9911796707
TMI Blog2022 (11) TMI 1440X X X X Extracts X X X X X X X X Extracts X X X X ..... r disallowances can be made.'' 2.1 In Ground of Appeal No.1 of the assessee, the addition of Rs. 2,26,41,521/- is under challenge. 2.2 Brief facts of the case are that during the assessment proceedings, the AO alleged that the assessee is engaged in the practice of delayed invoicing and under invoicing of sales in its books of accounts. The assessee is taking advance from customers against the sale of vehicles. In most of the cases the delivery of goods has been given to the customers, the vehicles are also registered with RTO, delivery memo have been issued for the year under consideration. However, the sales bills are prepared in the subsequent years and recorded the sale in its books of account in the subsequent years but not in the subjected year. The AO issued summon u/s 131 to one of the customers namely Shri Sunil Bhutani on 24.03.2014. In compliance thereto he attended and filed details. The assessee sold him a car Versa DX15S-BSIII on 02.12.2009 for a sum of Rs. 3,69,000/- as per the invoice issued to the said customer against which he had paid Rs. 4,01,000/- (Rs.5,100/- on 02.12.2009 for booking and balance amount of Rs. 3,95,900/- was paid by cheque) which included roa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, the said results cannot be the basis for application of the GP rate during the current year. The AO has clearly demonstrated that assessee is indulging in suppression of sales by gathering the various evidences from the customer i.e. specific case of a customer i.e. Shri Sunil Bhutani and other cases as noted in his number 9 and 10 of the assessment order which shows that there was suppression of sales to the extent of 4.1476%. So the increased the sales of the assessee from Rs. 1,14,86,38,878/- to Rs. 1,19,83,41,281/-. The assessee has not given any explanation as to why the said sales were suppressed by the assessee. In view of above, it is apparent that assessee has indulged in suppression of the sales. Further it is evident that assessee has indulged in delayed invoicing of the sales as evident from the instances pointed out by the AO in Page No. 9 and 10 of the assessment order and case of the assessment order and case of the Sunil Bhutani as discussed above. This also shows that assessee's closing stock is not reliable. As regarding the application of the GP rate, it is pointed out that Relan Motors who is a dealer of Maruti Udyog Ltd. in A.Y. 2013-14 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hases and expenses are fully vouched. The accounts are audited u/s 44AB of the Act (PB 23-54) as also under the Companies Act (PB 2-22) and Rajasthan VAT Act. The same were produced before the AO also along with other details from time to time. The AO at some places alleged that Cash Book and Cash Receipts were not produced before him. However, such allegation is factually wrong because firstly, the assessee did maintain Cash Book & Cash Receipts and based on such primary record only, entries have been made in the ledgers of the assessee. The AO himself mentioned at pg-10 Pr-5.1 ...that in majority of the cases cash and cheques were received as advance and entry regarding sale of vehicles was made in the ledger account. Therefore, the finding of the AO are contradictory on this aspect. 3. With regard to the allegation of suppression / deferment of the sale w.r.t. some examples like Shri Sunil Bhutani and others, we have made our submissions separately. Hence kindly refer para 8.1 to 8.2 of this written submission at pg. 11 to 13. 4. Minor irregularities, even assuming were there, cannot be made a basis of the rejection of the books of accounts or of trading addition. Kindly r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er with the basis of past records, then some flaw has to be found by the AO in making some addition-Tribunal has come to a conclusion that in the immediate past assessment year, the Tribunal itself had applied GP rate of 2.60 per cent whereas in the present year under consideration the GP rate has been declared as 4.85 percent- AO was unable to point out as to what are the distinguishing features in between the two assessment years-No substantial question of law arises.", In the case of CIT v/s Inani Marbles P. Ltd. (2009) 316 ITR 125 (Raj) (DPB 36-37), it was held that: "Accounts-Rejection-GP rate-Assessee's own result of immediately preceding assessment year at 2.51 per cent having been accepted upto the level of Tribunal, Tribunal was justified in applying the same GP rate for the assessment year in question as against 15 per cent applied by the AO and 2.30 per cent declared by the assessee" CIT v/s Popular Electric Co. Pvt. Ltd (1993) 203 ITR 630 (Cal), MA Rauf v/s CIT (1958) 33 ITR 843 (Pat). Also refer M/s Rishab Construction (P) Ltd. 38 TW 8 (JP) wherein it has been held that trading result should not be disturbed in a case wherein these are better than last year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. the so called comparable cases, could not be considered even. Kindly refer Vimal Chandra Golecha v/s ITO & Anr. (1982) 134 ITR 119 (Raj.), ITO & Anr. v/s Gargidin Jawla Prasad Maholi & Ors. (1980) 124 ITR 203 (All). 4.2 Further when the assessee has its own past history and this is not the first year, then the assessee's own past history is the best guide and there was no justification at all to rely to the comparable case. Kindly refer Ajay Goyal VS. ITO 99 TTJ 164 (JD), It was held that: "Accounts-Rejection-GP rate-Best guide for estimation of the trading results after rejecting the books is either the past history of the assessee or any other comparable case-The past history of the assessee takes preference over a comparable case-Assessee having declared higher GP rate than the preceding year, its trading results require acceptance and trading addition requires deletion" Also refer Madan Lal VS. ITO 99 TTJ 538 (JD), CIT vs. Ashok Behi Bharat Sethi & Party (2013)35 taxmann.com 214 (Raj.) (DPB 43-46) 4.3 Justifiable reason behind non-considering comparable case: The comparison so made with the G.P. declared two years later by a third party, is not a good basis for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gon-R. Needless to mention that there was huge consumer offer shared by dealer and the cut throat competition among two dealer in same territory is proven fact. The opening stock of General motors product was also sold by M/s Relan Motors Ajmer on higher values even at full dealer margins, because there was no existence of another dealer for 4 months in Ajmer, Bhilwara and Nagour market. Thus there was fine gap of product availability which directly influenced the gross profit and net profit of Relan Motors (2012-13). The comparison with above dealer is not justified, can be compare with the than multiple dealer of same market. Therefore request to consider our gross profit based and calculated on market situation of product demand/supply. But the AO without analysed the facts have simply considered that since the trade trend in the automotive company has been consistent especially in the case of Maruti Suzuki as the same is leading and established brand of the automotive industry. Therefore, the margins for the dealers and the other market forces are almost the same in this company from the long period of time. Thus, considering the gross profit rate declared by the compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that out of the total sale of Rs. 1,14,86,38,878/- declared of this year, the sale booked in relation to the advances received and adjusted in this year pertaining to various preceding assessment years being A.Y. 2008-09 to A.Y 2010-11 were not reduced. In fact, as per chart submitted to the authorities below (PB 68 of AY 2010-11), out of the total sale declared of Rs. 114.86 cr, it is only Rs. 82.10 cr which was the sale relating to the advances received in the current year whereas the balance sale related to advance received in the earlier years. Therefore, even assuming, though not admitting, the application of higher GP rate was required, the same could have been only with reference to the current year sale and not with reference to the entire sale of Rs. 114.86 cr. 6. No suppression of Sale transaction / Sale Consideration as alleged:*/ [Note: All references made to PB is to paper book separately filed whereas all references made to Annexures are the Paper annexed with the assessment order by the AO.] 6.1. The authorities below have made a much hue and cry alleging this a case of suppression of sale consideration. For this purpose, the AO made inquiry from one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) the assesse did not fully account for the sale out of the advance amounts received from the customers. ii) The assessee is engaged in the practice of delayed invoicing and under invoicing of sales in its books of accounts. Unfortunately, however, the assessee was never confronted with the terms of the enquiry made and response received thereto directly but even than adverse inference was drawn nor he provided any opportunity of cross examination of the documents Hence it is a clear case of gross violation of principle of natural justice which has vitiated the assessment proceedings. Consequently, the impugned addition must be deleted. Kindly refer Vimal Chandra Golecha v/s ITO & Anr. (1982) 134 ITR 119 (Raj.), ITO & Anr v/s Gargidin Jawla Prasad Maholi & Ors. (1980) 124 ITR 203 (All). 7.2. The law is well settled that in a case where there is a violation of Principles of natural justice and a party has been deprived of its valuable rights of being heard effectively yet, an order has been passed containing huge additions, such an action has to be considered as having been done without jurisdiction and vitiating the entire order which, results into as nullity and is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 1479) . In the light of these decisions, we do opine that the addition made by the Assessing Officer in violation of the principles of natural justice has to be set aside as void only in so far as the additions by way of cash credits alone are concerned, which are separable from the other additions in the order that are not challenged and consequently becoming thus non est in the eye of law." 7.3. No adequate and reasonable opportunity of hearing: Here also it is a case of hasty assessment without adequate opportunity. The AO raised queries vide order sheet entry dated 25.03.2014 only (AO Pg-3) whereas the assessment was completed on 28.03.2014, hardly providing, two days' time. The ld. CIT(A) at Pg-6 without appreciating, alleged that there was no explanation thereto. Similarly the assessee was asked regarding the advances received from customer vide order sheet entry 21.03.2014 and thereafter he himself states that the assessee furnished the details in parts on daily basis till the date of the order (AO Pg-12). This clearly shows that neither the AO was fully satisfied nor the assessee could furnished its explanation upto its own satisfaction. Yet then the AO acted hastily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Expenses incurred by Assessee Annex A-7 21.08.2010 Extended Warranty 4,582/- Paid by assessee to the Maruti by Cheque Annex B-1 25.08.2010 Accessories Purchased 6,818/- Expenses incurred by Assessee Annex B-5 31.08.2010 Other Expenses including other Accessories 12,720/- Expenses incurred by Assessee Annex B-7 Total (Rs.) 4,13,720/- 8.1.3 The above chart clearly shows that there was no suppression of the total amount of sale consideration so received. The assessee, on one hand received Rs. 4,13,720/- on different dates and adjusted the same towards the agreed sale consideration and towards various expenses incurred on behalf of the customer. The supporting vouchers of expenses incurred, were issued to the said customer as evident from his reply and the fact that with his reply he also submitted that copies of supporting evidences in response to the summon u/s 131. 8.2. Surprisingly, the authorities below are completely silent on this factual aspect and did not comment anything adversely. The facts coming out from a perusal of the reply of Bhutani and these evidences enclosed by the AO himself as Annexure A & B are that after negotiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of suppression of sale i.r.t the advance received from customer and not only in this year but also in other years, this was made as a basis. Other 12 customer's cases w.r.t advance received from customers: 9. Suppression of 4.1476% is unjustified: 9.1 Against theory of statistics: The AO analysed the details submitted by the assessee (AO pg. 9-10) by considering sample cases of 12 customers by way of a chart based on the details submitted by the assessee and alleged a difference between the sale consideration mentioned in the RC (based on the Performa/VAT Invoice) and those entered in the books of accounts. He worked out a difference of Rs. 1,35,337/- (Sales amount as per books Rs. 31,27,663/- and as per RC- Performa/VAT Invoice Rs. 32,63,000/-) and drew adverse inference based thereon that assessee was indulged in the suppression of sales to the extent of 4.1476%. In other words, the theory of statistics has been applied. However, where the total declared sale itself was of Rs. 114 Crores (and thereafter enhanced upto Rs. 119 Cr. by the department), the size of the sample is too small to be believed. As per the theory of statistics, a reasonable size of the sample has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Certificate (A) Bill Details as per Ledger Account (B) Difference Amount as Per AO Order Rs. (C) (A-B) R. T. O exp. Amt. Rs. (D) Insurance Exp. Rs. (E) Price of Accessories Rs. (F) Total Debits Rs. (G) (D + E + F) Difference Rs. (C-G) 1 Raj Kumar Swami ( Alto) PB-84-85 2,17,000/ 1,98,994/- 18,006/- 8,382/- 8,438/- 990/- 17,810/- 196/- 2 VirendraKumar Sharma ( Alto Lxi) PB-82-23 2,83,000/- 2,56,953/- 26,047/- 12,514/- 9,255/- 4,278/- 26,047/- 0 3 Ram Chandra Verma ( Alto Lxi) PB-86 2,73,000/- 2,70,900/- 2,100/- 7,100/- 7,100/- (-) 5,000/- 4 Udai Ram Prajapati (ECCO 5 siter) PB-87-88 3,17,000/- 3,03,161/- 13,839/- 19,855/- 19,855/- (-) 6,016/- 5 Ashok Kumar 2,63,000/- 2,62,842/- 158/- 0 158/- Sharma ( Alto Lxi) II PB- 72-73 6 Deep Singh Tanwar ( Alto Lxi) PB-74-75 2,38,000/- 2,37,843/- 157/- 0 157/- 7 Kapil Parihar (Wagon-R Lxi) PB-76-77 3,61,000/- 3,57,077/- 3,923/- 23,045/- 13,295/- 8,970/- 45,310/- (-) 41,387/- 8 Laxmi Swaroop Dholkheriya (Alto Lxi) PB-78-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ari Sugar Mills v. CIT (1992) 193 ITR 669 (Cal) (DPB 9-11),it was held that. "Income is estimated on the basis of the assessee's turnover furnished by the CTO. Income of the assessee is only from the sale of sugar; there can be no dispute on this. Therefore, the 'turnover' which is the basis for estimating the income, shall be proximate or relatable, to the turnover of sugar. If on the face of it, the 'turnover' of the assessee furnished by the CTO is not confined to the turnover regarding sugar, then, out of the turnover furnished by the CTO a fair percentage should have been excluded before estimating the 'turnover' regarding sugar. But, if the entire turnover of the assessee is the sole foundation for estimating the income of the assessee from sale of sugar, that estimate would not be a fair and proper estimate; the resultant guess work would partake the character of a wild guess work. It will be a case of relying on a partly relevant and partly irrelevant material to make an order of assessment, if it is established that conclusive material was available to show the turnover from sugar distinctly from the gross turnover of the assessee. It is also true that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills, it is noticed that in majority.... . The AO at pg. 11 states that "The assessee vide letter submitted on 25.02.2014 gave the 'Summary Chart" of the "Customer Advances"; which incorporated the Chasis Number, Engine Number and Date of Selling the Vehicle as per its books of accounts along with the location from where, the vehicle was sold. " The AO at pg. 1-2 states that " A/R of the assessee attended from time to time and produced books of accounts consisting of Cash Book, Bank Detailed, Ledger, Purchases Bill and Sales bills, vouchers of expenses debited in P/L account information/details as required were filed and examined on test check basis." Thus, the assessee submitted various documents and ledger accounts and also a detailed chart which contains so many details. 12. Lastly, we strongly rely upon our written submission filed before the ld. CIT(A) reproduced at Pg- 3 to 5 of his order at Pr. 3.2. The same has not been reproduced for the sake of brevity. Hence, the impugned addition kindly be deleted in full." 2.5 On the other hand, the ld. DR strongly relied upon the findings recorded by the authorities below and justified the additions made and confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee declared (revised) GP rate of around 4%. Secondly a perusal of the orders does not show that the assessee was ever confronted with the material used against him. Hence no reliance can be placed on so called comparable case. Before the CIT(A), we find that the assessee has furnished detailed reason at pages 4 onwards pointing out several facts making the said case of Rellan Motors as completely distinguishable. On the other hand the trading results as declared in AY 2010-11 were accepted. The Hon'ble Rajasthan HC in the case of CIT v/s Gotan Lime Khaniz Udyog 256 ITR 243, has held that where the accounts are rejected, it is not always necessary for the AO to make addition over and above the declared income, if considering the books of accounts, past history and material collected by the AO, no interference is warranted. Thus, we don't find any justification on the application of enhanced GP rate of 3.25% which is completely without furnishing any justified grounds hence, the GP rate as declared by the assessee at 1.68% is hereby accepted. Therefore, the authorities below were completely unjustified in applying higher GP rate of 3.25%. 2.6.1 Now coming to the aspect of supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils of the sale consideration, Road Tax, Registration & Insurance expenses. Hence, if all the debit items are added to the sale consideration, there will be no difference as such. We have carefully pursued the chart submitted before us and also the related material and find that except a minor variation, there is no case successfully made out by the AO of suppression of sale. Behind the minor variations there may be various reasons however, merely based on some small cases, without anything more, the AO was not justified in enhancing the sale to almost around Rs. 5 cr. We find nothing on the record to justify the case of suppression of sale i.e., though amount was received but was not recorded. Moreover, to effect the sale to such an extent, corresponding purchases of the vehicles are also required by the assessee, however, neither the claimed purchases have been discussed nor it is alleged so. At the best it was a case of mere suspicion which was not substantiated with the help of strong evidences, wherein the revenue has completely failed. Thus, the enhancement of the sale (due to suppression) and application of GP rate of 3.25% is not approved and the resultant addition to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in support of such a claim have been submitted. The vehicle sold have already been registered as per Registration Certificate. Further the assessee's claim that AO had no basis for determining sales effected during the year at Rs. 60.97% of the advances from customers is liable to be rejected as the AO has determined from the evidences submitted by the assessee in form of TRC, Insurance cover notes, financers delivery order (third party evidences) that out of advances from customers of Rs. 10,79,00,000/-, sales have been registered / effected for 6.58 crores during the year which constitute 60.97% of such advance from customers and for the balance amount of Rs. 4.21 Crores (i.e. 39.02%) sales have been booked in the subsequent year. So the AO has determined the sales against the advance from the customers on the basis of details furnished by the assessee itself. The AO has mentioned that out of total advances from customers of Rs. 30,46,50,118/-, sales have been effected to the extent of 60.97% during the year and balance 39.02% sales have been effected in the subsequent year. So the AO determined the sales made during the year at Rs. 18,57,60,104/-. However later, the sales f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame being consistently followed by the assessee. The same is being explained hereunder: 1.1.1 The assessment for A.Y. 2010-11 was completed first, wherein the entire amount of the advances received in that year of Rs. 20,28,74,955/-, were added as unexplained credits disbelieving the genuineness of such credits, vide the assessment order dated 28.03.2013 passed u/s 143(3) (the same is under challenge vide ITA No. 929/JP/2016 before the Hon'ble ITAT). 1.1.2 In the current year i.e. A.Y. 2011-12, the assessee has shown advances from customers as on 31.03.2011 of Rs. 30,46,50,118/- as against Rs. 44,87,96,115/- shown last year. Thus, Rs. 14,41,45,997/- being the amount of new advances were introduced during the year. Further, as per AO from the verification of confirmed advances of Rs. 10,79,64,236/-, it is revealed that sales effected / registered was to the extent of Rs. 6,58,31,191/- in the current year, which is 60.9749% (or 61%) in terms of percentage whereas the amount of advances to the extent of Rs. 4,21,33,045/- were the amount of the sale effected / registered in the later year/s which is 39.0251% (or 39%) in terms of percentage. Thus, as per AO out of the total advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opted in the later two years is considered fully or partly acceptable then his case of disbelieving the entire amount of the advances u/s 68 in A.Y. 2010-11 completely goes away. If his approach of considering the advances as deferred sale is accepted as good, his case of considering the entire amount of the advances as a case of deferred sale also goes away. It is not the cases of the revenue that the facts and the circumstances are altogether different in three years and there was new material and some special reasons assigned to take departure from the earlier approach. The entire amounts of the addition made in three different years are liable to be quashed and deleted on this ground alone in as much as such contradictory approach established that the AO did not dealt as a quasi-judicial authority. He merely proceeded on his own whims and fancies. The ld. CIT(A) completely ignored this vital aspect going to the root. Kindly refer Dhakeshwari cotton Mills 26 ITR 775 (SC). Use of words "might" and "appears" support this contention. 2. Settled Past Practice: 2.1 It is submitted that the assessee has been carrying on the same business in the same setup and under the same fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61). Case of Virendra Sharma support this (PB-82-83). 3. Case of multiple additions: From a bare reading of the orders of the authorities below the fact cannot be denied and easily ascertainable that it is case of multiple addition in as much as firstly, the AO while considering the outstanding advances of Rs. 30.46 Crores as on 31.03.2011 (A.Y. 2011- 12) considered a part of it (i.e. 60.97% thereof) as a sale which has not been disclosed by the assessee this year though it has been deferred and shown in the later years and accordingly, worked out at Rs. 18,57,60,105/-. At the same time however, the AO has completely ignored the fact that in the immediately preceding year (i.e. A.Y. 2010-11) the AO compared the opening and closing balances of the advances received from customer account which was Rs. 20,28,74,955/- at Pg-10 of the assessment year for that year and made an addition u/s 68 on account of unverified advance. On the other hand, in the present year the AO at Pg. 13 Pr. 5.5 has clearly admitted that the sale to the extent of Rs. 8.50 Cr. (Rs.5.81 Cr. and 2.68 Cr.) are the cases of such advances of customers which were outstanding as on 31.03.2010 and continued as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an item of sale which remained to be declared in A.Y. 2010-11 but declared in A.Y. 2011-12 or remained to be declared in A.Y. 2009-10 but same declared in later years, the revenue was not going to lose any tax. Hence, the assessee has declared the sale in the current year as well as in subsequent year/s with respect to the advances received from customers. Thus, addition made by the AO during the year for the sale effected in subsequent year amounted to a double addition as the assessee has already declared the same in the subsequent year and paid taxes thereon. Double taxation of the same income is not permissible, is a settled law.Kindly refer Jain Brother & other and UOI and other 77 ITR 107(SC). The AO and ld. CIT(A) both have admitted the fact of deferred sale. Kindly refer Pg-11 Pr. 4.3 of ld. CIT(A) order. However, the CIT(A) has shifted the onus upon the assessee which is not justified because the computation of deferred sale made by the AO is not correct with a mathematical precision. Regarding GP rate please refer our submission in GOA 1. Hence the impugned addition be deleted in full." 3.4 On the other hand, the ld. DR strongly relied upon the findings recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s year also hence, our findings and the decision therein shall equally apply here also. Accordingly, the impugned addition of Rs. 62,98,437/- is hereby deleted. This ground No. 2 of the appeal is therefore allowed. 4.1 In Ground of Appeal No.3 of the assessee, the Disallowance of Interest of Rs. 6,96,201/- u/s 40(a)(ia) is under challenge. 4.2 Brief facts of the case are that during the assessment proceedings, the AO at Pg-15 Pr-6 noted that the assessee made payment of Rs. 6,96,201/- on account of interest expenses for repayment of loan to M/s Maruti Udhyog Ltd., Sundaram Finance, AU Finance and Mahindra & Mahindra Finance as detailed in the assessment order. The AO observed that the assessee has not deducted TDS on the payments made to the said parties. Thus, there is violation of Provisions of S. 194A of the I.T. Act, 1961. Accordingly, he disallowed entire amount of Rs. 6,96,201/- u/s 40(a)(ia) and added to the total income of the assessee. 4.3 In the first appeal the ld. CIT(A) confirmed the action of the AO vide order dated 31.03.2015 in appeal no. 431/2013-14. "5.3 I have considered the contentions of the appellant as well as assessment order. It is seen that the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kindly refer a CBDT Instruction No. 1425 dated 14.11.1981, the contents of the Circular are as under: "1. ** ** ** ** 2. In a hire-purchase contract the owner delivers goods to another person upon terms on which the hirer is to hire them at a fixed periodical rental. The hirer has also the option of purchasing the goods by paying the total amount of agreed hire at any time or of returning the same before the total amount is paid. It may be pointed out that part of the amount of the hire purchase price is towards the hire and part towards the payment of price. The agreed amount payable by the hirer in periodical instalments cannot, therefore, be characterised as interest payable in any manner within the meaning of section 2(28A) of the Income-tax Act, as it is not in respect of any money borrowed or debt incurred. In this view of the matter it is clarified that the provisions of section 194A of the Income-tax Act are not attracted in such transactions." 2.1 No disallowance u/s 40(a)(ia) when books rejected and income estimated: Another aspect of the matter is to be considered is that the accounts of the assessee has been rejected and S.145 has been applied. Once income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 959) 37 ITR 369 (AP), ECI Engineering & Construction Co. Ltd in ITA No. 2048/Hyd/2011, Samurai Techno Trading Co. (P) Ltd. v/s CIT (2010) 37 DTR 386 (Ker). 3. The ld. CIT(A) however, rejected such contentions without considering the legal position. He simply held that NBFC is not a banking company ignoring the written submission and provisions of the RBI Act. His further contention that only gross profit rate has applied which does not take care of the direct expenses like interest expenses etc. is again ignoring the settled legal position. What has been held is only an estimation of income after rejection of the accounts which takes care of all the expenditure. There is no distinction made by the Hon`ble courts whether a GP rate has been applied or NP rate has been applied. But the moot question is whether any estimation of income has been made or not. Since in this case business income has already been estimated. All the incoming / outgoings related to the business, must be taken as already considered. 4. No TDS - When payee already paid taxes: 4.1 It is submitted that S.40(a)(ia) is not applicable in this case, for the reason that the payee company i.e. M/s Maruti Udhyog L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even no interest can be charged by the revenue from the payer (assessee here) where the payee has already paid tax more than the tax payable by it and the refund is due, which is also a fact in the cases of various buyers. (except) a few buyers only" 5. Supporting Case laws: 5.1 In the case of ACIT v/s Girdhari Lal Bargoti in ITA No. 757/JP/2012 on dated 10.04.2015 wherein, the entire impugned disallowance was deleted at the level of ITAT itself without sending it back to the AO. It was held as under "11. We have heard the rival contentions of both the parties and perused the material available on the record. X x x x x x Further the recipient are NBFC, therefore, not possible to not be assessed to tax, these payments were related for A.Y. 2009-10 and return for A.Y. 2009-10 already might have been filed by these NBFC by including these interests receipts as their income. Therefore, we do not find any reason to interfere in the order of the Ld. CIT(A)." 5.2 On identical factsand circumstances, the Hon'ble ITAT Jaipur bench, Jaipur in the case of ACIT vs M/s. Vastuvedik Colonizers & Developers Pvt. Ltd. In ITA No. 320/JP/2015 dated 24/10/2018 has set aside the matter ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) and prayed to upheld the addition/disallowance. 4.6 We have carefully considered the facts of the case, finding recorded in the impugned orders, the rival contentions raised by both the parties as also the material placed on record, we have also gone through the judicial pronouncements cited by the parties.Though various contentions have been raised to convince that it was not a case of making disallowance u/s 40(a)(ia) r/w S.194A however we shall confine ourselves to only one argument that where the payee had already paid the taxes, no further disallowance can be made. It is noticed that all the payees are public limited companies or corporations being M/s Maruti Udhyog Ltd. is the Public Limited Companies. Moreover, M/s Sundaram Finance, AU Finance and Mahindra & Mahindra Finance are Non-Banking Finance Corporation, which are renowned companies of their field. They must have already filled the return of income and paid tax due thereon considering the subjected amount paid to them of Rs. 6,96,201/- in their respective declared income. Therefore, no disallowance should have been made in view of the binding decision of the Hon'ble Supreme Court in the case of Hindustan Coca Col ..... X X X X Extracts X X X X X X X X Extracts X X X X
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