TaxTMI 
TaxTMI 
2016 (11) TMI 1043
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....advertisement, brand promotion and other related activities largely for the Samsung group of companies. The assessee declared profit before tax amounting to Rs. 12.11 crores and odd on its turnover of Rs. 34.70 crores and odd, giving net profit rate of 35 per cent. on the turnover. The Assessing Officer observed that in the immediately preceding assessment year, the assessee declared a net profit at Rs. 10.47 crores on its turnover of Rs. 27.57 crores, giving the net profit rate of 38 per cent. Considering the steep fall of about 3 per cent. in the net profit rate, the Assessing Officer made addition of Rs. 1,04,10,944 by applying 38 per cent. net profit rate. The learned Commissioner of Income-tax (Appeals) sustained the addition. The assessee is aggrieved against the sustenance of this addition. 4. We have heard the rival submissions and perused the relevant material on record. It is observed that the only basis for making and sustaining the addition of Rs. 1.04 crores is the application of higher net profit rate of 38 per cent., being the profit rate of the immediately preceding year, as against 35 per cent. declared by the assessee for the year under consideration. The Asses....
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....d receipts of Rs. 34,70,31,473 in its profit and loss account as against total receipts of Rs. 123,07,65,261 as per the information available in Form 26AS. The Assessing Officer opined that the assessee had shown receipts lower by Rs. 88.37 crores, being the differential amount between Rs. 123.07 crores and Rs. 34.70 crores. In the absence of the assessee filing copy of account of the vendors to whom payments were made or any confirmation/identification numbers such as PAN, etc., and the addresses of the vendors, the Assessing Officer treated short receipts declared by the assessee at Rs. 88.37 crores as its business income. The assessee filed certain details before the learned Commissioner of Income-tax (Appeals). Vide letter dated July 24, 2014, the learned Commissioner of Income-tax (Appeals) required the assessee to give complete details of payments made to vendors, etc., which were not initially given. In the absence of any response, the learned Commissioner of Income-tax (Appeals) again required the assessee to furnish current address of 13 vendors "(picked up on sample basis)" for the purpose of verification by the Assessing Officer. The Assessing Officer, vide his letter da....
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....84 The unconfirmed amount of Rs. 4,45,92,184 to be disallowed 8. Tata Teleservices Ltd. 4,41,68,372 - Confirmation not received. The unconfirmed amount of Rs. 4,41,68,372 to be disallowed 9. Lustra Print Process Pvt. Ltd. 4,15,34,580 98,29,279 3,17,05,301 The unconfirmed amount of Rs. 3,17,05,301 to be disallowed 10. Shark Design Studio Pvt. Ltd. 3,45,42,617 Confirmed - Confirmed 11. Next Step Engineering Pvt. Ltd. 3,89,73,075 - Confirmation not received. The unconfirmed amount of Rs. 3,80,73,075 to be disallowed on account of non-confirmation. 12. Primesite Outdoor Advertising Pvt. Ltd. 3,40,12,655 Confirmed - Confirmed 13. Kalpakaaru Projects Pvt. Ltd. 3,33,28,317 Confirmed - Confirmed Total 1,45,84,74,454 96,25,57,244 48,27,46,541 7. The learned first appellate authority observed that out of total payments claimed to have been made by the assessee to the above 13 parties totalling Rs. 145.84 crores and odd, confirmations were received for a sum of Rs. 96.25 crores, leaving the unconfirmed balances out of the alleged payments to these 1....
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....unt before making any addition for deficiency or otherwise. A copy of the Tribunal order for the immediately preceding assessment year, namely, 2009-10 is available on page 93 of the paper book. As the facts and circumstances of the instant year are mutatis mutandis similar to those of the earlier years, respectfully following the precedent, we set aside the impugned order and remit the matter to the file of the Assessing Officer for deciding this issue afresh after seeking details from the assessee and vendors and, thereafter, reconciling the position. If the payments are proved to have been genuinely made by the assessee to the vendors, then, of course, no addition can be made to that extent. If, however, the payments are found to be not genuinely made, then such alleged payments would qualify for addition. 9. Before parting with this issue, we would like to deal with the contention of the learned authorised representative that the restoration should be confined only to Rs. 48.27 crores, being the amount for which confirmations were not received out of 13 parties and no restoration should be made in respect of the remaining amount because the learned Commissioner of Income-tax....
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....he assessee filed submissions on August 22, 2014. Considering the details filed by the assessee, the learned Commissioner of Income-tax (Appeals) disallowed a sum of Rs. 2,85,34,682 (Rs. 2,31,000, being payment to print/ electronic media; Rs. 97,45,288, being non-deduction due to lower withholding certificates furnished by vendors; Rs. 64,92,390, being payments for purchase of material; Rs. 1,20,49,546, being reimbursement of expenses paid to employees/vendors; and Rs. 16,638, being expenses below threshold limit) under section 40(a)(ia) on account of non-deduction of tax at source. The assessee is aggrieved against the making of this enhancement by the learned Commissioner of Income-tax (Appeals). 12. We have heard the rival submissions and perused the relevant material on record. At the outset, the learned authorised representative contended that the learned Commissioner of Income-tax (Appeals) was not justified in making enhancement in the shape of disallowance under section40(a)(ia) by discovering a new source of income, which was not a subject matter of examination by the Assessing Officer. For this proposition, he relied on the judgment of the hon'ble Delhi High Court ....
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....see, it was observed by the learned Commissioner of Income-tax (Appeals) that the assessee submitted only two bills of Rs. 27,000 each which were in the name of Cheil World Wide, being a separate entity. For the remaining sum of Rs. 1.77 lakhs, the assessee did not furnish any evidence. That is how the learned Commissioner of Income-tax (Appeals) made disallowance of Rs. 21.31 lakhs. 14. The assessee has filed a request for admission of additional evidence, being, two bills of Rs. 27,000 each drawn in the name of the assessee, which were originally in the name of Cheil World Wide. The learned authorised representative submitted that the new bills could not be filed before the learned Commissioner of Income-tax (Appeals) as these were not available at the material time and the assessee could manage to obtain the same only later on. As regards the remaining sum of Rs. 1.77 lakhs, the learned authorised representative submitted that the evidence which was earlier not available now can be produced for examination. It was, therefore, prayed that this issue may be restored for a fresh consideration. The learned Departmental representative submitted that it would be more appropriate if....
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.... Burnett) as separate entities, the learned Commissioner of Income-tax (Appeals) could not have presumed the same to be one entity alone. However, considering the entirety of the facts and circumstances of the case, we are satisfied that it would be in the fitness of things if the impugned order is set aside and the matter is restored to the file of the Assessing Officer for verifying the assessee's contention and, then, deciding it accordingly. Both the sides were unanimous in their argument that this issue may be restored for fresh examination by the Assessing Officer. 18. The third component of disallowance made by the learned Commissioner of Income-tax (Appeals) under section 40(a)(ia) is a sum of Rs. 64,92,390, being payments made to certain vendors on which no tax at source was deducted under section 194C of the Act. The learned Commissioner of Income-tax (Appeals) noticed that the assessee did not deduct tax at source on payments amounting to Rs. 114,94,919 as such payments, in his opinion, fell within the definition of "work" as provided in section 194C of the Act. On a sample basis, he elaborated a few instances as given in annexure 8, submitted by the assessee, as ....
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....e under section 40(a)(ia). Acceding to the request from both the sides, we set aside the impugned order on this score and remit the matter to the file of the Assessing Officer for a de novo adjudication of this issue. The learned authorised representative's argument that the restoration should be made only for the disallowance to the tune of Rs. 14,89,861 and not for the 50 per cent. of the remaining amount, is not acceptable in view of the reasons given by us while dealing with the second issue. We, therefore, direct a fresh examination of the disallowance made by the learned Commissioner of Income-tax (Appeals) at Rs. 64,92,390 at the Assessing Officer's end. Needless to say, the assessee will be allowed a reasonable opportunity of hearing by the Assessing Officer. 21. Next item of disallowance is a sum of Rs. 120,49,546, being reimbursement of expense paid to employees/vendors. The assessee paid a sum of Rs. 1.20 crores as reimbursement of costs incurred by employees on its behalf. The learned Commissioner of Income-tax (Appeals) observed that the assessee did give a detailed list of employees and description of costs incurred. Since the expenditure shown against each....