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2018 (11) TMI 950 - ITAT VISAKHAPATNAMTDS u/s 194A - disallowance u/s 40(a)(ia) - loans were sanctioned under tie up arrangement of both the farmer and the assessee - interest payment made to the bank - Held that:- Since, the loans were sanctioned under tie up arrangement of both the farmer and the assessee and the entire agricultural loans were disbursed directly to the assessee, it has shown as loan funds in the assessee’s balance sheet. It is also not disputed that the assessee has made the direct payment to the bank and there was no payment made to the individual farmers. Farmers also did not dispute the payment made to the banks and thus there was an implied agreement of the farmers for payment of interest and loan directly to the bank. It is a fact that the loan was not utilized by the farmer and the entire loan was utilized by the assessee for cold storage plant and given securities to the bank. Therefore, there is an obligation on the part of the assessee to repay the loan to the bank. Accordingly the assessee made the payment to the bank and has discharged its liability / obligation. Since the payment was directly made to the bank on behalf of the farmers it should be construed as the payment made to the bank, but not to the individual farmers., the interest payment made to the bank does not attract the TDS as per section 194A. Accordingly, we uphold the order of the CIT(A) and hold that no disallowance is called for u/s 40(a)(ia) and dismiss the appeal of the revenue. Addition made towards sundry creditors - Held that:- The advance money, in the present case before us, is adjusted the sale price of the motor cycle and sale is disclosed in the return of income i.e. the trading account of the assessee. Accordingly, we find no ambiguity in the system followed by the assessee. From the details filed before us, DR could not point out the discrepancy in the same because these advances were adjusted against sales. When this was pointed out to Ld. Sr. DR, he stated that the assessee is unable to produce the PANs, names and addresses of the parties. He was specifically shown a tax/retail invoice wherein complete details were given except thePAN/Voter I. Card. In our view, PAN/Voter Identity Card is a KYC norm, which does not apply to the sale of goods under the Sale of Goods Act. We are of the view that the AO and CIT(A) both have erred in making and confirming this addition and accordingly, we delete the same - decided in favour of assessee.
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