TaxTMI 
TaxTMI 
2023 (10) TMI 186
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....11-12. 2. The issue raised in Ground No. 1 is against the order of the ld. CIT(A) directing the AO to allow deduction u/s 80IC of the Act amounting to Rs. 5,87,51,752/-. 3. The facts in brief are that the assessee is engaged in manufacturing of solid cushion tires, rubber P.U. moulded goods etc. The assessee has claimed deduction u/s 80IC of Rs. 11,75,03,503/- during the year and accordingly the assessee was called upon by the AO to furnish unit wise details of sales and profit earned which was accordingly furnished. The assessee has its units at various places. The said deduction was claimed in respect of its manufacturing unit at Dehradun. The AO during the course of assessment proceedings noticed that the net profit in respect of Dehradun Manufacturing unit is much higher as compared to overall profit rate of the assessee company as a whole. The AO further found that in the AY 2009-10 and A.Y. 2010-11 also claimed in respect of Section 80IC by the assessee and the profit rate of Dehradun unit was found unnaturally at very high level . In A.Y. 2009-10 & 2010-11 the claim u/s 80IC was restricted to 50% after observing that the net profit rate was 34.05% of this unit whereas ....
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....ed separately as under:- Rent of Rs. 3,08,000/- The appellant has submitted that it made rent payment to Smt. Shubra Shukla resident of 1/234 Viram Khand, Gomtinagar, Lucknow and no TDS was deducted as landlady declared such rent in her income tax return and paid due taxes thereon. On perusal of details furnished by the appellant, it is seen that the recipient of rent from the assessee company had shown rent receipts in her return for the relevant assessment year paid due taxes thereon. The Hon'ble Supreme Court in the landmark judgment in the case of Hindustan Coca Cola Beverages P. Ltd. Vs CIT 293 ITR 226 (SC) held that where deductee, recipient of income, has already paid taxes on amount received from deductor, department once again cannot recover tax from deductor on same income by treating deductor to be assessee-in-default for shortfall in its amount of tax deducted at source. Considering the facts of the case and decision of the Hon'ble Apex Court in the case of Hindustan Coca Cola Beverages P. Ltd., the AO is directed to delete the addition of Rs. 3,08,000/-. Consultancy expenses of Rs. 1,52,815/- made to Md. Muslim In respect of ....
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.... of details, the claim of the appellant appears to be correct. Accordingly, the AO is directed to delete the addition of Rs. 1,54,300/-. Consultancy charges of Rs. 84,595/- In respect of this payment, the appellant has submitted that Consultancy charge of Rs. 42,006/- was paid to several persons each below Rs. 20,000/-, this is evident from relevant ledger A/c enclosed and thus there was no liability to deduct TDS. Upon perusal of details the claim of the appellant appears to be correct. Accordingly, the AO is directed to delete the addition of Rs. 84,595/-. Consultancy charges of Rs. 1,17,000/- In respect of this payment, the appellant has submitted that the payment of Rs. 1,17,000/- to T. K. Kochunju has already been explained at item (d) above and hence disallowance of similar payment amounts to duplication of addition. I find that reason for non deduction of TDS in respect of this payment is already explained by the appellant and hence, I do not see any reason to sustain this disallowance. Accordingly, the addition of Rs. 1,17,000/- is directed to be deleted. Commission of Rs. 17,550/- In respect of this payment, the appella....
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....leted. The ground no. 3 raised by the appellant regarding this issue is allowed." 8. After hearing rival contentions and perusing the order of the ld. CIT(A), we observe that the ld. CIT(A) has passed a speaking and reasoned order giving substantive findings as to how the disallowance is not called for. We note that ld CIT(A) has analysed each and every item of expense and came to a conclusion that provisions of tax deduction at source are not applicable in some cases whereas in some instances in view of the decision of the apex court in the case of Hindustan Coca Cola Beverages P. Ltd. Vs CIT 293 JTR 226 (SC) , the provisions of section 40(a)(ia) are not applicable as the payees have returned the said payments in their return of income and paid due taxes. Consequently, we do not find any reason to disturb the findings of the ld. CIT(A) and accordingly Ground No. 2 of the revenue is dismissed. 9. Ground No. 3 is against the deletion of disallowance of Rs. 4,50,028/- by the ld. CIT(A) as made by the AO on account of payments made in cash in violation to provisions of Section 40A(3) of the Act. 10. During the assessment proceedings, the AO noticed that the assessee has made ....
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....pany failed to make payments which were outstanding and thus, hit by the provisions of sec. 43B of the Act the appellant claimed that in respect of outstanding payments enumerated in the table above from Sr. Nos. 1 to 7 which aggregated to Rs. 10,6,42,159/-, it paid total payment of Rs. 2,61,99,924/- and hence there was no question of non- payment of statutory liabilities. Upon considering the details and evidences by the appellant in support of its claim, I find that the AO failed to take note of the fact that the appellant had already made extra payment of Rs 2,61,99,924/- against total liability of Rs. 1,06,42,159/-. He might have got confused by the treatment given in the books of accounts. Nevertheless once it is established that the appellant company had in fact paid total sum of Rs. 2,61,99,924/- against liability of Rs. 1,06,42,159/-, then provisions of sec. 43B cannot be invoked. Similarly, regarding balance payments mentioned at Sr. No. 8 to 14 of the above table, the appellant company has satisfactorily explained that it had made statutory payments on or before the due date of filing of return of income. Considering the facts of the case and appellant's submissions, ....
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....rating payments (mentioned at Sr. No. 8 to 14) on or before 30-09-2011 i.e. on the due date of filing of return of income The appellant's case is duly covered by the Explanation provided in sec. 43B of the Act. Under such circumstances, the same cannot be disallowed and is allowable as per proviso to sec. 43B of the Act. Accordingly, the AOKS directed to delete the addition of Rs. 1,92,60,483/-. The ground no. 5 raised by the appellant regarding this issue is allowed." 15. After hearing rival contentions and perusing the material available on record, we observe that none of the cases of outstanding payments/dues were paid beyond the due date of filing of return. We observe from the submissions made and evidences furnished by the assessee and also from the findings given by the ld. CIT(A) in respect all these payments that they were paid within the due date. Since the issue is a factual one, we do not deem it fit to delve further into the issue as all these payments were made before the due date of filing of the return as noted by the ld CIT(A) in his appellate order. Consequently ground no. 4 is dismissed. 16. Ground No. 5 is against the direction of the ld. CIT(A) to all....
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....directors played their role in the company and had rendered their services for betterment of company. The appellant has further stated that Sri Subhash Chandra Saraf is aged about 65 years and is the promoter of the company he has management and administrative experience since incorporation till date, Sri Abhishek Saraf, the other director, is an MBA from foreign university, he is responsible for overall control of business carried on through four factory units at different places and the lady director is also an MBA and she looks after Haridwar factory unit. The appellant has also pointed out that the company had duly deducted TDS from consultancy charges paid to Directors and the directors are assessed to tax separately wherein remuneration as well as consultancy charged disclosed in their personal file. Considering the facts of the case and appellant's written submissions, I am inclined to agree with its claim. The appellant by highlighting qualification and work done by these three Directors, satisfactorily established that the consultancy charges paid to them cannot be said to be excessive or unreasonable. Moreover, these persons are separately assessed to tax and duly dec....
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....were shown outstanding at the year end and creditors were booked to circumvent and reduce tax liability. The ld AO thus observed that these commissions were paid out of non-business consideration and not for business purposes and, therefore, held the payments to be non-genuine. The ld. Assessing Officer also noted that in the past also similar payments made by the assessee by way of commission to different parties were disbelieved and disallowed. The ld. Assessing Officer on the basis of assessment made in Assessment Year 2009-10 and 2010-11 disallowed the said payments and added to the income of the assessee in the assessment framed. 24. In the appellate proceedings, the ld. CIT(A) allowed the appeal of the assessee after taking into consideration the submissions and contentions of the assessee. The ld. CIT(A) noted that the five parties who helped the assessee for procuring the orders and doing liaisoning work on behalf of the assessee with India Railways. It was also observed that the Assessing Officer doubted the genuineness of these payments by stating that there was no need for mediation for applying to the tenders/bids floated by Indian Railway and thus, the assessee has ....
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....icult to do business without the services of specialist agents for rendering these services. The ld. A/R submitted that the assessee has been paying the commissions over the years to procure and keep track of the tenders and after the tenders are awarded to ensure that work orders are issued and goods are supplied in terms of the work orders to Indian Railways. The ld. A/R, therefore, prayed that the order of the ld. CIT(A) being very speaking and reasoned is confirmed. 28. We have heard the rival submissions and perused the material available on record. We observe that the assessee is engaged in manufacturing and supplying goods to Indian Railways. We note that the assessee has hired services of commission agents for keeping track of the tenders, applying for the tenders, and after the tenders are successfully obtained, the obtaining of supply orders , supply of goods and finally pursuing and receiving payments. We have perused the order of the ld. CIT(A) and observed that the services of these agents are indispensable to do business with Indian Railways. The ld CIT(A) has gone into the commercial angle of these expenses and held that these were incurred for the purpose of busi....
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....e take up the assessee's appeal in ITA No. 580/Kol/2020 for Assessment Year 2012-13. 32. At the time of hearing, the ld. Counsel for the assessee submitted that it is not pressing Ground Nos. 1,2,5,6 & 7. 33. The issue raised in Ground No. 3 & 4 is against the confirmation of addition of Rs. 3,78,84,669/- by the ld. CIT(A) as made by the Assessing Officer on account of disallowance of commission. 34. The facts in brief are that the assessee has paid a sum of Rs. 6,60,32,650/- towards commission to four parties. The Assessing Officer disallowed the commission on the ground that India Railways is purely a Government Concern and they have their own system of tender, issue of work/supply orders, inspection of final products, quality control and final payments etc and also that the Government of India does not promote any middle men in the matter of procuring materials for its organization. The Assessing Officer also noted that a substantial part of the commission has been shown as outstanding at the year end, though these were paid in the subsequent period and thus doubted the genuineness of these expenses and added the same to the income of the assessee by passing a very cryp....
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.... commission can be genuine and another part is non-genuine between the eligible units and not eligible units when the services of the agents are taken in respect of all the units operated by the assessee. The ld. A/R submitted that these payments were made to the commission agents under specific agreements entered into with them for rendering special services and, therefore, these commission payments were wholly and exclusively rendered for the purpose of business of the assessee. It is not the case of the revenue that the assessee own money is siphoned off out of the books by way of paying commission. The ld. A/R finally submitted that keeping in view the consistency and also the decision of the Tribunal in the assessee's own case for Assessment Year 2010-11 and also the fact that the said payment was never bifurcated between genuine and non-genuine payments, payments being made by cheques after deduction of TDS ,the order of the ld. CIT(A) may be set aside by the directing the Assessing Officer to delete the disallowance. 37. We have heard rival contentions and perused the material available on record. 38. The ld DR on the other hand relied on the order of authorities below....