TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1341
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.... of Income Tax (Appeals) {Ld. C.l.T.(A)} erred in confirming the disallowance of interest expense of Rs. 11,27,850/- under Section 36(1)(iii) of the Act. Consequently, the Ld. C.l.T.(A) ought to have held that interest expenses of Rs. 1127850/- is not disallowable under Section 36(1 )(iii) of the Act." 3. Brief facts are that the AO noticed during the course of assessment proceedings that the assessee has debited bank interest of Rs. 52.82 lacs to its profit and loss account. The AO further observed that the assessee has advanced interest free loans. Accordingly, he required the assessee as to why the proportionate interest be not disallowed and accordingly, he disallowed a sum of Rs. 11,27,850/-. Aggrieved, assessee preferred the appeal before CIT(A), who also confirmed the action of the AO by observing in Para 2.2. as under: - "2.2 I have carefully considered facts stated by the AO. and also the arguments of Ld. A.R. in oral as well as written submissions, It is undisputed that assessee had paid huge interest on borrowings made by it and also advanced interest free loans/advances to different persons /concerns . In spite of the fact that assessee is a loss making concern, (los....
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....ourt in the case of Reliance Utilities and Power Limited (supra). In term of the above, we remand the matter back to the file of AO for fresh adjudication. 5. The second issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of commission for short deduction of TDS under section 194H of the Act, thereby invoking the provisions of section 40(a)(ia) of the Act. For this assessee has raised following ground No. 2:- Disallowance of commission under Section 40(a)(ia) of the Act Rs. 17,13,478/-: "2. The facts and circumstances of the case and in law, the Ld. C.l.T(A) erred in holding that the provisions of Section 40(a)(ia) of the Act apply to short deduction at source. Consequently, the Ld. C.l.T(A) ought to have not confirmed the disallowance of commission of Rs. 17,13,478/-, on which the appellant had deducted tax at source under Section 40(a)(ia) of the Act. 6. We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the assessee has filed the details of TDS deducted and only from one party i.e. Sohum Shoppy Ltd. to whom a commission of Rs. 33,725/- was paid no TDS was deducted. Except this p....
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.... Section 40A(2)(b ) of the Act. Consequently, the Ld. C IT (A) ought to have not disallowed Rs. 40,00,000/- under Section 40A(2)(a) of the Act. 11. Briefly stated facts are that the assessee has made payment on account of purchase of jewellery from Say India Jewellers Pvt. Ltd, a company covered under the provisions of section 40A(2b) of the Act. Further, the assessee also acquired/ purchased jewellery from Nascent Jewellery Private Limited, which is also covered under the provisions of section 40(a)(2b) of the Act. The AO noted that the assessee has made entire purchase of Rs. 4,07,67,591/- from group of companies and booked net loss of Rs. 2,54,59,777/-. According to AO, the businessman has take into consideration various variable or fixed expenses required for retail sales while purchasing goods in bulk. According to AO, the assessee has disclosed margin of profit i.e. GP at 43.68% and out of the sum around 29% to sale consideration was paid to various parties. According to AO, the effective GP rate comes around 14.63%. Therefore, according to AO, the purchase price paid to persons specified under section 40A(2b) of the Act, the assessee failed to justify the same. Accordingly,....
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....n an ad-hoc basis out of the total services charges of Rs. 1,5209,793/-Consequently, the Ld. CI.T.(A) ought to have not disallowed services charges of Rs. 38,00,000/-." 15. Brief facts are that the assessee has debited service charges of Rs. 1,52,09,793/- to P & L account on account of payment made to parties namely Ashapura Enterprises and corporate care. The first of all the AO required the assessee to explain as to why the claim of the assessee be not disallowed. The assessee furnished form No. 16A, copies of IT Return, computation of balance sheets of these parties, ledger account confirmations, copies of bills and list of persons to whom supplies/ work done in response to query by the AO. It was also asked whether any service tax was charged by the party or not. The assessee submitted the details in the form of 16A issued to these parties and sample copy of invoices. The AO noted that from the sample bill of Ashapura Enterprises that the service charges in the month of August 2010 at Rs. 9,66,857/- on which service tax was deducted at Rs. 48,343/-. In the case of corporate care, the service tax has been deducted at the rate of 10.30% on the amount of 1,92,614/- at Rs. 19,839/....