TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 342
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....hat the payment of Rs. 50,00,000/- has been made to sub-contractors through banks only against RA Bills raised by them. (d) The Ld. CIT(A) ought to have appreciated that the payment of Rs. 50,00,000/- is covered by TDS which has been duly credited in to Government Account. (e) The Ld. CIT(A) ought to have appreciated that the Assessing Officer has made the disallowance of Rs. 50,00,000/-by merely relying on the statements of employees recorded at the time of search, there being no corroborative evidence for the same and that the disallowance has been made in contravention of CBDT's Instruction in F.No.286/2/2003-IT (Invn.) (f) The Ld.CIT(A) has erred in holding that instruction No.286/2/2003IT (Inv.,) is not relevant to the appellant's case. (g) The Ld. CIT(A) ought to have appreciated that the Assessing Officer has not brought any evidence on record that the expenditure of Rs. 50,00,000/- is not actually incurred by the appellant company. (h) The Ld. CIT(A) ought to have appreciated that drawing of cash from bank account of the sub-contractors by the employees of the appellant company cannot be a reason for making the disallowance. (i) The Ld. CIT(A) ought to h....
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.... that a Search and seizure operations u/s. 132 of the LT. Act, 1961 were carried out in the case of M/s. Madhucon Projects Limited and its groups of cases on 04.03.2011. Accordingly, notice u/s. 153A of the LT. Act, 1961 was issued by the AO on 13.01.2012. The assessee had filed original return of income for AY 2007-08 on 31.10.2007 declaring an income of Rs. 47,27,22,240/-. The assessee later filed a revised return of income after claiming 80lA and declared income of Rs. 8,71,79,894/-. 2.1 Before the current search, there was a search in the case of the assessee on 20.10.2005. For the A.Y. 2007-08, the assessment was completed u/s. 143(3) of the IT Act, 1961 on 31-12-2009, assessing the income at Rs. 56,83,45,275/-. The assessee preferred an appeal before CIT(A). The CIT(A) in his order dated 04-02-2011 gave partial relief. The assessee as well as the department preferred appeal before ITAT, Hyderabad. The Hon'ble ITAT, Hyderabad in its order dated 28.12.2012 disposed off both the appeals. The income of the assessee was arrived at Rs. 19,31,97,724/-, consequent to giving effect to the order of the ITAT, Hyderabad. 2.2 Notices u/s. 143(2) & 142{1) along with questionnaire wer....
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....y of payments to sub-contractors and, therefore, the same was disallowed u/s 37(1) of the Act. He submitted that the addition made under the head "profits and gains from business or profession". He, therefore, submitted that the addition made by the AO is covered by the CBDT Circular No. 37/2016, dated 2nd November, 2016 that the assessee is eligible for deduction u/s 80 IA of the Act. He, therefore, contended that the CIT(A) is not justified in denying deduction u/s 80IA on the inflated expenditure as held by the AO. 7.1 He relied on the paper book containing pages 1 to 63 dated 19/10/2021, which are assessment orders of the sub-contractors to whom the payments have been made for different assessment years, the details of which are as under: Left space intentionally 7.2 Referring to the above, he submitted that the amounts disallowed by the AO have been taken as turnover by the concerned recipients/sub-contractors and those sub-contractors turnover has been accepted by the revenue authorities in the assessments made and copies of the assessment orders are available in the paper book as quoted supra. He, therefore, pointed out that once the turnover is accepted by the revenue au....
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....he order of the CIT(A) is to be upheld on this count. 9. We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. We observe that search was conducted on the assessee and its group cases on 04/03/2011 and further search was conducted on 07/03/2011 as per para No. 6 of the assessment order and the statements recorded by the search team, which have been recorded by the AO in his order. For deciding the issue before us, first we have to see the assessment order on the basis of which the additions made by the AO as per para 11, which is reproduced below for the sake of clarity: "11. During the previous year relevant to the AY 2007-08, it is observed that an amount of Rs. 50 lakhs was withdrawn from the bank account of M/s Maa Highways maintained at Axis Bank, Begumpet, Greenlands by Sri Raju Magrulkar vide Instrument No. 914303. In light of the detailed narrations in the preceding paragraphs, this amount of Rs. 50 lakhs is treated as inflated expenditure by way of subcontract payments. Accordingly, the same is added." 9.1 The basis for making the addition as noted above, the AO has made the addition only ....
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.... profits of assessee after adjusting disallowance under section 40(a)(ia) of the Act would qualify for deduction under section 80-IB of the Act. This view was taken by the courts in the following cases: 1 Income-tax Officer-Ward 5(1) v. Keval Construction [2013] 33 taxmann.com 277 (Guj.) 2 Commissioner of Income-tax-IV, Nagpur v. Sunil Vishwambharnath Tiwari [2016] 63 taxmann.com 241 (Bom.) (ii) If deduction under section 40A(3) of the Act is not allowed, the same would have to be added to the profits of the undertaking on which the assessee would be entitled for deduction under section 80-IB of the Act. This view was taken by the court in the following case: ♦ Principal CIT, Kanpur v. Surya Merchants Ltd. [2016] 72 taxmann.com 16 (All.). The above views have attained finality as these judgments of the High Courts of Bombay, Gujarat and Allahabad have been accepted by the Department. 3. In view of the above, the Board has accepted the settled position that the disallowances made under sections 32, 40(a)(ia), 40A(3), 43B, etc. of the Act and other specific disallowances, related to the business activity against which the Chapter VI-A deduction has b....