2012 (8) TMI 1065 - AT - Income Tax

Tribunal upholds CIT(A)'s decisions on disallowances under sections 40A(3) and 40A(ia) for AY 2005-06.

The Tribunal upheld the decisions of the ld. CIT(A) in favor of the assessee regarding various disallowances under sections 40A(3), 40A(ia), and other ... - Issues Involved:Cross appeals filed by the assessee and Revenue against the order of ld. CIT (A)-I, Rajkot dated 12.5.2009 for the assessments year 2005-06.Issue 1: Disallowance u/s 40A(3) of Rs. 1,46,776/-The ld. CIT(A) decided in favor of the assessee, stating that no purchase exceeding Rs. 20,000 in cash was made. Additionally, expenses for petrol/diesel at a site far from town were deemed covered by Rule 6DD(g), thus no disallowance u/s 40A(3) was warranted. The Tribunal found no reason to interfere with this decision.Issue 2: Disallowance u/s 40A(ia) of Rs. 5,26,384/-The ld. CIT(A) ruled in favor of the assessee, noting payments under Rs. 20,000 to any person. The Tribunal found no grounds to overturn this decision.Issue 3: Disallowance u/s 40A(ia) of Rs. 40,94,923/-The AO alleged a higher sub-contract work amount than claimed by the assessee. The ld. CIT(A) found fault with the AO's lack of inquiry from the contractor, leading to no basis for TDS deduction. The Tribunal upheld the ld. CIT(A)'s decision.Issue 4: Disallowance u/s 40A(ia) of Rs. 45,53,398/-The AO claimed TDS should be at 2.2% instead of 1.1%, but the ld. CIT(A) found no basis for this. The Tribunal agreed with the ld. CIT(A) on this issue.Issue 5: Addition on account of suppression of receipt of Rs. 39,77,057/-The ld. CIT(A) clarified that the amount represented deposits returned by the contractor, not income. Lack of verification by the AO led to the deletion of this addition, a decision upheld by the Tribunal.Issue 6: Disallowance of expenses of Rs. 2,50,000/-The AO made a disallowance of Rs. 3,00,000, reduced by the ld. CIT(A) to Rs. 50,000. The Tribunal found the reduced disallowance reasonable and confirmed the ld. CIT(A)'s decision.General GroundsRemaining grounds of appeal were of a general nature and were rejected without adjudication.Separate Judgement:The assessee's appeal was dismissed by the Tribunal after considering the grounds raised and finding no reason to interfere with the ld. CIT(A)'s order.This summary provides a detailed overview of the issues involved in the legal judgment, the decisions made by the ld. CIT(A), and the Tribunal's findings on each issue.