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2013 (7) TMI 357 - AT - Income TaxFreight charges disallowed u/s 40(a)(ia) - non deduction of TDS u/s 194C - Held that:- The tax authorities have not rebutted the claim of the assessees herein that they have not instructed the suppliers to dispatch the goods by a particular agency. It was also not brought on record that the assessees herein have only requested the suppliers to dispatch the goods by lorries. Thus it cannot be said that mere payments of lorry freights, by itself, constitute a contract between the assessees herein and the transport agencies. Accordingly, the provisions of sec. 40(a)(ia) cannot be invoked in the facts and circumstances of these casesa accordingly direct the AO to delete the impugned addition. Addition of interest calculated on loans and advances balances - Held that:- In the case of as relied upon revenue the interest assessed by the assessing officer is far more than the interest expenditure claimed by the assessee. In the said case, the interest expenditure represented only the interest paid to M/s State Bank of India towards the cash credit loan, major portion of interest paid is to State bank of India C.C account and ICICI bank car loan. Further there is interest payment to the tune of about Rs.1.95 lakhs to two other persons. These factual aspects show that the assessing officer has only calculated notional interest on the interest free loans and advances. In the case law relied upon by the assessee viz., Highways Construction Pvt. Ltd. Vs. CIT (1992 (11) TMI 86 - GAUHATI High Court) if the assessee had not bargained for interest, or had not collected interest, one fails to see how the IT authorities can fix a notional interest as due, or collected by the assessee. Since the assessing officer is not entitled to assess interest on notional basis direct AO to delete the impugned addition. Disallowance of a portion of Phamplets expenses - Held that:- Since these expenses were supported by self made vouchers, AO disallowed a portion of the expenditure claim and the same was confirmed by CIT(A). As before us no material was placed to rebut the findings given by AO thus no reason to interfere with his decision on this issue.
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