee's own case for A.Y. 2008-09. The grounds were partly allowed. 7. Addition on Account of Alleged Undisclosed Sales/Difference in Stock Valuation: The assessee disputed the addition of ?72,06,659 for alleged undisclosed sales/difference in stock valuation. The Tribunal found that the books of accounts were accepted, and the stock tallying with the balance sheet was not disputed. The Tribunal noted that the addition was based on assumptions and not on actual discrepancies. Consequently, the grounds were allowed in favor of the assessee. Conclusion: The assessee's appeal was partly allowed, and the Revenue's appeal was dismissed. The Tribunal provided detailed reasoning for each issue, emphasizing the importance of proper verification and adherence to legal standards. The order was pronounced on June 7, 2021.
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