TaxTMI 
TaxTMI 
2019 (3) TMI 891
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....009-10. The assessee has raised the following grounds of appeal. 1. The Ld.CIT (A) has erred in confirming the disallowance of Rs. 1,61,739/- made by the Assessing Officer out of depreciation on two wheeler vehicles and Car. 2. The Ld.CIT (A) has erred in confirming disallowance of Rs. 13,45,356/- made by the Assessing out of labour charges claimed by the Appellant. 3. The appellant craves leave to add, alter, amend or modify any of the grounds of appeal on or before the date of hearing of appeal. 4. The 1st issue raised by the assessee is that the learned CIT (A) erred in confirming the addition of Rs. 1,61,739/- on account of depreciation. 5. Briefly stated facts are that assessee is a limited company and engaged in the business of trading and manufacturing of gold and diamonds ornaments. The assessee has claimed depreciation in respect of certain vehicles which were registered in the name of Directors. The assessee claimed that it is the beneficial owner of the asset. The assessee further claimed that these assets were used only and exclusively for the business. Therefore, no adverse inference can be drawn against the assessee merely on the groun....
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....ablish that the assets were used for the business. The learned CIT (A) subsequently confirmed the action of the AO. 10.1 Regarding the ownership of the assets, we note that the beneficial ownership vest with the assessee. It is because the payment was made for the purchase of the assets by the assessee though the assets were registered in the name of the directors of the company. Since this fact has not been doubted by any of the authorities below, therefore, we can safely presume that the assessee is the beneficial owner of the assets. In holding so we find support and guidance from the judgment of Hon'ble Supreme Court in the case of Mysore minerals Ltd. vs CIT reported in 239 ITR 775 wherein it was held as under: "13. An overall view of the abovesaid authorities show that the very concept of depreciation suggests that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset, is utilizing the capital asset and thereby loosing gradually investment caused by wear and tear, and would need to replace the same by having lost its value fully over a period of time." 10.2 The 2nd dispute relates whether the assets were us....
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....ear 2006-07. Therefore, the same was disallowed and added to the total income of the assessee. 13. Aggrieved assessee preferred an appeal to Ld. CIT (A). The assessee before the Ld. CIT (A) submitted that it had received labour charges amounting to Rs. 42,00,303/- only against labour expenses of Rs. 19,20,390/- only. 13.1 The assessee before the ld. CIT (A) submitted that it is making the payment to labourers periodically against the work carried out by them. However, at the end of the year all the payment made to the labors are clubbed and against such payment, a single bill is issued by the labors. The assessee also submitted that the payment to the labourers had been made after deducting TDS and through account payee cheques. 13.2 All the details of the labourers were available with the AO during the assessment proceeding. Thus in case of any doubt the AO was empowered to verify the same by issuing notice u/s 131/133(6) of the Act. 13.3 There was an inadvertent error in mentioning the date on the bill issued by the labourers but these expenses were never claimed in the previous year 2006- 07. Therefore the question of double deduction for labour expenses does not ari....
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....on of the AO by observing that the assessee failed to furnish sufficient documentary evidence to demonstrate that there was an actual transfer of jewelry from the assessee to the laborers for carrying out the necessary work on such jewelry. 16.5 The assessee has filed revised bills of the current year which were raised by the laborers on the last day of the previous year. 16.6 The assessee has not deducted the TDS on the bills raised by the labors in the manner as provided under the provisions of law. Thus the ld. CIT (A) was of the view that the Labour expenses should also be disallowed on account of nondeduction of TDS under section 194C of the Act r.w.s. 40(a)(ia) of the Act. 16.7 From the preceding discussion we note that all the details of the laborers including the addresses and PAN were available with the authorities below. In case there is any doubt about the labour expenses claimed by the assessee, then the authorities below should have taken the confirmation from the respective parties. The authorities below were empowered to verify whether these labors have disclosed the receipt from the assessee in their respective income tax return or not. But we find that the....
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....ion of section 14A r.w.r 8D of Income Tax Rule. 19. The AO during the assessment proceedings found that the assessee has made the investment in shares and securities. But the assessee failed to make any disallowance u/s 14A r.w.r 8D, therefore, the AO made the disallowance of Rs. 1,84,600/- u/s. 14A r.w.r 8D and added to the total income of the assessee. 20. Aggrieved assessee preferred an appeal to ld. CIT(A) who has confirmed the order of the AO. 21. Being aggrieved by the order of ld. CIT (A) assessee is in appeal before us. 22. The Ld. AR before us submitted that there was no exempt income earned by the assessee during the year under consideration. Therefore, there cannot be any disallowance under the provision of section 14A r.w.r 8D of Income Tax Rules 1963. 23. On the other hand Ld. DR vehemently supported the order of the authorities below. 24. We have heard the rival contentions and perused the materials available on record. At the outset, we note that there was no exempt income earned by the assessee in the year under consideration. Therefore, in our considered view there cannot be any disallowance under section 14A read with rule 8D of the Act in view o....
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.... Accordingly, we set aside the order of learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 25. The second issue raised by the assessee is that Ld. CIT (A) erred in confirming the disallowance of Rs. 8,70,000/- on account of diversion of interestbearing fund. 26. The AO during the assessment proceedings found that the assessee has diverted its fund amounting to Rs. 70,00,000/- as an advance for capital assets which was having an opening balance of Rs. 75,00,000/- only. Accordingly the AO was of the view that the assessee has diverted interest-bearing fund. Accordingly, the AO workedout the amount of interest on such advance proportionately amounting to Rs. 8,70,000/- and added to the total income of the assessee. 27. Aggrieved assessee preferred an appeal to Ld. CIT (A) who has confirmed the order of the AO. 28. Being aggrieved by the order of the Ld. CIT (A) assessee is in appeal before us. 29. The Ld. AR, before us at the outset submitted that own fund of assessee including the free reserve exceeds the amount of such advances. Therefore, there cannot be any disallowance on account of interest ....