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2013 (11) TMI 517 - AT - Income TaxDisallowance u/s 40(a)(ia) - Deduction of tax at source - Violation of TDS provisions - Reversal of entries made regarding provision for TDS payable on contractors payment - Held that:- It is seen that the assessing officer has made disallowance of expenditure u/s40(a)(ia) of the Act only on the basis of reversal of entries made regarding provision for TDS payable on contractors payment. The assessing officer has not brought on record any such instance of expenditure, on which tax is not deducted or deducted but not paid so, and in the absence of which disallowance cannot be made u/s 40(a)(ia) of the Act. Further Ld. Counsel has drawn our attention to pg. nos.140-147 of P/B and submitted that on each and every expenditure for contractor’s payment, tax has been deducted at source and paid wherever it is applicable. We are of the firm view that if the expenditure has been subject matter of tax deduction at source and if the compliance to the Chapter XVII-B has been made then no disallowance can be made u/s 40(a)(ia) of the Act on presumption basis. Therefore, in the interest of justice, we set aside this issue to the file of Assessing Officer and direct him to verify the details as furnished by the Assessee and find out as to whether tax has been deducted at source on the expenditure - Decided in favour of assessee. Addition u/s 69B - Difference between stock declared to the Canara Bank and stock reflected as closing stock - Held that:- additions cannot be made on account of difference arising in the quantity and value of stock shown in the books of accounts and the statement furnished to the banking authorities, admittedly to avail higher credit facilities. Courts have laid down the following guidelines while dealing with the issue: - (a) The stock in quantity and value is inflated on estimate basis in the statement furnished to the banking authorities to avail higher financial credits; - (b) The inflated and estimated stock is hypothecated and not pledged; - (c) No actual physical verification of stock is carried out by the officer of banking authorities during the year or as on date of valuation of stock; - (d) The assessee has maintained stock register; - (e) The assessee’s books of accounts are not found to be defective or nongenuine by AO; - (f) The books of accounts maintained by the assessee are accepted by the Central Excise and / or Sales Tax Department. After including the addition made by the AO, the financial statement would completely be distorted and will not show the correct, true and fair view, which is on more factor which substantiates our finding that the figure of stock was inflated, adhoc and estimated purely for showing to the bank without there being any actual stock acquired by the assessee. Therefore in any which way, the addition made by the assessing officer is not justified and the same is hereby directed to be deleted - Decided in favour of assessee.
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