2015 (7) TMI 70 - AT - Income Tax

Tax appeal outcome: Assessee partly wins, additions deleted, expenses disallowed partially, issues remanded.

Tybas Projects Pvt Ltd. Versus ACIT, Circle-1 (1), Bhubaneswar

Tybas Projects Pvt Ltd. Versus ACIT, Circle-1 (1), Bhubaneswar - TMI Issues Involved:1. Deletion of additions regarding unsecured loans.2. Deletion of addition under Section 69C for non-accounting of hire charges payable.3. Deletion of addition under Section 40(a)(ia) for non-deduction of TDS.4. Alleged violation of Rule 46A by CIT(A).5. Disallowance of expenses under Section 40(a)(ia) for payments made to subcontractors.Issue-wise Detailed Analysis:1. Deletion of Additions Regarding Unsecured Loans:The Assessing Officer (AO) observed discrepancies in the balance sheet regarding unsecured loans from Anand Exports (Rs. 28,60,000/-) and B. Behera (Rs. 10,00,000/-), which led to additions under Section 69C of the Income Tax Act. The CIT(A) deleted these additions after considering the remand report, which confirmed that these amounts were disclosed under 'advance from customers' in the balance sheet. The Tribunal upheld the CIT(A)'s decision, finding no infirmity since the AO accepted the assessee's contention after due verification. Hence, Ground Nos. 1 & 2 of the department's appeal were dismissed.2. Deletion of Addition Under Section 69C for Non-Accounting of Hire Charges Payable:The AO made an addition of Rs. 9,75,000/- under Section 69C for non-accounting of hire charges payable. The CIT(A) deleted this addition, noting that the amount was part of the liabilities in Schedule-4 of the balance sheet, as verified by the AO during the remand. The Tribunal found no reason to interfere with the CIT(A)'s order and dismissed Ground No. 3 of the department's appeal.3. Deletion of Addition Under Section 40(a)(ia) for Non-Deduction of TDS:The AO disallowed Rs. 1,55,000/- under Section 40(a)(ia) for non-deduction of TDS on payments made to Prabir Kumar Rout. The CIT(A) deleted the addition based on the AO's remand report, which indicated that all payments were made on different dates and to different persons, each below Rs. 20,000/-, thus not attracting Section 194C. The Tribunal upheld the CIT(A)'s decision and rejected Ground No. 3 of the department's appeal.4. Alleged Violation of Rule 46A by CIT(A):The department contended that the CIT(A) violated Rule 46A by accepting the assessee's contentions without a comprehensive remand report. The Tribunal found no violation since the CIT(A) had called for a remand report and decided the issue based on it. Hence, Ground No. 4 of the department's appeal was rejected.5. Disallowance of Expenses Under Section 40(a)(ia) for Payments Made to Subcontractors:The assessee's appeal involved disallowances of Rs. 1,75,000/- paid to Subrat Sahoo and Rs. 78,100/- to Biswajit Construction under Section 40(a)(ia). The AO disallowed these amounts for non-deduction of TDS, considering them service contracts under Section 194C. The CIT(A) confirmed the additions. The Tribunal, referencing the ITAT Delhi Bench and Hon'ble Allahabad High Court decisions, allowed Ground Nos. 2 & 3 of the assessee's appeal, noting that no amount was outstanding at the year-end.Regarding the Rs. 10,00,000/- paid to S.S. Builders, the Tribunal restored this issue to the AO for verification of whether it represented an opening balance. If confirmed, the provisions of Section 194C would not be attracted. Hence, Ground No. 4 was allowed for statistical purposes.Ground No. 5 was partly allowed in light of the findings on Ground Nos. 2 & 3.Conclusion:- The department's appeal was dismissed.- The assessee's appeal was partly allowed, with specific issues remanded for further verification.