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TMI Blog2012 (11) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... g the labours and taking them to the site and transporting them back to the Camp. It was thus that they have to devote additional one hour for this trip either way. It was under this circumstance that more amount had to be paid. This is the practice in all the years in past. It is therefore submitted that there is no basis for making addition of Rs.35,200/- u/s. 40A(2)(b) of-the I.T. Act and the same be deleted." 3. As per ground No.1, the assessee is disputing regarding disallowance of Rs.35,200/- u/s 40A(2)(b) in respect of payment made by the assessee to the partners for hiring the tractors. 4. It is submitted by the Ld. A.R. that the A.O. in para 4 of the assessment order, has stated that hire charges had been paid to the independent contractors also and there is difference between the payments made to outside contractors and the partners and on this basis, he has made disallowance without considering this explanation of the assessee that the rates of tractor per trip paid by the assessee to the partners and to outsiders are the same if it is calculated on per hour basis and because the tractors of the partners were used for more hours, the payment to them is higher. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee advances to these two parties i.e. Bhagyodaya Tiles and Mahalaxmi Quarry Works were given out of interest free funds available with the assessee. Regarding interest free funds available with the assessee as on 31.03.2003, it was submitted that it comprises of partners' capital of Rs.29,37,803/- and creditors Rs.9,08,660/-. A querry was raised by the bench as to whether any interest was paid to the partners on the capital and in reply, it was submitted that interest was paid to the partners of Rs.2,48,336/-. Regarding various judgements cited by the Ld. A.R., we feel that none of these judgements is of any help to the assessee since the facts of the present case are different as the assessee could not bring any evidence that interest free funds were available with the assessee to give interest free advances and hence these judgments are not being discussed for the sake of brevity. 8. Ld. D.R. supported the orders of authorities below. 9. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that this is the only argument before us that these advances were given out of interest free funds av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant submits that looking to the fact that the appellant is situated at Bajwa, which is an out of way place and hence telephone expenses and vehicle expenses were necessary for the purpose of business. Merely presuming and making an ad-hoc disallowance at 10% is not justified and the addition may kindly be deleted." 13. It is submitted by the Ld. A.R. that disallowance is excessive but we are of the considered opinion that 10% disallowance out of vehicle running expenses and maintenance and telephone expenses is reasonable and hence, we do not interfere in the order of Ld. CIT(A) on this issue. Ground No.4 is rejected. 14. In the result, appeal of the assessee is partly allowed. 15. Now, we take up the appeal of the assessee for the assessment year 2004-05 in I.T.A.No. 3152/Ahd/2008. 16. Ground No.1 is as under: "1. The learned C.I.T.(Appeals) has erred in confirming the disallowance at 1% of the expenses out of diesel purchase, oil and grease, repairs and maintenance, octroi, freight and cartage expenses. The appellant submits that full details are maintained and are available in the account and therefore, there is no justification f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. It is submitted that these are normal business expenses especially when amounts are paid for the benefit of staff use. Under the circumstances there is no justification for making the disallowance and the addition may kindly be deleted." 21. It is admitted by both the sides that this issue is similar to ground No.4 in assessment year 2003-04 and the same can be decided on similar lines. In that year, we have confirmed this disallowance and hence, in this year also, this ground is rejected. 22. Ground No.3 is as under: "3. The learned C.I.T.(A) has erred in confirming the disallowance of interest out of interest-bearing funds. The same has been done because the amounts were advanced to M/s Bhagyodaya Tiles Factory. The amount given earlier year and carried forward was of Rs.10,34,659/- and the closing balance was Rs.11,88,214/-. This shows that there is a usual practice to give such advances. In the case of another party Shri Mahalaxmi Quarry Works the amount of Rs.3,95,818/- was the opening debit balance given to the party and the amount has been given during the year. Under the circumstances the disallowance made at Rs. 2,25,247/- is not justified an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,35,523/-." 28. From the above para of the order of Ld. CIT (A), we find that a clear finding is given by Ld. CIT(A) that these advances are not given for business purposes but the same are given because the persons were related to the assessee and advances were given for non business consideration. The Ld. A.R. could not controvert this specific finding of Ld. CIT(A) and hence, we decline to interfere in the order of Ld. CIT(A) on this issue also. This ground is also rejected. 29. Ground no.5 is as under: "5. The learned C.I.T.(Appeals) erred in confirming the disallowance of Rs.40,6427- being belated payment towards Employees' contribution to Provident Fund. The amount was paid as per statutory obligation for the purpose of business and therefore there is no justification for disallowing the same." 30. Both the side agreed that this issue is identical to ground NO.3 in assessment year 2003-04. In that year, this issue has been decided by us in favour of the assessee by following judgment of Hon'ble Apex Court and on similar lines, in this year also, this issue is decided in favour of the assessee. This ground is allowed. 31. Ground No.6 is as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of Ld. CIT(A). He has submitted that a clear finding is given by Ld. CIT(A) in para 8.2 of his order that this amount was borrowed by the assessee from Lloyed Finance in financial year 1997-98 and there is no borrowing in this year. Under these facts, we do not find any reason to interfere in the order of ld. CIT(A) on this issue. This ground is also rejected. 40. In the result, appeal of the revenue is dismissed. 41. Now, we take up the assessee's appeal for assessment year 2005-06 in I.T.A.No. 845/Ahd/2009. 42. Ground No.1 is as under: "1. The learned C.I.T. (Appeals) has erred both in law and on facts in confirming the disallowance of Rs. 65.500/- with regard to the expenses on Diesel, Oil and Grease, repairs and maintenance, Tractor carting charges and Transport & carting expenses at the rate of "\% of the total of above expenses. On the facts and circumstances of the case there being no specific item of disallowable nature pointed by the Assessing Officer, addition/disallowance ought to have been deleted in toto. It be so held now and the addition of Rs. 65,500/- confirmed by C.I.T. (Appeals) be deleted." 43. It is agreed by both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that the amendment in Section 40(a)(ia) is not retrospective. In reply, Ld. A.R. had nothing to say. Ld. D.R. of the revenue supported the orders of authorities below and he placed reliance on the decision of Special bench of the Tribunal cited above. 48. We have considered the rival submissions, perused the material on record and have gone through the orders of authorities below. We find that it is noted by the A.O. that the assessee has not made payment of TDS as per the requirement of Section 40(a)(ia) of the Act. As per the provisions of Section 40(a)(ia) in the relevant period, the assessee could have made payment of TDS till the due date of filing of return of income for those TDS, which were deductible and was also deducted during the last month of the previous year and for the remaining amount, the TDS was required to be paid before the last day of the previous year. Nothing has been brought on record before the authorities below or before us regarding this fact that TDS was paid before the due date of filing of return of income and such TDS was deductible and so deducted in last month of the financial year 2004-05. Under these facts, we find that this issue is cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es that this issue is identical to ground no.4 in assessment year 2004-05 and the same can be decided on similar lines. In that year, this issue was decided by us against the assessee and hence, in this year also, this ground of the assessee is rejected. 55. Ground No.7 is as under: "7. The learned C.I.T. (Appeals) has erred both in law and on facts in confirming the disallowance of Rs.79,325/- in respect of payment of Provident Funds inasmuch as payment is already made mostly within the previous year and also before due date of filing the return as narrated in Para 8.1 of the C.I.T.(Appeals)'s order. In view of the amendment to section 43B, the disallowance ought not to have been made. It be so held now and the disallowance be deleted." 56. Both the sides agreed that this issue is identical to ground no.5 in assessment year 2004-05 and the same can be decided on similar lines. In that year, this issue has been decided by us in favour of the assessee by following the judgment of Hon'ble Apex Court cited by the Ld. A.R. On the same lines, in this year also, this issue is decided in favour of the assessee and this ground is allowed. 57. Ground No.8 is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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