9911796707
TMI Blog2018 (2) TMI 431X X X X Extracts X X X X X X X X Extracts X X X X ..... not be made. The assessee stated vide its letter dated 08.10.2011 that no exempt income was earned in the year under consideration and the provision of section 14A is not applicable to the issue on hand. The AO by placing reliance on the decision of ITAT, Delhi in the case of Chem Invest Ltd. vs ITO determined the expenses to be disallowed in spite of having no exempt income earned by invoking Rule 8D(2) of Income Tax Rules, 1962 and Rs. 30,186/- was added to the total income of the assessee. Aggrieved the assessee before the CIT(A) contended all the investments are brought forward from earlier years accounts and the same were made from assessee's own capital. The AO examined the books of accounts, bank statement and other details produced before him and arbitrarily disallowed the impugned addition u/s 14A of the Act, disallowed the said amount by invoking Rule 8D(2) of the Income Tax Rules, 1962. The Ld. CIT(A) considering the decision of Hon'ble High Court of Delhi in the case of Chem Investment Ltd. which was overruled the decision of the Hon'ble Special Bench relied on by the AO and deleted the said addition. The relevant portion of which is reproduced herein below: "4.2. I h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... testing charges and calibration charges and soil exploration charges. The AO further requested the required evidences regarding service charges, nature of work. The assessee submitted its reply vide its letter dated 21.11.2011. The assessee in nut shell stated as under: (i) the amount of Rs. 17,12,322/- even advance payments received from its clients prior to commencing of work and the said work was actually instituted during the subsequent financial year and the same has been shown as commission liability during the year under consideration. (ii) Regarding payment to reliable construction it was contended the said payment was made for supply of stone dust and other materials no TDS is warranted. (iii) regarding Bhunia Construction the assessee stated TDS was deducted except same payment which the assessee paid directly. (iv) To avoid local disturbances and nuisance the assessee paid service charges to various parties. (v) Regarding drawing and drafting payment was made from time to time. (vi) TDS were deducted on low charges to Haldia Nirman Project Pvt. Ltd. and no TDS was deducted on same payments which were below taxable limit. (vii) Regarding Callibration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provision of section u/s. 40(a)(ia) of Act. The expenditures are disallowable for other reasons also. It is seen that most of the expenditures are' made in cash. During the course of assessment proceeding, the assessee was required to furnish the evidence of payment. However, the same could not be produced by the assessee. On this ground alone, the expenditures are disallowable. 6.6 . In view of the above, an amount of Rs. 3,64,349/- and Rs. 3,89,145/- is added to the total income being short deduction of TOS. An amount of Rs. 1,15,36,280/- is added to the total income of the assessee as the assessee has not deducted any TDS on these amount. 6.7 In view of the above, the total addition of Rs. 1,22,89,774/- is added to the total income of the assessee." 10. Aggrieved, the assessee challenged the same before the CIT(A). The CIT(A) by examining the documents and bill produced before him in first appellate proceedings deleted the addition observing as under: "5.1. The A.O. has added a slim of Rs, 1,22,89,774/- to the total income of the appellant by making disallowance under section 40(a)(ia) of the Act referring to his discussion at para-6.6 of the said assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given in Para 6.1 of the assessment order includes the name and amount M/s Bhunia Construction and M/s Sepai Baidya discussed above. Various others name and amount mentioned in the said Table includes the amount of supply and/or the reimbursement of expenses made by the appellant, on which there is no scope or provision for deduction of TDS. There are various other names in which cases aggregate amount of bill for the work done by each of them (excluding the cost of material and reimbursement of expenses) are less than the statutory amount on which there was no requirement of any TDS as per the provisions of the I. T. Act. 5.4. In Para 6.5 of the assessment order the A.D. has specifically mentioned the name of Reliable Construction and D .B Enterprises - in respect of which the appellant in the course of assessment proceeding specifically submitted that payment were made to them for supply of stone dust and other materials used for the infrastructure development of Eastern Railway Site at Kuntighat. From the bills of the said parties submitted by the applicant it will. appear that such bills were mainly for the supply of goods, material and reimbursement of expenses. There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd argued having the said material evidences before the Ld. AO the additions were made and the CIT(A) by examining the same deleted the said addition and Ld. AR referred to page no. 151 and argued that all the payments were made towards reimbursement of expenses for stone dust lifting, for dressing and levelling etc. therefore, the addition made u/s 40a(ia) is not maintainable. The AR also placed reliance on the decision of the Hon'ble High Court of Gujarat in the case of Consumer Marketing (India) Pvt. Ltd. reported in (2015) 64 taxmann.com 16 (Gujarat) for the proposition no TDS is maintainable on reimbursement of expenses. 13. Heard the rival submission and perused the material available on record. It is observed from the assessment order it is clearly mentioned by the AO that the assessee did not furnish any evidence in support of his claim on expenditure. But however, it is seen from para no. 5.2, 5.3 and 5.4 the CIT(A) observed and deleted the said addition on the basis of documents and bills. Therefore, it shows that the assessee submitted a new documents before the CIT(A) which were not admittedly before the AO for his verification. Therefore, in these circumstances we dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein clearly shows the cash payments were below the statutory limit. The AR argued that all the payments which were made in cash were below Rs. 20,000/- and the addition made u/s 40A(3) is not maintainable. 17. Heard the rival submissions and perused the material available on record. It is observed that there is no evidence filed before the AO but however it is seen the CIT(A) has examined the same payments as reflected in page nos. 12,13 and 14 and AO found that all payments were made through account payee cheques. In our opinion, the CIT(A) has verified the said payments in details found to be made through account payee cheques. The Ld. AR before us referred to page nos. 416 to 453 which are in the ledger accounts of the various entities as reflected in AO's order under the different head i.e. service charge, drawing and drafting, machinery hire charges, material testing charges, soil exploration charges, transport charges and business promotion charges. Therefore, in our opinion the order of CIT(A) justified in holding the payments were made through account payee cheques and all other payments were made in cash are below the prescribed monetary limit u/s 40A(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
