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2018 (4) TMI 985 - ITAT DELHITDS u/s 194C - Non deduction of tds on Inland Haulage for export consignment payment - Held that:- Payments are in the form of reimbursement and no payments have been made directly by the assessee to shipping companies, therefore, assessee is not liable to deduct TDS. The assessee produced documentary evidences in support of the same contention which have not been rebutted by the authorities below. Since the amount in question were towards the reimbursement of the exact amount which have been paid to the shipping companies and others, therefore, assessee is not liable to deduct TDS. - Decided in favour of assessee Disallowance of freight payments to Consignment Agents without deduction of TDS - Held that:- These payments are freight payments to Consignment Agents. The services of various Consignment Agents are undertaken by assessee who incurred the expenses in connection with sales which are then reimbursed to them or deducted from the gross amount of sales. The actual payment of freight charges are made by the Consignment Agents. The assessee would get the sale proceeds net of these expenses. The Ld. CIT(A) was, therefore, justified in holding that freight payments are made by the Consignment Agents only and even the assessee may not aware of different transporters, shipping agents, therefore, it would impossible for assessee to deduct TDS on such payments. - Decided in favour of assessee Disallowance of certain expenditure claimed as revenue expenditure - Held that:- Since the cost of the packing was not included in the cost of D.G. set and it was spent for bringing the generator set to the premises of the assessee, it was incurred wholly and exclusively for the purpose of business. Therefore, it was rightly held to be revenue in nature. Further, out of packing no assets have been created in favour of the assessee. The other amount was incurred by assessee for upgradation of software or installation charges or better internet connectivity for business purposes. Therefore, same are revenue in nature. The Ld. CIT(A) on proper appreciation of facts and material on record, correctly deleted the addition - Decided in favour of assessee Disallowance of prior period expenses - Allowable expenditure - Held that:- The assessee has given details of entire expenses which is reproduced in the appellate order which shows that the bills have been received in assessment year under appeal and settled. The liabilities to pay these expenses have, therefore, crystalized during assessment year under appeal. Same practice has been followed in earlier year, on which, expenses have been allowed by the Department. Therefore, rule of consistency also applies against the Revenue. Further, whether expenses are allowed in this year or in earlier year, it is not reported as to if revenue has been deprived of any tax. Therefore, it is a mere tax neutral exercise and such expenditure are allowable in assessment year under appeal. - Decided in favour of assessee Disallowance of general repair and maintenance expenses - Held that:- No merit in this ground of Revenue. the Ld. CIT(A) correctly appreciated the fact that for repair and maintenance, assessee has to engage labour for which details are maintained. Learned Counsel for the Assessee pointed out to various documents in the paper book to show that same are properly vouched. Since the expenditure were incurred wholly and exclusively for the purpose of business, therefore, the same were correctly allowed as deduction. - Decided in favour of assessee Disallowance of bad debts - Held that:- the loss is incidental to the business of the assessee which were written off in the books of account as irrecoverable. Therefore, it was correctly allowed as business loss by the Ld. CIT(A). - Decided in favour of assessee Addition on account of unexplained, unsecured loans/trade deposits received by assessee and disallowance of interest relating thereto - A.O. made the addition because income of these parties were very less and assessee has failed to establish the genuineness of the transaction - Held that:- We find that out of these six creditors, two are common in the preceding assessment years, in which, Ld. CIT(A), deleted the addition. It is not reported if the order of the Ld. CIT(A) for earlier year have been reversed. The A.O. merely did not accept the explanation of assessee because of the income of the parties are very less. However, the A.O. has forgot to note that some of the parties are trade creditors from whom security have been taken for making sales to them and in other cases, the assessee has specifically pleaded that they have sufficient amount in their books of account and bank to make investment in assessee-company. Therefore, the Ld. CIT(A), on proper appreciation of facts and material on record, correctly deleted the addition because assessee has proved the identity of the creditors, their creditworthiness and genuineness of the transaction in the matter. - Decided in favour of assessee Disallowance of expenses incurred through credit cards - Held that:- The assessee explained that credit card facilities were provided to the Directors only facilitating payment of expenses to be made on behalf of the company. The details of same were filed, which have not been disputed by the authorities below. The expenses are, therefore, incurred wholly and exclusively for the business of the assessee-company. Copy of the ledger account is also filed in the paper book to support the findings of the Ld. CIT(A). In earlier year, the Ld. CIT(A), deleted the similar addition on which nothing is brought to our notice if the findings of the Ld. CIT(A) in earlier year have been reversed.- Decided in favour of assessee Disallowance of interest on bank held same to be capital in nature - Held that:- The proviso to Section 36(1)(iii) is applicable only to interest paid in respect of capital borrowed for acquisition of asset for extension of existing business. The generator by nature itself is always ready for functioning. Therefore, Learned Counsel for the Assessee, rightly contended that generator was for running the existing business more efficiently. Thus, generator cannot be for the extension of the business. Therefore, disallowance was wholly unjustified. The assessee, thus, paid interest on Bank loan for capital borrowed for business purpose. Therefore, the same was an allowable deduction. We, therefore, set aside the orders of the authorities below and direct the A.O. to allow deduction of the interest under section 36(1)(iii) - Decided in favour of assessee Disallowance of expenditure booked on account of writing-off of security deposit paid to Haryana State Electricity Board (“HSEB”) - Held that:- When the amount is adjusted against the electricity bill, it was clearly revenue in nature. Since the Electricity Board intimated to assessee of the adjustment in this assessment year under appeal, therefore, the expenditure is crystalized in assessment year under appeal. Therefore, it was correctly treated as revenue expenditure by making relevant book entries in the books of account. The Ld. CIT(A), therefore, correctly deleted the addition. - Decided in favour of assessee Disallowance of excess depreciation - Held that:- No merit in this ground of appeal of the Revenue. The assessee pointed out to the Ld. CIT(A) that there is a mistake in calculation of disallowance which was accepted by the Ld. CIT(A) after verifying the facts. No material is produced before us to show any infirmity in the finding of the Ld. CIT(A) to that extent. As regards the depreciation claimed on SS Pipe Plant, assessee pleaded that it was installed on 29.02.2008 and was put to use and same facts could be verified from Excise record. No material is produced before us to rebut the finding of fact recorded by Ld. CIT(A). - Decided in favour of assessee Addition on account of sales tax incentive receivable - Held that:- The assessee received letter from Sales Tax authorities on 10.11.2008 intimating the assessee that he was entitled for refund. The assessee, thereafter, made a claim of refund on 21.09.2009 and according to the explanation of assessee, the amount of refund depends upon various calculations like rebate/interest etc., which may change the quantum of refund. Therefore, assessee would be knowing of the exact amount of refund due to assessee only on actual calculation made in this behalf. Therefore, the refund would depend upon the claim made by the assessee which was made in subsequent A.Y. 2010-2011. The receipt of the amount in question is finally crystalized in A.Y. 2010-2011 which have been correctly offered for tax in A.Y. 2010-2011 which have been assessed by the A.O. also in the order under section 143(3) of the I.T. Act. Therefore, no double addition should be made against the assessee.- Decided in favour of assessee Addition of discount allowed to foreign buyer - Held that:- Both the parties conducted the transaction through their respective Bankers and the genuineness of the transaction have not been doubted. The assessee produced confirmation from the party as well as other material on record to support the transaction that because of the discount offered, the assessee was able to sell the goods and to receive the payment. Therefore, there were nothing unusual in the transaction. No evidence of any collusive transaction have been brought on record. Merely because no formal agreement or MOU to offer discount has been filed, would not disentitle the assessee to claim the discount.- Decided in favour of assessee Disallowance of labour and staff welfare expenses - assessee has made payment to Hindustan Refrigeration for purchase of water cooler which were debited to labour and staff welfare expenses - Held that:- The purchase of water cooler is office equipment and was correctly treated as capital in nature. The assessee has not explained as to how the purchase of water cooler would be considered as business expenditure. The assessee failed to explain that it was a business expenditure incurred wholly and exclusively for the purpose of business. Therefore, Ground of the cross objection of the assessee is dismissed.
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