ITAT upholds CIT(A)'s deletion of additions under sec. 40(a)(ia) & sec. 69. Revenue's appeal dismissed.

The ITAT upheld the decisions of the Ld. CIT(A) to delete additions under section 40(a)(ia) and section 69 of the Income-tax Act, 1961. The appeal of the revenue was dismissed, confirming the deletion of the additions related to TDS deduction and undisclosed investment in shares.

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Issues:
1. Condonation of delay in filing appeal.
2. Deletion of addition under section 40(a)(ia) of the Income-tax Act, 1961.
3. Deletion of addition towards undisclosed investment on account of shares.

Analysis:

Issue 1: Condonation of delay in filing appeal
The revenue filed an appeal against the order of Ld. CIT(A)-XIX, Kolkata for AY 2009-10, which was time-barred by 35 days. A condonation petition was filed, and after perusing the petition and concession by the ld. AR, the delay was condoned, and the appeal was admitted for hearing on merits.

Issue 2: Deletion of addition under section 40(a)(ia) of the Income-tax Act, 1961
The AO disallowed an amount under section 40(a)(ia) as the assessee made payments to M/s. Basu & Co. Road Contractors Pvt. Ltd. without deducting TDS. However, it was argued that the proprietary business was taken over by M/s. BCRCPL, a Private Limited Company, and hence TDS deduction was not required. The ITAT noted the documents showing the takeover agreement and the approval from the Govt. of West Bengal, confirming that the Private Limited Company existed for the purpose of taking over the proprietary concern. The ITAT upheld the Ld. CIT(A)'s decision to delete the addition under section 40(a)(ia).

Issue 3: Deletion of addition towards undisclosed investment on account of shares
The AO treated the share application money introduced by the assessee in M/s. BCRCPL as undisclosed investment under section 69. However, the ITAT found that the shares were allotted to the assessee after the takeover of the proprietary concern, and there was no real monetary transaction involved. The shares were allotted based on the valuation of assets and liabilities taken over by the Private Limited Company. The ITAT agreed with the Ld. CIT(A)'s decision to delete the addition, as there was no new investment made by the assessee in the form of share application amount. The appeal of the revenue was dismissed.

In conclusion, the ITAT upheld the decisions of the Ld. CIT(A) in both issues, confirming the deletion of additions under section 40(a)(ia) and section 69 of the Income-tax Act, 1961.

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