AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 1773
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....purchases made by the assessee. 3. We have heard the ld DR and perused the materials available on record. The return of income for the assessment year 2015-16 was filed by the Assessee declaring total income of Rs 8,68,68,625/-. During the course of assessment proceedings, the ld AO proceeded to examine the veracity of purchases made by the Assessee. The Assessee furnished the list of parties from whom it had made purchases. The Assessee is a partnership firm engaged in the business of manufacture and export of frozen meat, hide, MBM, poultry feed, tallow etc., from its factory at Muzaffarnagar, Meerut and Mumbai. The Assessee firm has its slaughter house and rendering plant at 9^th K.M. Jansath Road, Muzaffarnagar. Live buffaloes are received from various suppliers at the factory. The same are slaughtered as per the recommended procedure after due examination by veterinary doctors. The inedible portions and hide are removed and the boneless meat is chilled for 10 to 12 hours at 0 degrees temperature. After chilling, the same is processed in various sizes as per the specifications of the respective buyers. Then the processed meat is sent for freezing at minus 40 degrees temperat....
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.... before the ld AO. The assessee firm in respect of Mohammed Imran filed a copy of ledger account of the said party as appearing in the books of accounts, copies of sample meet receipt voucher along with bank statements showing the payments made to the said party. It was also pointed out that the said party is filing its income tax returns regularly and in support of which the assessee furnished the copy of PAN card along with ITR and computation of income for Assessment Year 2015-16. All the payments were made to the parties by account payee cheques. The ld AO observed that 4 parties had duly responded to the notice under section 133(6) of the Act and proceeded to accept the purchases made from them as genuine. However, in respect of 2 parties where notice under section 133(6) of the Act stood not complied, the purchases made from them totaling to Rs 20,02,27,640/- was sought to be treated as unverifiable purchases and accordingly added to the total income of the Assessee. 5. The submissions of the Assessee were forwarded to the ld AO by the ld CITA for verification and a remand report was sought. The ld AO furnished remand report dated 25-01-2019 which is reproduced in pages 33....
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....tted that these persons are not under the control of the Assessee firm. Further, the Assessee also submitted one more letter dated 5-3-2020 before the ld CITA. The ld CITA again sought for a remand report from the ld AO in respect of further submissions made by the Assessee. No remand report was furnished by the ld AO for the same. 7. The ld CITA observed that in respect of the purchases made from these two disputed parties, the Assessee could only produce self-serving documents in the form of supporting evidences to justify the claim of purchase transactions and that no third-party confirmations could be produced for the same. The ld CITA also observed that the ld AO had noticed that there was a trend of decline in the gross profit and net profit ratio during the year when compared to the preceding year. The ld CITA observed in para 5.16 of the order that wherever the parties had duly complied with the notice under section 133(6) of the Act, the ld AO had duly accepted the same to be genuine as they were supported by third-party evidences and confirmations. However, with regard to these two disputed parties i.e. Mohammad Imran and Haji Mohammad Yameen, the 133(6) notice stood n....
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....d CHAPS6447N 8& 2,63,094 4. AdityaRaiSud FLPTS3652D 8% 2,46,407 5. KrishanSood (HUF) r AAEHK7878N 4% 4,23,599 Total Rs. 14,31,847/- 11. The ld AO stated that this interest is paid on unsecured loans to the related parties. From the aforesaid table, it was noticed by the ld AO that Assessee had paid interest only at the rate of 4% on the loan borrowed from Krishan Sud (HUF), whereas for other related parties, interest is paid at the rate of 8%. Accordingly, the ld AO held that the market rate of interest should be considered only at 4% for all the related parties and proceeded to disallow a sum of Rs. 5,04,124 as being excessive interest paid in terms of Section 40A(2)(b) of the Act. The Assessee before the ld CITA submitted that the market rate of interest on unsecured loans was in the range of 12 to 14% whereas the Assessee has paid only 8% to its relatives on the unsecured loans received. It was also pointed out that all the related parties are duly assessed to income tax and had offered the interest income in their returns. The ld AO had not brought any comparable instances to determine the fair market....
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....ving the total details of cash payments made in excess of Rs 10000/-, there were certain payments which were towards capital assets and there were some duplication of entries. Hence, the same should be outside the purview of disallowance under Section 40A(3) of the Act in any event. After the removal of these deficiencies, what remains is total payments made in the sum of Rs 3,76,998/- which are tabulated in page 33 of the Order of ld CITA which is reproduced as under:- SN DATE NATURE OF EXPS. DESCRIPTION AMOUNT REMARK 1 19.01.2018 Mzr F.A. Tractor Trolley being cash for tractor 1,57,000 Old second hand tractor purchased from a farmer who did not have any bank account. Since this payment is for purchase of capital asset, the disallowance can not exceed the depreciation amount of Rs. 11,775/- 2 08.11.2017 Bonus Cash payment 1,31,750 Paid to various contractors for payment of bonus to their labour. Only payment to four contractors exceeded Rs. 10,000/ -. However, payment to each labour did not exceed Rs. 10,000/ -. 3 15.07.2017 Labour Welfare Cash payment 11,000 Paid to School for fee five children of late employ....
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....resents reimbursements made to partner and employees for petrol and diesel purchased on various dates wherein each payment did not exceed Rs 10,000/-. Hence there is no violation of provisions of section 40A(3) of the Act. 22. Accordingly, the Ground Nos. 1 to 3 raised by the revenue are dismissed. 23. Ground Nos. 4 and 5 raised by the revenue are challenging the deletion of disallowance made on account of export commission expenses. 24. We have heard the rival submissions and perused the material available on record. It is not in dispute that the assessee had paid commission to non- resident Indian agents outside India for procurement of orders from buyers. These payments are made without deduction of tax at source. It is not in dispute that the buyers are located outside India and agents are also located outside India and services are rendered outside India. It is not in dispute that the non-resident agents do not have any Permanent Establishment in India. Accordingly, it was pleaded that the assessee was not liable to deduct tax at source in terms of Section 195(1) of the Act on the commission paid to the non-resident agents as the sum is not taxable in India in the han....