TaxTMI 
TaxTMI 
2022 (7) TMI 1133
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.... as Nil in the preceding year and Rs.4,03,38,986/- in the impugned year. During the course of assessment proceedings, the assessee was requested to reconcile the same. In reply, the assessee submitted that due to technical error in generation of xml file in assessment year 2012-13, the same was not reflected in return of income but contended that the resultant figure of net profit in the return of income matched with the net profit as per audit report which was derived after giving effect of closing stock. The AO rejected the explanation of the assessee finding it not satisfactory and not supported by any documentary evidence, and thereafter added the said discrepancy of closing stock of assessment year 2012-13 & opening stock of assessment year 2013-14 to the tune of Rs.4,03,38,986/- to the total income of the assessee. 4. The Ld.CIT(A) deleted the addition finding merit in the assesses contention that it was only a typographical error in the return and the audited financial statements of both the years reflected no such discrepancy. The findings of the Ld.CIT(A) at para 6.1 of his order is as under: "6.1 So far as ground of appeal against addition of Rs.4,03,38|986/~ on accoun....
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....ival contentions and have gone through the orders of the authorities below. We do not find any infirmity in the order of the Ld.CIT(A) who has given a categorical finding of fact after due verification that there was no such discrepancy in the figures of stock of the preceding and impugned year in the audited financial statements of the assessee., that the discrepancy in the return filed therefore was a mere typographical error. The Revenue being unable to controvert the finding of the Ld.CIT(A) before us, we see no reason to interfere in the order of the Ld.CIT(A) deleting the addition of Rs.4,03,38,986/- made on account of alleged difference in stock. 8. Ground of appeal No.1 of the Revenue is therefore dismissed. 9. Ground no. 2 raised by the Revenue reads as under: The Ld.CIT(A) erred on facts and in law in deleting Rs.9,028/- made by AO on account of late payment of employees contribution u/s 36(1)(va)/43B. 10. Briefly stated the disallowance made by the AO u/s 36(1)(va)/43B of the Act pertained to employees contribution towards ESI of Rs.4,701/- for the month of August 2012 paid on 15.10.2012 which was due on 21.09.2012 and Rs.4,327/- for the month- of May 2012,challan o....
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....e by AO on account of disallowance u/s 14A . 17. The issue relates to disallowance of expenses incurred for the purposes of earning incomes exempt from tax u/s 14A of the Act Brief facts relating to the same are that during the course of assessment proceedings, it was seen that the assessee had made investment in Mutual Fund, income from which was exempt and had earned tax free dividend income of Rs.1,50,803/-& interest on PPF of Rs.92,710/-. Further, it was seen that the assessee had borrowed funds from banks & incurred interest expenses of Rs.74,20,523/-. Since the assessee did not furnish any details of separate interest expenses incurred on borrowed funds which had been utilized for the purpose of investment in Mutual Fund to earn the said tax free income, therefore the AO worked out disallowance u/s 14A rwr 8D at Rs. 9,28,106/-. 18. The Ld.CIT(A) deleted the addition finding sufficient interest free funds available with the assessee to make the investments. The relevant findings of the Ld.CIT(A) at para 6.4 of the order is as under: 6.4 So far as ground of appeal against disallowance of Rs.9,28,106/- U/S.14A r.w.r, 8D is concerned, I am of the considered view that the ques....
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....earned is fully exempt. We enclose herewith chart (Annexure A) showing details of such investments from which income earned is considered as exempt. Hence, the investments from which income is considered as taxable should not be considered in the computation of disallowance u/s. 14A. Further, the average of total assets appearing in the balance sheet of the assessee, on first day and last day of previous year will be worked out as per Annexure B enclosed herewith." 21. We have heard the rival contentions. We see no reason to interfere in the order of the Ld.CIT(A) who deleted the disallowance finding sufficient interest free funds available with the assessee for the purpose of making the investments. This fact has remained uncontroverted before us. It is a settled position of law that where sufficient own funds are available, the presumption is that the investments have been made out of the same calling for no disallowance of interest u/s 14A of the Act. The Hon'ble apex court laid down this proposition in the case of Commissioner of Income Tax(LTU) vs Reliance Industries Ltd.in Civil Appeal No. 37 of 2019 & Others dated 23-03-2019 . In view of the same we uphold the order of th....
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....fore part of purchase cost paid to them and not in the nature of transportation expenses. Relevant findings of the Ld.CIT(A) at para 6.6 of the order as under: "6.6 So far as ground of appeal against disallowance of Rs.36,61,656/u/s.40(a)(ia) is concerned, I am inclined to agree with the appellant that as the appellant does not make any payment to any transporter and the expenditure is part of purchase invoice raised by Hero Moto Corp. Ltd., question of disallowance u/s.40(a)(ia) does not arise. Hence, disallowance/addition is hereby deleted." 32. Before us Ld.Counsel for the assessee drew our attention to the decision of the Hon'ble Punjab and Haryana High Court in the case of CIT Vs. M/s. Bhagwati Steels (2010) ITA No. 693 Punjab & Haryana High Court holding that where freight expenses are part of bills of suppliers ,it cannot be said that assessee has paid any amount for transportation of goods and therefore no deduction of tax at source is called for on such payments u/s 194C of the Act .That as a consequence such amounts cannot be disallowed by invoking section 40(a)(ia) of the Act. Relevant findings of the Hon'ble High court to which our attention was drawn is as under: ....
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....r the Hon'ble apex court holding to the contrary to what was held by the Hon'ble Punjab and Haryana High Court in the case of Bhagwati Steels (supra). 35. In view of the same we see no reason to interfere in the order of the Ld.CIT(A) deleting the disallowance of freight expenses amounting to Rs.36,61,656/-. 36. Ground of appeal No.5 is dismissed. 37. Ground no. 6 reads as under: The Ld.CIT(A) erred on facts and in law in deleting Rs.2,91,440/- out of Rs.4,11,483/- made by AO on account of travelling expenses. 38. Briefly stated the AO had disallowed entire travelling expenses of Rs.4,11,483/- incurred by the assessee during the year on account of his failure to substantiate the same as having been incurred for business purposes. 39. Before the Ld.CIT(A) the assessee pointed out that the travelling expenses comprised of foreign travelling and domestic travelling and considering its business transactions with Hero Moto Corp Group travelling cannot be completely ruled out. 40. Ld.CIT(A) found merit in the same but held that the foreign traveling was not justified by the explanation and accordingly while he upheld the disallowance of foreign travelling expenses amounting to Rs....