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2012 (10) TMI 748 - AT - Income TaxDisallowance of Loss – Held that:- As the expenditure incurred has been inflated and vouchers were not produced, since the Assessing Officer has made ad-hoc disallowance and certain expenditure is inevitable while carrying on the manufacturing activity disallowance of expense is restricted to 50% i.e. Rs. 2.5 lakhs in the interest of justice - appeal of assessee is partly allowed. Disallowance of interest - Following the decision of Supreme Court in case of [SA Builders Ltd. Vs. CIT(A),2006 (12) TMI 82 - SUPREME COURT] Held that:-since there was no business purpose and moreover, there was no business expediency in giving such loans/advances, interest-free to the group concerns, proportionate amount of interest attributable to such advances/loans, has to be disallowed from the claim of interest made by the assessee - issue restored to the file of the Assessing Officer to decide the same in the light of the decision of the ITAT, Mumbai Bench wherein it was held that if the own capital is sufficient to cover up the interest free advances,no disallowance is warranted. Finance charges - Outstanding amount or the provision for expense (and not the amount already paid) is liable for disallowance if TDS is not deducted. Sec 40(a)(ia) can apply only to expenditure which is payable” as of 31st March and does not apply to expenditure which has been already paid during the year - issue restored to the file of the Assessing Officer to decide the same – appeal allowed for statistical purposes. Disallowance of Freight inward and Factory expenditure – Held that as the expenditure is likely to have been incurred for Business purpose disallowance to 50% is restricted - appeal is partly allowed. Consultancy charges – Held that :- Order of CIT(A) is confirmed in allowing claim of the assessee to the extent the TDS challans were furnished and proper deduction of tax at source had been made and has disallowed the balance on which assessee has not made TDS deduction - appeal of the assessee is dismissed. Water Charges – Held that:- As the assessee had not deducted tax at source on such payment as per the provisions of section 194C of the Act – issue restored to the file of the AO to decide the same - allowed for statistical purposes. Disallowance on account of employee contribution u/s 36(i) - Issue remitted to the file of the Assessing Officer to verify the details as it has been submitted befor that the Assessing Officer has failed to consider the information furnished before him and the Assessing Officer shall decide same in accordance with law after providing an opportunity of hearing to the assessee - allowed for statistical purposes. Delayed payments - set aside this issue to the file of the Assessing Officer to verify the claim of the assessee that the amount disallowed u/s 40(a)(ia) for delayed payments of TDS now allowed as TDS was paid in the current year. The Assessing Officer shall allow deduction after verifying the disallowance made u/s 40(a)(ia) - appeal of the assessee is partly allowed for statistical purposes.
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