TaxTMI 
TaxTMI 
2017 (5) TMI 362
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.... year 2006-07 on 4.12.2006 declaring total income of Rs. 1,54,136/-. The assessment was completed u/s 143(3) of the Income Tax Act, 1961 (hereinafter called as 'the Act') on 12.12.2008 determining the total income of Rs. 50,96,493/-, inter-alia making additions towards disallowance of sundry creditors u/s 68 of the Act and disallowance of machinery maintenance expenditure u/s 40(a)(ia) of the Act for failure to deduct tax at source u/s 194C of the Act. The assessee carried the matter in appeal before the first appellate authority. The first appellate authority has confirmed the additions made by the A.O. and dismissed appeal filed by the assessee. The assessee has filed further appeal before the ITAT. The ITAT has set aside the issu....
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....rred, mode of payment and also balance outstanding at the end of the year. The A.O., however, could not satisfied with the explanations of the assessee, observed that the assessee failed to produce any proof to establish the identity of such persons and the genuineness of the payment, therefore, treated total expenditure incurred under the head machinery rent as unproved expenditure and added back to the total income of the assessee. Similarly, in respect of disallowance of machinery maintenance expenditure u/s 40(a)(ia) of the Act, though the assessee stated that expenditure incurred under the head machinery maintenance expenditure is towards reimbursement of fuel and spare parts cost to M/s. Essar Constructions and M/s. Kishore Enterprise....
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....ia) of the Act, the assessee submitted that it is a mere reimbursement of expenditure incurred by the parties towards cost of fuel and spare parts, therefore, the A.O. was erred in treating the same as a service contract, which attracts TDS provisions u/s 194C of the Act. 5. The CIT(A) after considering the relevant submissions of the assessee and also by relied upon certain judicial precedents, including the decision of Hon'ble High Court of Bombay in the case of Vodafone International Holdings BV Vs. CIT (311 ITR 46), observed that the assessee has not produced the details of payment, etc. as sought to decide whether expenses were genuinely incurred and payment was genuinely made, more so, when even identity of payer is not established a....
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....A.O. was erred in disallowing total expenditure, ignoring the specific directions of the ITAT, wherein the ITAT has given a categorical finding that the A.O. cannot make impugned disallowance u/s 68 of the Act, when the expenditure incurred under the head has been considered genuine, however, the ITAT has set aside the issue for the limited purpose of verification of facts to ascertain whether those details are filed before the A.O. or not. The assessee further contended that it has filed necessary details of expenditure including ledger extracts of the parties along with confirmation letters explaining the nature of expenditure and also proof of payment. The assessee also contends that the said outstanding expenditure was paid in the subse....
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.... ledger extracts. On perusal of the details filed by the assessee, we find that the parties have confirmed the transactions and also outstanding balance at the end of the year. Therefore, we are of the view that the A.O. was erred in travel beyond the directions of the ITAT, while disallowing the entire expenditure incurred under the head 'machinery rents'. The CIT(A) without appreciating the facts, simply uphold additions made by the A.O., therefore, we direct the A.O. to delete additions made towards disallowance of machinery rent. 8. The next issue that came up for our consideration is disallowance of machinery maintenance expenditure u/s 40(a)(ia) of the Act, for failure to deduct tax at source u/s 194C of the Act. The A.O. disallowed ....