TaxTMI 
TaxTMI 
TaxTMI 
2015 (9) TMI 1004
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....the facts are, assessee a partnership firm is carrying on business of execution of civil contract works. For the AY under dispute, assessee filed its return of income on 30/09/2009 declaring total income of 2,01,90,884. During the assessment proceeding, AO noticed that assessee has debited an amount of Rs. 27,32,230 to the P&L A/c as finance charges. On going through the ledger extract, AO noticed that interest payments were made to the following organsations: S.No. Name of the Bank Interest amount 1 ICICI 11,24,581 2 HDFC 1,36,690 3 CITI Corp 9,92,209 4 AB Builders Fund Coop. Society 2,36,846 Total 24,90,326 AO observed that the provisions of section 194A are not applicable only in case of interest payment....
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....see concluded that organsations to whom assessee has made payments are within the purview of section 194A(3)(iii) of the Act, hence, there is no requirement for assessee to deduct tax at source on the payments made to them. On that basis, ld. CIT(A) deleted the addition made by AO. 7. We have considered the submissions of the parties and perused the materials on record. As could be seen, the only reason on which disallowance u/s 40(a)(ia) was made is, Citi Corp and AB Builders Fund Co-op. Society are not covered under Banking Regulation Act. However, on perusal of the relevant statutory provision, it is seen that both the organizations to whom assessee has paid interest, but, are coming within the exception provided u/s 194A(3)(iii) of the....
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....creditors have not confirmed of having supplied the materials to assessee. The details of the creditors are as under: S.No. Name of the creditors Amount (Rs.) 1 Sri Syed Sadiq Mohiuddin 45,00,000 2 Sri Shankar 23,64,500 3 M/s KSL Constructions 2,97,500 AO observed, when enquiry was conducted through an Inspector, it was found that Syed Sadiq Mohiuddin was not found in the address given by assessee. Even the PAN of Shri Syed Sadiq Mohiuddin given by assessee was is not existing. AO noted that assessee has entered into transactions with Shri Syed Sadiq Mohiuddin in April and May'08 and after initial payments from assessee for Rs. 13,50,000 on 08/04/08, no other transactions happened till January'09, which is surprising si....
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....ingly, he added back the amount of Rs. 2,97,500. Being aggrieved of such additions, assessee challenged the same in appeal preferred before ld. CIT(A). 10. Before ld. CIT(A), assessee made detailed submissions with regard to each of the creditor. In respect of Shri Syed Sadiq Mohiuddin, it was submitted by assessee that the concerned person was supplying materials to assessee from earlier FYs also and as on 01/04/08, there was outstanding liability to the said creditor amounting to Rs. 23,50,000. During the accounting year, assessee effected transaction to the tune of Rs. 70 lakhs and out of the total amount of Rs. 93,50,000, assessee made payment during the year to the extent of Rs. 45,50,000 leaving the balance due as on 31/03/09 at Rs. ....
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....as under: "7.3 I have seen carefully the facts and evidence. With respect to each of the three creditors, the assessing officer has accepted the genuineness of the payments. The assessing officer has held that each of the three persons were suppliers of the appellant with respect to stone and metal. The purchases have been accepted as genuine and the payments made have been accepted as genuine. For example in the case of Mis KSL Constructions, the assessing officer writes, "..... mere furnishing of bills/vouchers will only certify the genuineness of payments but not the existence of the creditor." 7 .4 In other words, there is no doubt expressed about the fact that purchases had been made and proper payments have been made with respect t....
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....tted, outstanding balance in respect of each of the creditor has been cleared in subsequent AY. In this context, he referred to the respective ledger account of the creditors as submitted in the paper book. 14. We have considered the submissions of the parties and perused the orders of the revenue authorities as well as other materials on record. On a perusal of the relevant material on record, it is very much clear that assessee was having running account with all the three creditors in respect of which additions have been made by AO. There is no dispute to the fact that concerned parties are suppliers to assessee as the material on record indicate that assessee was purchasing materials from the concerned parties from the earlier AYs. Thi....