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<h1>Tribunal upholds CIT(A)'s decisions on Income Tax Act sections, labor charges, capital gains, deems dividends</h1> <h3>DCIT, Cir. 1 (1) (1) Ahmedabad. Versus Aaryavart Infrastructure P. Ltd.</h3> DCIT, Cir. 1 (1) (1) Ahmedabad. Versus Aaryavart Infrastructure P. Ltd. - TMI Issues Involved:1. Deletion of addition made under section 68 of the Income Tax Act.2. Deletion of addition made under section 2(22)(e) of the Income Tax Act.3. Deletion of addition made for labour and transportation charges.4. Deletion of addition made on account of short-term capital gains.Issue 1: Deletion of Addition Made Under Section 68 of the Income Tax Act:The Revenue contested the deletion of an addition of Rs. 1,31,50,000/- made under section 68 of the Act for unsecured loans from M/s Pushparaj Corporation. The CIT(A) deleted the addition, noting that the assessee had provided sufficient evidence, including confirmation from the lender, bank statements, and PAN details. The AO failed to make further inquiries despite having all necessary information. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere.Issue 2: Deletion of Addition Made Under Section 2(22)(e) of the Income Tax Act:The AO added Rs. 13,02,64,245/- as deemed dividend under section 2(22)(e) of the Act, noting common substantial shareholders between the assessee and the lending companies. The CIT(A) restricted the addition to Rs. 37,78,000/- based on available reserves and surplus but ultimately deleted the entire addition, citing jurisdictional High Court decisions that deemed dividends are taxable only in the hands of shareholders. The Tribunal upheld this deletion, noting that the assessee was not a shareholder in the lending companies.Issue 3: Deletion of Addition Made for Labour and Transportation Charges:The AO disallowed 25% of labour and transportation expenses due to a lack of details, totaling Rs. 1,52,10,011/-. The CIT(A) found that most payments were made by cheque with TDS deducted and noted that the AO did not point out specific defects. However, the CIT(A) upheld a disallowance of Rs. 10,00,000/- for unsubstantiated expenses. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere.Issue 4: Deletion of Addition Made on Account of Short-Term Capital Gains:The AO made an adhoc addition of Rs. 10,00,000/- over the short-term capital loss declared by the assessee due to a lack of sale agreement. The CIT(A) deleted the addition after verifying the sale deed and noting that the AO did not find any discrepancies in the transaction details. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere.Cross Objection by Assessee:1. The assessee's objection to the CIT(A)'s restriction of deemed dividend addition to Rs. 37,78,000/- was dismissed, as the factual finding of available reserves was uncontroverted.2. The objection to the disallowance of Rs. 10,00,000/- for labour and transportation charges was also dismissed, as the CIT(A)'s decision was based on substantial evidence.Conclusion:Both the appeal of the Revenue and the cross-objection of the assessee were dismissed. The Tribunal upheld the CIT(A)'s decisions on all issues.