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TMI Blog2013 (9) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... onable opportunity of being heard to the A.O. and pass necessary order as per law - Decided in favour of assesee. - ITA No. 1211/Ahd/2008 & 1257/Ahd/2012 and ITA No. 2101/A hd/2008 - - - Dated:- 2-9-2013 - Shri G.C.Gupta and and Shri T.R. Meena, JJ. For the Appellant: Shri J. P. Jhangid, Sr. D.R. For the Respondent: Shri Manish J. Shah, A.R. ORDER PER : Shri T.R.Meena, Accountant Member These three appeals, two filed by assessee and one filed by the Revenue, emanated from the orders of ld. Commission er of Income-Tax (Appeals)-VIII, Ahmedabad, dated 12.03.2008 in ITA Nos. 1211 2101/Ahd/2008 and order dated 26.04.2012 in ITA No. 1257 Ahd 2012 for the assessment year 2005-06. The issues and arguments in all appeals are same. Therefore, we are deciding all in a consoled ate order for the sake of convenience. The grounds of all appeals are as under:- ITA No. 1211/Ahd/2008 (Assessee s Appeal) 1. Your appellant being aggrieved by the order passed by Learned C.I.T. (Appeals)-VIII, Ahmadabad, dated 12.03.2008, presents this appeal on following grounds. 2. The Learned C.I.T. (Appeals)-VIII, Ahmadabad has erred in confirming Rs.22,97,336/- being Reimburseme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e , which was replied by the appellant. The contention of the assessee company considered by the A.O. and held that provisions of Section 194C, during the year aggregate amount of payment made to each payee exceeds Rs.50,000/- tax at source should be deducted. The assessee is in manufacturing of plastic processing machinery. According to Circular no. 715 dated 08.08.1995, issued by the Board on the subject, the sum paid as reimbursement cannot be deducted out of the bill amount for the purpose of tax deduction at source. Robinson Air Services had issued their bills in which separate bills for reimbursement had not been raised. Also supporting vouchers/evidences for the reimbursement are also not given. In view of the facts, the assessee company was required to deduct tax on the gross bills amount in respect of payment made. The assessee had failed to deduct tax on the payments made to Robinson Air Services amounting to Rs.22,97,337/-. Thus, this is not allowable u/s. 40(a)(ia) of the IT Act. 3. Being aggrieved by the order of the A.O., the assessee carried the matter before CIT(A) who had confirmed the finding of the A.O. by observing as under: 8. I have considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition of Rs. 11,22,513/- being interest expenses u/s. 36(1)(iii) and administrative expenses of Rs.20,000/- u/s. 14A. The A.O. found that as per Schedule 7 of the balance sheet, the appellant company had made investment in shares of companies under the same management totaling to Rs.4,47,88,116/-. The assessee company had shown dividend income from said investments which were exempted under the provisions of the IT Act. The proportionate interest expenses and administrative expenses had not been disallowed by the appellant. Therefore, A.O. gave reasonable opportunity of being heard, which was replied by the appellant. But the appellant had not furnished the details and evidences showing source of investment of the funds from which the investment have been made. In absence of any specific details of source of investment, it could be inferred that the assessee company had invested interest bearing funds for making the investments. He further relied in case of Harish Krishnakant Bhatt vs. ITO (2004) 91 ITD 311 (Ahd). He worked out proportionate expenditure at Rs. 56,57,827/- u/s. 14A and held that expenses to the extent of Rs. 56,57,827/- were not incurred for the purpose of busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears upto F.Y.1997-98 i.e. from F.Y. 1991-92 to 97-98 and the same has been made out of the private placement of capital of Rs.2.16 crores and internal accruals. Therefore, proportionate disallowance should be made only for investment of Rs.1.44 crores in the wholly owned subsidiary. The A.R. has given a working and has submitted a copy of sanction letter from SBI, Vatva Branch dated 31.10.2003 for sanction of Rs.3 crores corporate loan out of which Rs.1 crore was to be deployed for investment in wholly owned US subsidiary, as per clause 19, thus investment of Rs.1 crore in the wholly owned subsidiary has been made out of the corporate loan of Rs.3 crores from SBI, and the A.R. has given a working of interest on this loan for the relevant financial year. The balance investment of Rs.44,18,616/- in the subsidiary company has been stated to be out of internal accruals. The total interest liability for F.Y.2004-05 worked out by the A.R. is of Rs.33,67,538/- on loan of Rs.3 crores, therefore, for investment of Rs.1 crore in the wholly owned US subsidiary, the proportionate interest liability would be 1/3rd of the same which comes to Rs.11,22,513/-. As per the said working and the detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), had been furnished to the A.O. at the time of assessment proceeding, as per paper book submitted by the appellant on page nos. 1 to 4 5 to 8 i.e. written submission. It is also evident from the order of the CIT(A) that he has not allowed any opportunity to the A.O. on the additional evidence admitted by him during the course of appellate proceeding. Thus, in the interest of justice, on this issue, we set aside the order of the CIT(A) for de novo and also directed to allow reasonable opportunity of being heard to the A.O. and pass necessary order as per law. Ground no.3 of the assessee s appeal and ground no. 3 4 of Revenues appeal is set aside. 10. In the result, assessee s appeal is partly allowed. Now, we take I.T.A. No. 2101 /Ahd/ 2008 (Revenue s Appeal) 11. Ground nos. 1 2 of the Revenue s appeal are against disallowance made by ld. CIT(A) out of prior period expenses of Rs.1,17,138/- to Rs. 1,000/-. The assessee company had paid Rs.1,13,106/- for service tax and Rs. 3,832/- towards interest and penalty and debited the expenditure in the Excise expenses Account. The expenses claimed pertained to financial year 2003-04 relevant to A.Y. 2004-05. On this issue, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 43,31,780/-. The appellant had furnished inaccurate particulars of Rs.37,90,670/- tax on income was worked out at Rs.13,87,101/-. He imposed minimum penalty i.e. 100% of tax sought to be evaded at Rs. 13,87,101/- u/s. 271(1)(C) of the IT Act. 14. Being aggrieved by the order of the A.O., the assessee carried the matter before CIT(A) who had partly allowed the appeal by observing that he had not accepted assessee s claim that mere making of claim which is not substantiable in law by itself will not amount to furnish inaccurate particulars regarding income of the assessee. After considering the decision of Hon ble Apex Court in case of CIT vs. Reliance Petro Products (P) Ltd. (2010) 322 ITR 158, wherein it was held that where more than one view can be taken for any issue that cannot be said to be concealment of income or furnishing of the inaccurate income. But, it is not applicable in case of assessee as assessee has not deducted TDS on payments made. He further relied in case of CIT vs. Zoom Communication (P) Ltd. 40 DTR (Del) 249. Thus, he confirmed the penalty order partly. 15. Now the assessee is before us. Ld. Counsel for the appellant argued that all the additions made ..... 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