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TMI Blog2016 (10) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... ained for the purpose of Assessee's business. iv) deleting the disallowance u/s.40A(2)(b) of the Act of Rs. 71,631/- made on account of interest on account of higher rate of interest paid to related party as compared to non related parties without any provable Jurisdiction. v) deleting the addition of Rs. 47,228/- made on account of late payment of employees contribution to PF/ESI , not covered u/s.43B of the Act. 3. At the outset, both the parties agreed that the Ground No.5 in respect of payment of employee's contribution to PF/ESI is covered against the assessee by the judgment of Hon'ble Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation reported in (2014) 366 ITR 170 (Guj). Consequently, this ground of the Revenue is allowed. 4. Brief facts are - the assessee-company is engaged in the business of manufacturing of packing materials. During the course of assessment proceedings, assessee was asked to explain in respect of the additions in questions. The assessee vide its reply dated 18.12.2012 explained the same. The Assessing Officer, however, was not satisfied and made the additions. 5. Aggrieved, the assessee preferred first appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO and the appellant is before CIT(A) for adjudication. The loss is fully confirmed by the Excise Department. The working of reduction of loss from one valuation to another is due to adjustment in it as per opinion of Excise Department and findings containing in RG-23 which was field with AO. This was also not the loss claimed on loss of capital item such as building(s) etc. The loss is finally assessed by insurance company at lesser value than actual for reason unknown and it is common knowledge that insurance company as per their business practice never allow full loss to be assessed / reimbursed. It is my opinion that loss of stock was much higher but figures were pruned as per entries in RG-23 and same required to be respected. As per ratio laid down by Hon'ble Madras High Court in the case of CIT Vs. Anandha Metal Corporation [188 Taxman 481 (Mad.)], calculation of closing stock by Sales Tax Authorities is binding on Income Tax Authorities. The claim is supported by evidences such as Excise Cenvat / Panchnama and audited books of account. No fault is pointed out by AO in audited books of account of the appellant. The has not questioned the genuineness of the claim but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remains that loss for 3300 cylinders was originally computed at Rs. 4,99,00,000/- and the insurance claim passed is of only Rs. 22,32,578/- and claim of Rs. 22,32,578/-- is only allowed by AO as same is accounted as income of appellant in next Assessment Years. Appellant has accounted cylinder loss in books of account at Rs. 76,45,315/- which is as per Audit Report. No adverse findings about the audited accounts by AO. Even if all the benefit of doubt avoided, the claim of Rs. 39,74,201/-- was not allowed by insurance company simply because the same stock was not covered under insurance policy. However, the loss of Rs. 39,74,201/- is getting confirmed in the computational papers of insurance company. The loss is as per third party duly confirmed by auditor. The AO has not questioned the genuineness of the claim but allowed the claim to the extent passed by the insurance company. There has been insurance claim and the amount received from insurance company has been credited in books of accounts. This is stark reality as the cross-verification is not possible for something which has lost in fire. But how one can assume that fire engulfed only part of cylinders and not the cylinder n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS and portion relating to reimbursement / non-TDS are clearly discernible. The details are culled out and reproduced in tabular form below:- Name of CHA Contract Service TDS Reimbursement TDS Amt.Rs. Amt.Rs. Amt. Rs. Amt.Rs. Preeti Clearing Agency 15031 339 186921 0 Preeti Farieight Pvt. Ltd. 205415 4406 1212609 0 Translog Express Pvt. Ltd. 244618 4820 1 007443 0 Liladhar Pasoo Forward Pvt. Ltd. 66180 1324 111147 0 TOTAL 531244 10889 2518120 0 As can be seen above, the appellant has been careful in deducting TDS for the amount paid as contract services. So far as, reimbursement of Rs. 25,18,120/- is concerned, the appellant has considered opinion that it is not amenable to TDS provisions. The issue, therefore, is whether TDS should have been deducted on reimbursement of expenses or not. The charging section 4 of I. T. Act 1967 says "(1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year "in accordance with, and [subject to the provisions (including provisions for the levy of additional income-tax of, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue was applicable only in the cases where bills are raised for the gross amount inclusive of professional fees as well as reimbursement of actual expenses and the same, therefore, was not applicable to the facts of the present case where bills were raised separately by the consultants for reimbursement of actual expenses incurred by them. As such, considering all the facts of the case, the provisions of section 194J were not applicable to the reimbursement of actual expenses and the assessee-company was not liable to deduct tax at source from such reimbursement. Thus, the impugned order of the Commissioner (Appeals) was upheld. The AO is, therefore, directed to be deleted the disallowance of Rs. 25,18,121/-. The ground of appeal is accordingly allowed." 6.1 Ld. Departmental Representative supported the order of the Assessing Officer. 6.2 On the other hand, ld. Counsel for the assessee contends that the amount paid in question clearly amounts to reimbursement of expenses which cannot be held as any payment of income made by the assessee liable for TDS. Reliance is placed on the order of Mumbai High Court in the case of Information Architects (supra), ITAT Jodhpur Bench decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OB Dt. 12.01.11 Rs.57457, Chq. No. 223, BOB Dt. 28.03.11 5 PR Shah 37,Sweet Home Society, Ambavadi, Ahmedabad (Gujarat) ACIPS7111 G 156059.00 15803.00 140256.00 Rs.150000, Chq.No. 737, BOB Dtd. 07.10.10 6 Harshit Dalai 37,Sweet Home Society, Ambavadi, Ahmedabad (Gujarat) AJHPD 7286 K 202321.00 20232.00 182089.00 Rs.150000, Chq.No.725, BOB Dtd. 01.10.10 Rs.32089, Chq. No.222, BOB, Dtd. 28.03.11 7. Hiten Ranghani A-4 103, Yogi Palace, Yogi Nagar, Eksar Road, Boriwali West, Mumbai-400092. AFKPR7313C 22000.00 1133.00 20867.00 Rs.11014, Chq. No.640, BOB, Dtd. 18.05.2009 Rs. 10000, Chq. No.513, BOB, Dtd. 20.06.2009 8. Samir Samant B-6, Nandadeep, Opp. Bhagwati Hospital, SVPRoad, Boriwali West, Mumbai-400103 AFBPS0886A 18108.00 932.00 17176.00 Rs. 16243, Chq. No.539, BOB, Dtd.29.07.2009 The commission paid to above 8 commission agents comes to Rs. 8,31,013/-. The appellant was asked to reconcile as this figure is less by an amount of Rs. 28,375/-, if compared with the total disallowance. A letter dated 13/06/2013 filed saying that no TDS was deducted for following two commission agents: SI. No. Name of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ences for the department and taken decision based on presumptions and not on the facts on record. The ground of appeal for commission expenses of Rs. 8,31,013/- is allowed and the rest is confirmed. The ground of appeal is accordingly partly allowed." 7.1 Ld. Departmental Representative relied on the order of the Assessing Officer. 7.2 Ld. Counsel for the assessee, on the other hand, contends that the assessee has submitted all the relevant details about the genuineness of commission agents in the form of full addresses of the commission agents, their PAN, details of the cheque through which the amount paid and the amount of TDS deducted. The services rendered by these commission agents have been explained. A plethora of evidence filed by the assessee has not been rebutted and instead, on surmises and conjectures, the commission has been disallowed. Ld. CIT(A) has categorically held that the ld. AO has not substantiated its allegations that the commission was bogus or not corroborated by evidence. The order of the ld. CIT(A) is relied on. 7.3 I have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. From t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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