TaxTMI 
TaxTMI 
2025 (2) TMI 1915
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....A.Y. 2012-13 on 24.09.2012 declaring total loss of Rs. 4,23,41,043/-. The case of the assessee was selected for scrutiny and accordingly notices u/s.143(2) / 142(1) of the Income Tax Act, 1961 ("the Act") were issued by the Learned Assessing Officer ("Ld. AO") to the assessee. However, the assessee did not respond to the said notices issued by the Ld. AO. 2.1 From the available record, the Ld. AO found that the opening and closing balance of unsecured loans were Rs. 2,99,95,953/- and Rs. 12,05,75,037/- respectively and accordingly, there was an increase in unsecured loans by Rs. 9,05,79,084/- during the year under consideration (placed at para no.3(i) on page no.2 of order of Ld. AO). In the absence of non-submission of the confirmation letter in support of loan creditors, the Ld. AO treated the increase in unsecured loan as unexplained credit u/s.68 of the Act and Rs. 9,05,79,084/- was added to the total income of the assessee. 2.2 At para no.3(i) of page no.2 of the order of Ld. AO, the Ld. AO has reproduced various expenditure claimed by the assessee during the year under consideration, which are to the following effect : 3. (i) On verification of the inf....
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....84 9868902 4331382 Interest expense disallowed @ 50% u/s.40(a)(ia) 4412893 4412893 -- Advertisement expenses u/s.40(a)(ia) 23463 -- 23463 Audit fees u/s.40(a)(ia) 150000 150000 -- Sales promotion expense @ 50% for no vouchers 656978 -- 656978 Depreciation disallowed 127840 -- 127840 14A disallowance 148354 148354 -- Total 110298896 105159236 5139660 4. Aggrieved with the order of Ld. CIT(A), the assessee as well as revenue are in appeal before us. ITA No.895/Hyd/2018 (By Revenue) 5. The grounds raised by the Revenue are as under : "i) The order of the Ld. CIT(A) is erroneous on facts as well as in law. ii) The Ld. CIT(A) erred in admitting the invalid appeal by condoning the delay without giving any reasons. iii) The Ld. CIT(A) erred in deleting the addition of Rs. 9,05,79,084/- made u/s 68 by admitting additional evidence without providing an opportunity to the Assessing officer as required under Rule 46A of IT rules. iv) The Ld. CIT(A) erred in deleting the disallowance of expenses of Rs. 98,68,902/- out of Rs. 1,42,00,284/- made by the AO. ....
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....ed loans in accordance with section 68 of the Act. Consequently, the Ld. AO treated the increase in unsecured loans as unexplained credit u/s.68 of the Act and made the addition of Rs. 9,05,79,084/- in the hands of the assessee. 7.1 Aggrieved with the order of Ld. AO, the assessee had filed appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee submitted that it is the security deposits and not the unsecured loans, which has been increased during the year under consideration. The assessee submitted that, they had taken security deposit of Rs. 9.97 Crores during the year from M/s. Hyderabad Infracom (India) Pvt. Ltd. ("Hyderabad Infracom or depositor") and filed before the Ld. CIT(A), the ledger account of Hyderabad Infracom, copy of bank statement in which the sums were received and the confirmation letter received from Hyderabad Infracom stating that they have given the security deposit to the assessee. On considering the submissions and explanation of the assessee, the Ld. CIT(A) deleted the addition of Rs. 9,05,79,084/- made by the Ld. AO. The observation of the Ld. CIT(A) in this regard is contained under para no.7.3 of his order, which is to the following effect ....
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....t, the same copies were produced before the Ld. CIT(A), which are not legible. He finally submitted that, when the copy of bank statements are not legible and the confirmation letter given by the Hyderabad Infra shows that the payment of Rs. 2 Crores, 31 lakhs, 1 lakh falls in F.Y. 2012-13, which the assessee has shown in their books in F.Y. 2011-12, the verification done by the Ld. CIT(A) is erroneous and required to be set aside. 7.3 Per contra, the Ld. AR submitted that, the order passed by the Ld. CIT(A) is well reasoned and has been passed after verification of all the relevant documents produced before him. Therefore, the allegation of the Ld. DR, that the Ld. CIT(A) has not properly verified the documents / evidences are not correct. Further, with regard to the argument of the Ld. DR regarding payment of Rs. 2 Crores, 31 lakhs and 1 lakh as per the certificate of Hyderabad Infracom, the Ld. AR submitted that, they have deposited the cheque in the bank on 31.03.2012 and accordingly, the bank credited the same on the same date in the bank statement. However, it has been cleared from the account of the payer on 04.04.2012. This is a normal routine process in the case of cheq....
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....n considered by him for the purpose of making such addition. After verification, the Ld. CIT(A) has given the findings that it is the security deposit of Rs. 9.97 Crores which has been increased during the year and after considering the relevant documents filed by the assessee deleted the said addition. Further, as far as the objection of the Ld. DR that, there are differences of Rs. 2 Crores Rs. 31 lakhs and 1 lakh between the certificate given by the depositor and as per the books of accounts of the assessee, we are convinced with submission of the assessee, that, such type of differences are common under banking transactions, which are caused due to time consumed in clearing. Further, we are also in conformity with the assessee that there was no need of any bank reconcilement in this case, as the bank has given the credit during the same year and accordingly, there was no difference in balance as per their books and bank statement. Accordingly, we do not find any infirmity in the order of Ld. CIT(A) and hereby uphold the order of Ld. CIT(A) qua this issue. Hence, ground no.3 of the revenue is dismissed. 8. The facts with regard to ground no.4 of the revenue are that, at para ....
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.... CIT(A) are as under : SI. No. Item of Expenditure Details submitted 1 Interest on Cash Credits 1. Ledger copy of Interest on Cash Credits, wherein the interest provision was shown at Rs. 35,78,150/- as on 01.10.2010 to 31.03.2011 and Rs. 88,25,786/- as on 01.04.2011 to 31.03.2012 totalling to Rs. 1,24,03.936/-. 2. Bank Statement of SB A/c No. 52095899033 of State Bank of Hyderabad, Punjagutta Branch, Hyderabad, wherein it shows the debit of Interest as on 31.03.2012 at Rs. 1,24,03,936/- 2 Electricity charges Copies of Ledger and Electricity Bills from April 2011 to March 2012 for total amount of Rs. 10,43,116/- 3 Business Promotions Copy of Ledger of Business Promotion Fee for Rs. 4,52,391/-. No confirmations were submitted from the recipients. 4 Other Miscellaneous Expenses Amount and details were not submitted. 8.3 The submission of the appellant has been carefully considered. The appellant's submissions regarding Interest on Cash Credits, Electricity Charges and Business Promotions have lacuna. Findings are as follows : Amount claimed Amount explained Interest on Cash Credits Rs. 88,25,786 Exp....
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....on the order of Ld. CIT(A). 8.5 We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. We have gone through the order of Ld. AO and Ld. CIT(A). It is a fact that while making the addition of Rs. 1,42,00,284/- on account of non-production of bills / vouchers, the Ld. AO has not given any details of nature of expenditure or the head of expenditure out of which the said addition has been made. It seems like that, the Ld. AO has made addition on estimated basis, which is very arbitrary on the part of the Ld. AO. Any arbitrary addition made on the estimated basis cannot be sustained under the law. Accordingly, the addition made by the Ld. AO is liable to be dismissed on this count only. However, the Ld. CIT(A) in his order has given a finding that, the amount of Rs. 88,25,786/- and Rs. 10,43,116/- are on account of interest to bank and electricity expenses respectively, are forming part of the amount of disallowance of Rs. 1,42,00,284/- made by the Ld. AO. With regard to the interest to bank, the Ld. CIT(A) after verification of the bank account of the assessee has deleted the addition. Further, as far as the electric....
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....gh the record in the light of the submissions made by either side. As far as the deletion of Rs. 44,12,893/- made by the Ld. CIT(A) on account of no TDS, we have gone through the order of Ld. CIT(A) and also gone through the provisions contained in section 194A of the Act. As per the clear meaning of section 194A, no TDS is required to be deducted on the amount of payment of interest to bank. Therefore, in our considered opinion, as no TDS was required to be deducted on interest to bank, the addition made by the Ld. AO on account of no TDS is required to be deleted. Accordingly, we do not find any infirmity in the order of Ld. CIT(A) qua deletion of Rs. 44,12,893/-. Further, as far as the objection of the Ld. DR that the Ld. CIT(A) has given double relief on account of interest to bank is concerned, as mentioned in para 8.5 above, the Ld. CIT(A) in his order has given a finding that, the total disallowance of Rs. 1,42,00,284/- made by the Ld. AO include Rs. 88,25,786/- and Rs. 10,43,116/- on account of disallowance made towards interest to bank and electricity expenses respectively. Accordingly, the Ld. AO had made addition on account of bank interest twice, i.e. first along with t....
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....1. The only investment in the Indian company is made by the assessee in the preceding year and not during the year under consideration and therefore, when there is no dividend income for the year under consideration, the provisions of section 14A are not applicable. Hence, in view of the various judgments on this point Page 7 of 32 ITA Nos 1550 and 1769 LYCOS Internet Ltd including the decision of the Hon'ble Delhi High Court in the case of Cheminvest Ltd (2015) 378 ITR 33 (Del.) as well as the judgment of the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Hero Cycles Ltd (2010) 323 ITR 518 (P&H), no disallowance u/s 14A is called for when the assessee has not earned any dividend income during the year under consideration. Accordingly, in view of the facts as discussed above, we do not find any error or illegality in the impugned order of the learned CIT(A) qua on this issue. The same is upheld." 10.3 Respectfully following the decision of Hyderabad Bench of ITAT (supra), we also hold that, as the assessee has not earned any dividend income which is exempted u/s.10(34) of the Act on the said investment during the year under consideration, no disallowance can ....
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....n the light of the submissions made by either side. We have gone through the order of Ld. CIT(A), the details of relief given by the Ld. CIT(A) to the assessee and the details of evidences / documents on the basis of which the Ld. CIT(A) has given the relief. 11.3 It is crucial to mention here that, the Ld. CIT(A) has also sustained addition of Rs. 43,31,379/- out of addition of Rs. 1,42,00,284/- on account of inadequacy of relevant evidences / documents. However as far as the relief of Rs. 44,12,893/- u/s.40(a)(ia) of the Act on account of payment of bank interest is concerned, the same did not required the verification of any documents. The relief was given by the Ld. CIT(A) merely on the basis of interpretation of section 194A(3)(iii) of the Act, as per which, no TDS is required to be deducted on payment of bank interest and accordingly no disallowance could be made u/s 40(a)(ia) of the Act. Further, in case of disallowance of depreciation of Rs. 1,27,840/-, the Ld. CIT(A) has not deleted the addition and in fact has set aside the issue to the file of Ld. AO for verification of bills / vouchers, necessitating the need of verification of the same on the part of the Ld. AO. On ....
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.... u/s 40(a) (ia) of the Act. 5. The Ld. CIT(A) ought to have appreciated that the amount of Rs. 23,463/- spent towards advertisement expenses is much below the threshold limit as per the provisions of section 194C of the Act and thus no disallowance shall be made under section 40(a)(ia) of the Act. 6. The Ld. CIT(A) ought to have appreciated that the disallowance of Rs. 23,463/- is not warranted since the assessee has not been treated as an assessee in default u/s. 201(1) of the Act and no proceedings have been initiated in this regard. 7. The Ld. CIT(A) erred in upholding the disallowance made of Rs. 6,56,978/- under the head "Sales Promotion". 1. The order of the CIT(A) is erroneous both on facts and in law. 8. The Ld. CIT(A) ought to have appreciated that there is no discussion in the assessment order as to the disallowance of 50% of expenditure on Sales Promotion being Rs. 6,56,978/- except mentioning in the abstract of additions/disallowances by the AO. 9. The Ld. CIT(A) while confirming the disallowance of Rs. 6,56,978/- erred in holding that since no TDS had been deducted, 50% of the expenditure was disallowed by the AO. ....
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....ness of the assessee and are in the nature of revenue expenditure. Accordingly, the same are required to be allowed as business expenditure u/s. 37 of the Act. Therefore, the Ld. AR prayed before the bench to delete the amount of Rs. 43,31,382/- sustained by the Ld. CIT(A). 16.1 Per contra, the Ld. DR relied on the order of Ld. CIT(A). 16.2 We have heard the rival contentions and also gone through the record in the light of the submissions made by either side. As far as the addition sustained by the Ld. CIT(A) for Rs. 43,31,382/- is concerned, the assessee failed to submit any evidence in the form of bills / vouchers before the Ld. AO as well as the Ld. CIT(A) and therefore, the Ld. CIT(A) sustained the said addition. Therefore, in the absence of any supporting evidence, we do not find any merit in the argument of Ld. AR. Accordingly, we dismiss the claim of the assessee. In the result, the ground nos.2 and 3 of the assessee are dismissed. 17. The ground nos.7 to 11 of the assessee ae related to addition of Rs. 6,56,978/- on account of sales promotion expenses. The relevant facts with regards to this issue is that, the assessee had claimed an amount of Rs. 13,13,955/- unde....