2015 (11) TMI 1820 - AT - Income Tax

Tribunal allows partial appeal, remits issues for further examination

The Tribunal partially allowed the assessee's appeal, remitting certain issues back to the AO for further examination and consideration of additional ... Disallowance under the doctrine of section 40(a)(ia) for failure to deduct tax at source - effect of payee having offered receipts to tax on applicability of section 40(a)(ia) (curative/retrospective operation of proviso) - remand for verification of recipients' tax compliance before making disallowance - reassessment of disallowance of interest on alleged interest free loans after verification of receipt and payment of interest - reconsideration of addition for difference in stock found during survey after taking reconciliation into account - appeal dismissed as not pressedDisallowance under the doctrine of section 40(a)(ia) for failure to deduct tax at source - effect of payee having offered receipts to tax on applicability of section 40(a)(ia) (curative/retrospective operation of proviso) - remand for verification of recipients' tax compliance before making disallowance - Disallowance of liquidated damages for non-deduction of TDS u/s. 194C and consequent disallowance u/s. 40(a)(ia) set aside for verification of payees' tax treatment of receipts. - HELD THAT: - Assessee paid liquidated damages without deducting TDS and AO disallowed the amount under section 40(a)(ia). Assessee conceded liability to be covered by section 40(a)(ia) but sought remand so the AO could verify whether the recipients had included the receipts in their returns and paid tax thereon. Bench accepted that if recipients have offered the receipts to tax, disallowance should be deleted in light of the principle applied in the decision referred to by the assessee regarding retrospective/curative effect of the proviso to section 40(a)(ia). Consequently the matter is remitted to the AO to examine the recipients' returns and tax payment and delete the disallowance if receipts were offered to tax. [Paras 4]Issue set aside to AO for verification of recipients' inclusion of receipts in their returns; disallowance to be deleted if receipts were offered to tax; allowed for statistical purposes.Appeal dismissed as not pressed - Disallowance under section 40(a)(ia) on payments to various parties not pressed by assessee was dismissed as not pressed. - HELD THAT: - Assessee did not press the ground challenging disallowance of payments to various parties before the Tribunal and Revenue raised no objection to non consideration. The Tribunal accordingly treated the ground as not pressed and dismissed it on that basis. [Paras 5]Ground dismissed as not pressed.Reassessment of disallowance of interest on alleged interest free loans after verification of receipt and payment of interest - remand for fresh consideration on submission of additional details - Addition of interest on loans/advances set aside to AO for fresh adjudication after verification of whether interest was in fact received or paid. - HELD THAT: - AO disallowed interest by applying a notional rate on alleged interest free advances to directors and related concerns; CIT(A) confirmed. Assessee sought to place details before the Tribunal but these were new evidence and, instead of admitting them, requested remand. The Tribunal, with no objection from Revenue, set aside the issue to the AO to re decide after examining the details to determine whether interest had been received and/or paid and to compute the disallowance accordingly. [Paras 8]Issue remitted to AO for fresh examination of interest receipts/payments and re decide the addition.Reconsideration of addition for difference in stock found during survey after taking reconciliation into account - remand for verification of reconciliation submitted by assessee - Addition for difference in stock found during survey set aside to AO for fresh adjudication after considering the reconciliation statement filed by the assessee. - HELD THAT: - AO made an addition based on stock difference observed during survey; assessee filed a reconciliation statement purportedly showing closing stock as on date of survey. Both AO and CIT(A) failed to consider the reconciliation. Tribunal held that the reconciliation should be examined and therefore remitted the issue to the AO to re adjudicate the addition after considering the reconciliation submitted by the assessee. [Paras 10]Issue remitted to AO to consider reconciliation and re decide the addition; allowed for statistical purposes.Final Conclusion: Appeal partly allowed for statistical purposes: one ground dismissed as not pressed; other contested additions and disallowances remitted to the Assessing Officer for verification and fresh adjudication in accordance with the Tribunal's directions. Issues:1. Disallowance of payment of liquidated damages for non-deduction of TDS under section 40(a)(ia) of the Income-tax Act.2. Disallowance under section 40(a)(ia) for payment made to various parties.3. Disallowance of interest amount.4. Addition of difference in stock found during a survey.Analysis:1. The first issue concerns the disallowance of payment of liquidated damages due to non-deduction of TDS under section 40(a)(ia) of the Income-tax Act. The appeal was made against the order of CIT(A) confirming the disallowance. The assessee admitted liability but requested a remittance to the AO for verification if recipients included the amount in their income. The Tribunal allowed the appeal for statistical purposes, citing a relevant decision of the Delhi High Court.2. The second issue pertains to disallowance under section 40(a)(ia) for payments to various parties. The assessee did not press this issue during the hearing, and the Senior DR did not object. Consequently, the issue was dismissed as not pressed.3. The third issue involves the disallowance of interest amount. The AO disallowed interest based on loans given to specific individuals and entities. The CIT(A) upheld the AO's decision. The Tribunal noted discrepancies in the interest received and paid, and on the assessee's request, remitted the issue back to the AO for fresh examination, considering new evidence presented.4. The final issue concerns the addition of the difference in stock found during a survey. The CIT(A) confirmed the addition without considering the reconciliation statement filed by the assessee. The Tribunal found this oversight and remitted the issue to the AO for reevaluation after considering the reconciliation. The appeal was allowed for statistical purposes.In conclusion, the Tribunal partially allowed the assessee's appeal, remitting certain issues back to the AO for further examination and consideration of additional evidence and reconciliation statements.