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2013 (4) TMI 678 - AT - Income TaxCash discount allowed to the dealers and sub-dealers for promotion of goods - Non deduction of TDS - CIT (A) deleted the addition - Held that:- As goods had been sold to dealers/ sub-dealers at arm’s length on principal to principal basis and they were not acting on behalf of the assessee, therefore, there was no agency relationship with them. As per the policy of the assessee company, no commission was payable to the dealers / sub-dealers for promotion of the selling of the goods & this cash discount was for the prompt payment for the goods supplied to them as abetment of cost and not in the nature of commission, therefore provisions of section 194H are not applicable. In favour of assessee. Interest invested on capital work in progress out of its interest bearing funds - disallowance as the capital work in progress has not been put to use by the assessee for its business - CIT (A) deleted the addition - Held that:- There was an opening balance at the beginning of the year under the head ‘capital work in progress’. Further as per the audited accounts of the assessee, there was no closing balance under the head ‘capital work in progress’. This shows that the work was completed during the relevant year & assets were ready for use or used for the business purposes during the year. Since there was nothing under the head ‘capital work in progress’, therefore, there is no question of establishing the nexus between the borrowed fund and the investment made - order of the CIT (A)sustained. In favour of assessee. Disallowance of un-vouched expenses under the sub-head leakage and wastage - CIT (A) deleted the addition - Held that:- CIT (A) has rightly deleted the addition as these leakages and wastages debited in the books of account are part and parcel of manufacturing activity of the assessee. In favour of assessee.
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