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TMI Blog2019 (3) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... he business - the assessee has claimed other expenses in connection with the vehicle as discussed above. These expenses are like interest on a car loan, petrol expenses, repair and maintenance expenses etc. The necessary details of such expenses are available in the financial statements. It is undisputed fact that these expenses have not been disallowed. Thus, it can be transpired that the Revenue has admitted these expenses incurred by the assessee for the business. Thus in our considered view, we find that the authorities below have made the addition on account of depreciation without the application of mind. - Decided in favour of assessee Disallowance on account of labour charges - assessee failed to furnish the details for the movement of jewelry to the labourers for carrying out the necessary job work - non deduction of tds - disallowance under the assessment framed under section 143(3) - HELD THAT:- All the details of the laborers including the addresses and PAN were available with the authorities below. In case there is any doubt about the labour expenses claimed by the assessee, then the authorities below should have taken the confirmation from the respective parties. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils filed by the assessee before resorting to making the ad hoc disallowance. Accordingly, we direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. - ITA Nos.1075-1076/AHD/2016 - - - Dated:- 1-3-2019 - SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND MS MADHUMITA ROY, JUDICIAL MEMBER For The Assessee : Shri Aseem Thakkar, A.R For The Revenue : Shri VinodTanwani, Sr. DR ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeals have been filed at the instance of the Assessee against the separate order of the Commissioner of Income Tax (Appeals)- 2, Ahmedabad[CIT(A) in short] of dated 24/02/2016 and 26/02/2016 arising in the matter of assessment order passed under s.143(3)of the Income Tax Act, 1961 (here-in-after referred to as the Act ) dated 22/12/2011 and 02/03/2015 relevant to assessment Years 2009-10 2012-13 respectively. 2. Since the issues raised in both the appeals are common and related to the same assessee, therefore, we proceed to adjudicate the same through this common order for the sake of convenience and brevity. 3. First, we take ITA No.1075/Ahd/2016 for A.Y- 2009-10. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m pages 1 to 136 and submitted that the assessee was the beneficial owner of the asset as the assessee made the payment for the acquision of such assets. Thus the benefit of depreciation cannot be denied merely on the ground that the ownership is in the name of Director/employee of the Company. 8.1 The ld. AR further submitted that the assessee had claimed interest on the car loan, insurance premium of the car, petrol expenses on the scooter and car and vehicle expenses which were not doubted by the Revenue. 8.2 The ld. AR further submitted that the Revenue had taken the contrary stand by allowing the expenses incurred in connection with the vehicle in full. Therefore, the depreciation in respect of such vehicle was disallowed on the basis of mere conjecture and surmises. 9. On the other hand ld. DR relied on the order of the authorities below. 10. We have heard the rival contentions and perused the materials available on record. In the instant case, the depreciation claimed on the vehicles, i.e. cars and two-wheelers was disallowed by the AO on account of two reasons. Firstly, the assessee was not the owner of the assets, and secondly, the assessee failed to establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 2005-06, but the learned CIT (A) deleted the addition made by the AO. The learned DR has also not brought anything on record to demonstrate whether an appeal was preferred by the Revenue against the order of learned CIT-A. Thus in the absence of requisite information from the side of the learned DR, we hold that the Revenue did not challenge the order of the learned CIT-A for the assessment year 2005-06. 10.4 After considering the facts in totality as discussed above, we are not inclined to uphold the finding of the authorities below. Accordingly, we set aside the order of learned CIT-A, and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 11. The next issue raised by the assessee is that Ld. CIT (A) erred in confirming the disallowance of ₹ 13,45,356/- on account of labour charges. 12. The assessee in the year under consideration has claimed labour expenses of ₹ 19,29,390/- only. The assessee in support of labour expenses filed the copies of the bills issued by the labourer. However, the AO found that some of the bills filed by the assessee amounting to ₹ 13,45,356/- pertains to the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings despite several reminders. 15.2 All the details of the labourers were available with the authorities below but none of them has issued any notice u/s. 133/133(6) of the Act. 15.3 There was no disallowance made by the Revenue on account of labour expenses pertaining to the assessment year 2008-09 and 2011-12. 16. On the other hand the Ld. DR submitted that the Ld. CIT (A) has coterminus power; therefore, he can decide the issue in the absence of remand report from the AO. 16.1 The Ld. DR further submitted that the assessee failed to furnish the necessary evidence to demonstrate whether any job work was carried out on the jewelry. 16.2 The Ld. DR vehemently supported the order of the authorities below. 16.3 We have heard the rival contentions and perused the materials available on record. The assessee in the year under consideration has claimed Labour expenses amounting to ₹ 19,20,390/-. However, the AO found that the bills filed by the assessee in support of Labour expenses for ₹ 13,45,356/- pertain to the financial year 2006-07. Therefore, the same was disallowed and added to the total income of the assessee. 16.4 Subsequently, the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee as discussed above. In view of the above, we are not inclined to uphold the finding of the authorities below. Accordingly, we set aside the order of learned CIT (A) and direct the AO to delete the addition made by him. Hence, the ground of appeal of the assessee is allowed. 17. Now coming to ITA No. 1076/Ahd/2016 for A.Y 2012-13. The assessee has raised the following grounds of appeal: 1. The Ld.CIT (A) has erred inconfirming the disallowance of ₹ 1,84,600/- made by the Assessing Officer u/s.14A of the I.T. Act 1961 r.w.r 8D of the I.T. Rules 1962. 2. The Ld.CIT (A) has erred in confirming the disallowance of ₹ 8,70,000/- made by the Assessing Officer out of interest expenses on estimate basis. 3. The ''Ld.CIT(A) has erred in confirming disallowance made by the Assessing Officer for labour expenses of ₹ 7,03,801/- being 25% of the total labour expenses of ₹ 28,15,202/- The appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal. 18. The first issue raised by the assessee is that Ld. CIT(A) erred in confirming the addition made by the AO for S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of CIT v Winsome Textile Industries Ltd. [2009] 319 ITR 204 in which also the Court had observed as under : 7. We do not find any merit in this submission. The judgement of this court in Abhishek Industries Ltd (2006) 286 ITR 1 was on the issue of allowability of interest paid on loans given to sister concerns, without interest. It was held that deduction for interest was permissible when loan was taken for business purpose and not for diverting the same to sister concern without having nexus with the business. The observations made therein have to be read in that context. In the present case, admittedly the assessee did not make any claim for exemption. In such a situation section 14A could have no application. 5. We do not find any question of law arising, Tax Appeal is therefore dismissed. In view of the above, we hold that the disallowance under section 14A read with rule 8D of the income tax rule is not warranted. 24.1 We also note that the circular issued by the CBDT as relied on by the AO is not binding on the ITAT. As such we are bound to follow the judgment of Hon ble jurisdictional High Court. Thus, we do not want to make any reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest-free funds were sufficient to meet the investments. In this case this presumption is established considering the finding of fact both by the CIT(A) and Tribunal . 31.1 Similarly, we also rely on the judgment of the Hon ble Bombay High Court in the case of CIT vs. HDFC Bank Ltd reported in 366 ITR 505 (Bom). The relevant extract of the order is reproduced below: Where assessee'scapCIT (A)l, profit reserves, surplus and current account deposits were higher than the investment in tax-free securities, it would have to be presumed that investment made by the Assessee would be out of the interest-free funds available with Assessee and no disallowance was warranted u/s 14A. 31.2 Similarly, we also find support from the judgment of Hon ble Gujarat High Court in the case of UTI Bank Ltd. reported in 32 Taxmann.com 370 where the headnote reads as under : If there are sufficient interest free funds to meet tax free investments, they are presumed to be made from interest free funds and not loaned funds and no disallowance can be made under section 14A . In view of the above proposition, we hold that no disallowance of interest expense claimed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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