2013 (3) TMI 758 - AT - Income Tax

Summary

Issues Involved: Appeal against CIT(A)'s order for Assessment year 2007-08.

Issue 1: Addition of freight payment u/s 40(a)(ia)
- Assessee challenged CIT(A)'s confirmation of addition of freight payment u/s 40(a)(ia) for non-deduction of TDS u/s 194C.
- Assessee argued that amended provision of section 194C, applicable to individuals from 01.06.2007, precludes disallowance for Assessment year 2007-08.
- Citing a Co-ordinate Bench decision, Tribunal held that no disallowance can be made post the amendment's effective date.
- Consequently, the addition u/s 40(a)(ia) was deleted.

Issue 2: Adhoc disallowances of labor, travel, and telephone charges
- Assessee contested CIT(A)'s confirmation of adhoc disallowances by AO on labor, travel, and telephone charges.
- AO's disallowances were based on lack of verifiability and potential personal usage, reduced by CIT(A) to 10%.
- Tribunal noted that no specific defects were pointed out in expenses to warrant adhoc disallowances.
- Emphasized that expenses cannot be disallowed without specific defects or evidence of personal use.
- Consequently, the adhoc disallowances were deemed unsustainable and deleted.

Conclusion: Assessee's appeal allowed, with deletion of additions and disallowances. General grounds not adjudicated.