TMI Blog2013 (2) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... l books written off – Assessee claimed short term capital loss on the technical books - no sale proceeds had been shown by the assessee – Held that:- The AO was not justified in making addition on account of deemed income from sale of books without any adverse material evidence on record and without rejecting the books of account. And also the short term capital loss claimed u/s 50 was justified, does not appear to be correct. AY 2008-09 also the issue regarding depreciation is in dispute before the Tribunal. To decide the issue taking into consideration for AY 2008-09 - Remand back to A.O. - ITA No.5219/Del/2012 - - - Dated:- 14-12-2012 - S.V. Mehrotra and C.M. Garg, JJ. Appellant Rep by: Shri Sukhveer Chaudhary, Sr. DR R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and in the circumstances of the case, the ld. CIT(A) has erred in law in deleting the disallowance of Rs. 1,17,68,621/- made by the Assessing Officer u/s 40(a)(ia) of the I.T. Act, 1961 by ignoring the fact that the company M/s Mercator Lines Limited had performed ship management work on behalf of the assessee M/s Vector Shipping Services (P) Ltd. and there was a Memorandum of Understanding signed between both the companies and as per the definition of Memorandum of Understanding it included contract also. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law in deleting the disallowance of Rs. 13,82,714/- made by the AO on account of write off of books by ignoring the fact that the business of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessee s claim of Rs. 1,17,68,621/- u/s 40(a)(ia) of the Act. 5. Before ld. CIT(A), it was, inter-alia, submitted that the company M/s Mercator Lines Limited, Mumbai deducted tax on salaries etc. on behalf of the assessee as TDS provisions of the Act required so and paid the same to the credit of Central Government. Therefore, the assessee could not be treated as assessee in default in terms of section 201. Under such circumstances, the provisions of section 194C were not attracted. It was also pointed out that the provisions of section 40(a)(ia) are applicable in case the amount is payable in the balance sheet and not on the account paid during the year. Since the amount was paid fully to the extent of Rs. 1,17,68,621/-, therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. The submissions made before ld. CIT(A), as noted earlier, have not been controverted by the Department. It is not disputed that M/s Mercator Lines Limited had deducted TDS on salaries paid by it on behalf of assessee. Under such circumstances assessee was not required to deduct TDS on reimbursement being made by it to M/s Mercator Lines Limited. Further, in any view of the matter, since it is not disputed that no amount remained payable at the year end, therefore, in view of the Special Bench decision in the case of Merilyn Shipping and Transport Ltd., (136 ITD 23) (SB), addition could not be made. In this case, it was held as under: - Section 40(a)(ia) was introduced in the Act, by the Finance Act, 2004 with effect from 1/4/200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of excess depreciation claimed and the Department is in appeal before ITAT. He further observed that the short term capital loss as claimed by the assessee cannot be accepted since in one year the assessee had made such a huge investment in purchase of books and had claimed depreciation @ 60%, as per the Income Tax Act and in the next year the company had claimed short term capital loss on such books. He noted that no sale proceeds had been shown by the assessee. The AO noticed that AY 2008-09, the assessee had submitted as under: - the addition in technical books was made to maintain International Standard of Ship Management, the company has to maintain a library of Technical Books for providing intensive Training to thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is not allowed. 13. Ld. CIT(A) after considering the remand report of AO did not accept the AO s findings that the assessee must have received Rs. 13,82,714/- and accepted the short term capital loss u/s 50 as claimed by the assessee. 14. We have considered the submissions of both the parties and have perused the record of the case. We are in agreement with the findings of ld. CIT(A), that the AO was not justified in making addition of Rs. 13,82,714/- on account of deemed income from sale of books without any adverse material evidence on record and without rejecting the books of account. However, ld. CIT(A) s findings that the short term capital loss claimed u/s 50 was justified, does not appear to be correct. Ld. CIT(A) has n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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