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2023 (10) TMI 186 - AT - Income TaxDeduction u/s 80IC - profit rate of Dehradun unit was found unnaturally at very high level - AO restricted the claim to 50% of the total profit on the ground that details of expenses were not available and could not be verified - HELD THAT - As we find that assessee s case is squarely covered in its favour in own cases 2018 (4) TMI 1118 - ITAT KOLKATA and 2018 (4) TMI 1126 - ITAT KOLKATA by the decisions of the coordinate benches wherein similar issue has been decided in favour of the assessee. The ld. CIT(A) allowed the appeal of the assessee after following the above decisions of the coordinate benches. The facts in the instant assessment year are materially same and, therefore, respectfully following the same, we uphold the order passed by the ld. CIT(A) and dismiss Ground No. 1 raised by the revenue. Disallowance u/s. 40(a)(ia) - Non deduction of TDS on rent paid, consultancy charges and commission - HELD THAT - CIT(A) has passed a speaking and reasoned order giving substantive findings as to how the disallowance is not called for. We note that ld CIT(A) has analysed each and every item of expense and came to a conclusion that provisions of tax deduction at source are not applicable in some cases whereas in some instances in view of the decision of the apex court in the case of Hindustan Coca Cola Beverages P. Ltd. 2007 (8) TMI 12 - SUPREME COURT the provisions of section 40(a)(ia) are not applicable as the payees have returned the said payments in their return of income and paid due taxes. Consequently, we do not find any reason to disturb the findings of the ld. CIT(A) and accordingly Ground No. 2 of the revenue is dismissed. Addition on payments made in cash in violation to provisions of Section 40A(3) - HELD THAT - CIT(A) observed that in a single day, where the payment exceeded Rs. 20,000/-, the same was made by way of account payee cheque or account payee demand draft. CIT(A) observed that the said Section applies to payments made to a single party on a single day. The ld. CIT(A) have recorded a finding of fact that the single day payments to single individual, never exceeded Rs. 20,000/- by way of cash and, therefore, provisions of Section 40A(3) of the Act cannot be applied and correctly deleted the disallowance. Non-payment of dues in terms of provisions of Section 43B - HELD THAT - We observe that none of the cases of outstanding payments/dues were paid beyond the due date of filing of return. We observe from the submissions made and evidences furnished by the assessee and also from the findings given by the ld. CIT(A) in respect all these payments that they were paid within the due date. Since the issue is a factual one, we do not deem it fit to delve further into the issue as all these payments were made before the due date of filing of the return as noted by the ld CIT(A) in his appellate order. Consequently ground is dismissed. Deduction u/s 80G in respect of donations made to three trusts - Addition made as assessee has not offered any explanation and accordingly the same was disallowed - HELD THAT - CIT(A) in the appellate proceedings observed that these donations were made to the trust/institutions which are eligible for deduction u/s 80G of the Act and accordingly restored the issue to the file of the Assessing Officer and directed the Assessing Officer to allow the statutory deduction as per statutory limit prescribed u/s 80G of the Act. We do not find any reason to interfere with this finding of the ld. CIT(A) and accordingly uphold the order of ld CIT(A) on this issue. Consultancy charges paid to three directors of the assessee company over and above the remuneration - HELD THAT - We have also noted the findings of the ld. CIT(A) that these payments were made to the directors for rendering services to the assessee company who were qualified in their respective fields. CIT(A) also noted that while making the payment, the TDS was duly deducted from consultancy charges and these directors were assessed to tax in their personal capacities also. CIT(A) specifically noted that this is not the case of the assessee that the payments made to the directors is excessive and unreasonable. Besides we note that these directors are separately assessed to tax and have duly declared the consultancy charges received from the assessee company and paid due taxes thereon. The finding to this effect has been given by the CIT(A) in his order also. Accordingly, we are inclined to uphold the order of the ld. CIT(A) Bogus and non-genuine commission payments - AO observed from the evidences furnished by the assessee in the form of agreements with these agents to whom commission was paid that assessee has failed to substantiate as to how these persons were rendering their services to the assessee - CIT(A) deleted addition - HELD THAT - We observe that the assessee is engaged in manufacturing and supplying goods to Indian Railways. We note that the assessee has hired services of commission agents for keeping track of the tenders, applying for the tenders, and after the tenders are successfully obtained, the obtaining of supply orders , supply of goods and finally pursuing and receiving payments. We have perused the order of the ld. CIT(A) and observed that the services of these agents are indispensable to do business with Indian Railways. The ld CIT(A) has gone into the commercial angle of these expenses and held that these were incurred for the purpose of business wholly and exclusively. The mere fact that these expenses were outstanding at the year end would not colour them with taint that these expenses are non genuine and bogus. The ld. CIT(A) has taken into account all these aspects while allowing the appeal and passed a very detailed and reasoned order explaining each and every aspect of the issue by noting that similar commission has been paid in the preceding assessment years and was allowed. The ld CIT(A) has noted that these agents are experts in their field and that the assessee has duly explained the services rendered by these agents to the assessee. The ld CIT(A) relied on a series of decisions to justify his conclusion. Decided against revenue.
Issues Involved:
1. Deduction u/s 80IC of the Income-tax Act, 1961. 2. Disallowance for non-deduction of TDS. 3. Disallowance of payments made in cash violating Section 40A(3) of the Act. 4. Disallowance of dues under Section 43B of the Act. 5. Deduction u/s 80G for donations. 6. Disallowance of consultancy charges paid to directors. 7. Disallowance of commission payments. Summary: Issue 1: Deduction u/s 80IC of the Income-tax Act, 1961 The tribunal upheld the CIT(A)'s order allowing the assessee's claim for deduction u/s 80IC, noting that the issue was already decided in favor of the assessee in previous years (AY 2009-10 and AY 2010-11) by the coordinate benches. The facts in the current year were materially the same, and hence, the appeal by the revenue was dismissed. Issue 2: Disallowance for Non-Deduction of TDS The tribunal upheld the CIT(A)'s decision to delete the disallowance of Rs. 11,24,310/- made by the AO for non-deduction of TDS. The CIT(A) provided substantive findings that in several instances, the provisions of tax deduction at source were not applicable or the recipients had already paid due taxes on the income. Issue 3: Disallowance of Payments Made in Cash Violating Section 40A(3) of the Act The tribunal upheld the CIT(A)'s decision to delete the disallowance of Rs. 4,50,028/- for payments exceeding Rs. 20,000/- in cash. The CIT(A) found that none of the payments exceeded Rs. 20,000/- in a single day to a single party by cash, and where payments exceeded Rs. 20,000/-, they were made by account payee cheque or demand draft. Issue 4: Disallowance of Dues Under Section 43B of the Act The tribunal upheld the CIT(A)'s order deleting the disallowance of Rs. 1,92,60,483/- made by the AO under Section 43B. The CIT(A) found that all statutory dues were paid on or before the due date of filing the return, and the appellant had made extra payments against the total liability. Issue 5: Deduction u/s 80G for Donations The tribunal upheld the CIT(A)'s decision to allow the claim of deduction u/s 80G for donations amounting to Rs. 70,089/-. The CIT(A) observed that the donations were made to eligible trusts/institutions and directed the AO to allow the statutory deduction as per the prescribed limit. Issue 6: Disallowance of Consultancy Charges Paid to Directors The tribunal upheld the CIT(A)'s decision to delete the disallowance of Rs. 15,60,000/- paid as consultancy charges to three directors. The CIT(A) found that the payments were justified based on the directors' qualifications and services rendered, and TDS was duly deducted. Issue 7: Disallowance of Commission Payments The tribunal upheld the CIT(A)'s decision to allow commission payments amounting to Rs. 6,61,83,867/- to various entities. The CIT(A) found that the payments were genuine and incurred wholly and exclusively for business purposes. The tribunal also dismissed the revenue's appeal for AY 2011-12 and allowed the assessee's appeal for AY 2012-13, noting that the commission payments were a regular business phenomenon and had been allowed in previous years. General Observation: The tribunal consistently upheld the CIT(A)'s reasoned and detailed orders, finding no justification to disturb the findings, which were in accordance with the provisions of the Act and supported by substantive evidence and prior case law.
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