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2016 (4) TMI 423

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..... y and exclusively for the purpose of business and the genuineness of the expenses have not been doubted. He has also given a finding that the aggregate amount of ₹ 12,36,224/- had been paid full in subsequent previous year. Before us, Revenue has not brought on record any material to controvert the aforesaid findings of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) - Decided against revenue Addition on account of household withdrawals - Held that:- While deleting the addition made by A.O., ld. CIT(A) has given finding that family members’ cash withdrawals of household expenses were to the tune of ₹ 8,74,006/- over and above other expenses which have been incurred by the assessee that assessee stayed in a joint family under one roof. He has further held that provisions of Section 69 of the Act cannot be invoked when addition is made on estimated basis. Before us, Revenue has not brought on record any material to controvert the aforesaid findings of ld. CIT(A) - Decided against revenue - ITA No. 66/Ahd/2011 - - - Dated:- 9-3-2016 - SHRI ANIL CHATURVEDI, A.M. SHRI KUL BHARAT, J.M. For The Appellant : S .....

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..... any material to prove that the sales were effected through the impugned persons, the discounts were debited on the last day of the accounting year which prima facie appeared to be appropriation of income and that assessee had not received any service. He also noted that aforesaid persons to whom the discounts had been paid were covered u/s.40A(2)(a) of the Act and the payments made were excessive. In the alternate, he was of the view that the discounts were at a fixed percentage and though assessee had used the nomenclature of Discount , the true nature of payment was in the nature of Sales Commission , on which, assessee had not deducted tax u/s.194H of the Act and therefore also the same were liable for disallowance u/s.40A(ia) of the Act. He accordingly disallowed ₹ 22,56,224/-. 4. Aggrieved by the order of A.O., assessee carried the matter before the ld. CIT(A) who deleted the addition by holding as under: 3.1. I have considered the submissions made by the A. R. of the appellant and the observations of the assessing officer in the assessment order. I have also gone through the details produced before me by the A. R. of the appellant. I am inclined to accept the .....

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..... made out any case of the cash discount paid to two parties to be excessive or unreasonable in terms of Section 40A(2b) of the Act, ld. CIT(A) has deleted the addition. We further find that ld. CIT(A) has given a finding that the nature of expenditure was in the nature of cash discount and not in the nature of commission on sales and therefore, assessee was not liable to deduct tax at source u/s. 194H of the Act. Before us, Revenue has not brought on record any material to controvert the aforesaid findings of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A) and thus, this ground of Revenue is dismissed. 7. Ground no.2 is with respect to deleting the addition of ₹ 12,36,224/- on account of overhead expenses. 7.1 A.O. on perusing the various expenses accounts, like, Advertising and Modelling , Sales Promotion , Packing Expenses etc., noticed that assessee had debited various sums under the respective heads and credited the account of Harra , which was a proprietary concern of Shri Mahendrabhai, brother of assessee. He also noticed that the business premises of the assessee and Harra were same. A.O. was of the vie .....

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..... ₹ 12,36,224/- which remained outstanding at the end of the previous year relevant to A.Y. 2007-08 has been paid in full in the subsequent previous year. 4.1.5. On careful perusal of the details produced before me by the A. R. of the appellant it is seen that no such disallowance has been made in earlier A.Y. 2006-07 for which the assessment was completed u/s 143(3) vide order dt. 31-12-2008 on the similar facts. 4.1.6. In the light of the above discussion, I am of the view that the assessing officer is not justified in making the addition ₹ 12,36,224/- on account of various expenses credited to Hara . The A.O.is directed to delete the addition made by him. This ground of appeal is allowed. 9. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us. 9.1 Before us, ld. D.R. supported the order of A.O., on the other hand, ld. A.R. reiterated the submissions made before the ld. A.O. and ld. CIT(A) and supported the order of ld. CIT(A). 10. We have heard the rival submissions and perused the material on record. We find that while deleting the addition made by A.O., ld. CIT(A) has given finding that the expenses aggregating to ₹ .....

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..... I am of considered view that the withdrawals made by the Appellant and his family members are sufficient enough for the size of the family who are staying with the appellant. Further, the provisions of section 69 cannot be invoked when addition is made on estimation basis. The provisions of section 69 can be invoked only in case where the expenditure has been incurred by the assessee and he fails to offer explanation about source of such expenditure or part thereof. In these circumstances, I am of the view that the A.O.is not justified in making addition on account of unexplained House-hold expenditure. The addition made by the A.O. of ₹ 6,36,000/- is deleted. 13. Aggrieved by the order of ld. CIT(A), Revenue is now in appeal before us. 13.1 Before us, ld. D.R. supported the order of A.O., on the other hand, ld. A.R. reiterated the submissions made before the ld. A.O. and ld. CIT(A) and supported the order of ld. CIT(A). 14. We have heard the rival submissions and perused the material on record. We find that while deleting the addition made by A.O., ld. CIT(A) has given finding that family members cash withdrawals of household expenses were to the tune of ₹ .....

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