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2015 (9) TMI 1004 - ITAT HYDERABADAddition made on account of disallowance u/s 40(a)(ia) - CIT(A) deleted the addition - submissions of assessee concluded that organsations to whom assessee has made payments are within the purview of section 194A(3)(iii) of the Act, hence, there is no requirement for assessee to deduct tax at source on the payments made to them - Held that:- the only reason on which disallowance u/s 40(a)(ia) was made is, Citi Corp and AB Builders Fund Co-op. Society are not covered under Banking Regulation Act. However, on perusal of the relevant statutory provision, it is seen that both the organizations to whom assessee has paid interest, but, are coming within the exception provided u/s 194A(3)(iii) of the Act. Therefore, ld. CIT(A) was correct in holding that there is no requirement for assessee to deduct tax at source on the payments made. Even otherwise also, it is the contention of assessee that the entire finace charges were paid by assessee during the relevant PY and nothing remained outstanding at the end of the PY. The aforesaid factual position has not been controverted by the department. That being the case, following the decisions cited by ld. AR as referred to by ld. CIT(A), no disallowance u/s 40(a)(ia) can be made. In view of the above, we uphold the decision of ld. CIT(A) on this issue - Decided against revenue. Bogus purchases - Outstanding closing balance in respect of three creditors - CIT(A) deleted the addition - Held that:- When AO accepts purchases as well as payments made by assessee to the concerned parties, he cannot treat the outstanding closing balance of the concerned creditors as bogus. If at all he had an doubt with regard to the transactions affected by assessee with the concerned parties, he should have treated the entire transactions as bogus and not part of it. Moreover, it is seen from the observations made by AO that he accepts the fact that bills/vouchers submitted by assessee to certain extent proves the genuineness of the transaction between parties. That being the case, in our view, AO cannot treat the outstanding balance due to the creditors as bogus purchases of the assessee on purely conjectures and surmises. In the aforesaid view of the matter, having not found any infirmity in the order of ld. CIT(A) in deleting addition made by AO in respect of the three creditors, we uphold the same by dismissing the grounds raised by the department.- Decided against revenue.
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