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TMI Blog2019 (9) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... st revenue Addition u/s 68 of bogus / sundry liability - HELD THAT:- We find that only 24 out of the said 109 creditors did not contain the complete addresses. It further emerges that the Assessing Officer is himself very fair in making it clear in his assessment order that the total credit figure in respect of these 109 parties as against closing balance in issue which stand treated as bogus. This action of Assessing Officer part is hardly acceptable being an instance of mutual contradictory findings. We make it clear that the Assessing Officer has treated the differential figure in case of very parties as correct. The fact also remains that the assessee has not completely discharged its onus of proving liability by filing all the necessary particulars as well. Faced with this peculiar situation, we deem it appropriate that a lump sum disallowance of ₹5 lac only than ₹90,53,743/- in issue would meet the ends of justice with a rider that same shall not be treated as precedent in any other assessment year Addition u/s14A r.w.s. Rule 8D - addition of proportionate interest and administrative expenditure figure(s) under Rule 8D(2)(ii) (iii) - HELD THAT:- The ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mselves carried out all activities of cultivation, harvesting and seed processing at their own risk. It is therefore an instant of outright purchase of the seed produce between the assessee and said seed growers without involving an agent or middleman. This tribunal s co-ordinate bench s decision in Additional Commissioner of Income-tax, Rang-4, Visakhapatnam vs. Pearl Bottling (P) Ltd. [ 2011 (2) TMI 42 - ITAT, VISAKHAPATNAM] holds that 194H does not apply in case of principal-to-principal relationship between the buyer and the recipient . We therefore direct the Assessing Officer to delete the impugned sec. 194H disallowance - ITA No.2216/Kol/2013 And ITA No.18/Kol/2017, ITA No.2128/Kol/2013 - - - Dated:- 18-9-2019 - S.S.Godara, Judicial Member And Dr. A.L. Saini, Accountant Member For the Assessee : Shri D.S. Damle, FCA For the Revenue : Shri Rabin Chowdhury, CIT-DR ORDER PER S.S.GODARA, JUDICIAL MEMBER:- The instant batch of three cases pertains to a single assessees M/s Florence Investech Ltd. earlier known as M/s J.K. Agri Genetices Ltd . Assessment Year 2008-09 cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e denied that it is a brand in itself, accordingly, allowability of depreciation' on WDV of the actual cost is required in this field. Thus, AO's appeal, on' grounds no. 2, 3 and 4 are allowed. 6. Appeal on grounds no. 5, 6 and 7 are, against the disallowance of sundry creditors. The AO.' has given his findings that the assessee did not file all the required details during the assessment proceeding. Therefore, the Assessing Officer disallowed ₹ 9053492/- u/s. 68 of the I.T.Act, 1961. The AR. has submitted a written submission explaining that due to paucity of time the assessee was unable to provide certain documentary evidence in respect of creditors. So in the appellate proceeding that has been filed. The mater was referred to the AO for verification and remand report. The AO. has filed a remand report vide letter no. DClT, Cir- 1O/Kol/Report/2011-12/1025 dt. 24-08-2011. The AO has submitted that on addresses provided by the AR. the existence of many parties are not established. The AO. has further submitted in the remand report that ledger accounts of many suppliers in the books of accounts in the assessee has been subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation it can be called commission/brokerage. Therefore, assessee's appeal on grounds no., 12 to 14 are allowed. 9. Appeal on ground no. 15 to 18 are against the disallowance of ₹ 7419691/- being notional interest on interest free .advance to suppliers. The A.O has made an addition on the presumption that such interest free advances might have been paid from borrowed funds. The A.R. during the appellate proceeding has submitted that in the line of business of the assessee giving and receiving interest free advances to suppliers and purchasers is a normal practice. The A.R. has also brought on record that during the year the assessee has given advances to its suppliers and business associates amounting to ₹ 61830760/- and it has also received interest free advances against its own supplies to purchasers amounting to ₹ 283059000/-. I have considered the finding; of the AO and the written submission filed by the AR. I find that giving and received advances in assessee's line of business is a normal practice. In fact the assessee has received more advances than it has given to its own suppliers. Therefore, the AO is not jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal on ground No. 22 to 26 are allowed. 3. Mr. Chowdhury, vehemently contends during the course of hearing that the CIT(A) has erred in law and on facts in deleting the impugned disallowance. His case is that the Assessing Officer had rightly rejected the assessee s deduction claim since it had purchased the corresponding R D items for carrying out its normal business activity than that any scientific research and development (R D only). We find no merit in the Revenue s instant grievance. The relevant assessment order dated 31.12.2010 nowhere indicates that the assessee had put to use the impugned plant and machinery in regular business operations and vice versa . It is made clear that the Department of Scientific and Industrial Research (DSIR) had duly granted approval to the taxpayer s capital expenditure as per rules. We conclude in this factual backdrop that the CIT(A) has rightly deleted the impugned scientific research and development disallowance of ₹1,85,49,462/- made u/s 35(1)(i) made during the course of assessment without any material but on assumptions and presumptions. The Revenue s instant sole grievance as well the main appeal ITA No.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the minimum support price shall the produce involving seeds are yet to be introduced in the market. We find that the lower authorities have failed to consider this cumbersome process involved in assessee s line of seed processing and production business. 8. Learned departmental representative at this stage invited our attention to pages 9 to 14 in the assessment order that the Assessing Officer could not have issued the relevant factual verification process to 109 parties on account of their incomplete addresses. We find that only 24 out of the said 109 creditors did not contain the complete addresses. It further emerges that the Assessing Officer is himself very fair in making it clear in his assessment order that the total credit figure in respect of these 109 parties was ₹6,21,48,167/- as against closing balance in issue (supra) which stand treated as bogus. This action of Assessing Officer part is hardly acceptable being an instance of mutual contradictory findings. We make it clear that the Assessing Officer has treated the differential figure of ₹530,94,675/- in case of very parties as correct. The fact also remains that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two companies in assessment year 2004-05 as well. The CIT(A) s corresponding lower appellate order dated 09.09.2014 page 82 to 93 and more particularly at pages 92 held that the above stated amalgamation scheme involved zero coupon bonds and zero coupon preference shares not including any interest at all. This clinching fact has not been rebutted in either of the lower proceedings nor before us. We therefore direct the Assessing Officer to delete the impugned proportionate interest expenditure disallowance in respect of assessee s dividend income of ₹150,19,308 and ₹7,58,057/- relating to these two entities; respectively. 11. Coming to assessee s remaining dividend income in respect to M/s Ashim Investment Co. Ltd., JK Lakshmi Cement Ltd. it emerges that Assessing Officer has nowhere given a clear-cut finding about its non interest bearing fund available at the time of making tax free income yelding investments. We therefore deem it appropriate to restore the instant remaining component of proportionate interest disallowance back to the Assessing Officer for finalizing consequential computation as per law in view of interest free fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost. But there is no denying the facts that cultivators do so with understanding/contract between the assessee and themselves ( seed growers/cultivators ). Therefore, the assessee should have deducted tax at source u/s. 194H of the I.T. Act, 1961 in this case. Accordingly assessee s appeal on grounds no. 10 to 21 are dismissed . 14. It therefore emerges that both the lower authorities haves treated the assessee s payments to its growers for the purpose of crops / seeds trials as commission / brokerage payments requiring TDS deduction u/s. 194H of the Act. We find that the CIT(A) himself is very fair in holding that growers / recipients enjoy title on their own agricultural lands, they have themselves carried out all activities of cultivation, harvesting and seed processing at their own risk. It is therefore an instant of outright purchase of the seed produce between the assessee and said seed growers without involving an agent or middleman. This tribunal s co-ordinate bench s decision in (2011) 46 SOT 133 (Visakh.)/10 taxmann.com 47 (Visakh.-ITAT) Additional Commissioner of Income-tax, Rang-4, Visakhapatnam vs. Pearl Bottling (P) Ltd. holds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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