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2015 (8) TMI 419 - AT - Income TaxAddition u/s.68 - Held that:- As perused the letter of confirmation dated 26/03/2003 purportedly issued by Narendra Holding Pvt.Ltd. However, the said letter describes the payment through banking channel but has not mentioned the names of the 3rd parties in whose account such amount has been credited. Moreover, the assessee has also not placed any material on record suggesting that those payments were made to 3rd parties on account of calls in arrears and share premium as there is no mention of the names, addresses, etc. of the parties to whom the assessee was liable to pay calls in arrears and share premium. In the absence of such material evidences which were required to be placed on record by the assessee in support of its claim of expenditure, we do not see any reason to interfere with the orders of the authorities below, the same are hereby confirmed. Decided against assessee. Disallowance u/s 40A(2)(b) - Held that:- It is settled position of law that the provisions of section 40A(2)(b) of the Act can be invoked in the event where assessee incurs any expenditure in respect of which payment has been paid or is to be made to any person referred to in clause (b) of section 40A(2) and the Assessing Officer is of the opinion that such expenditure is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom, so much of the expenditure as is so considered by him to be excessive or unreasonable shall not be allowed as a deduction. Therefore, the AO has first to determine the reasonableness or excessiveness having regard to the fair market value of the services rendered. In the case in hand, the AO has made disallowance on the basis that no verifiable record was placed before the AO which could indicate the fact that Director, namely Shri Mehool N.Bhuva imparted any technical services to the assessee-company. The AO was of the opinion that mere holding of qualification does not lead to inference that he has indeed rendered any services. There is no dispute with regard to the fact that the issue in question is identical as was raised in the AY 1997-98.Therefore, taking a consistent view, we hereby direct the AO to delete the disallowance - Decided in favour of assessee. Validity of the reopening of the assessment u/s.147 - Held that:- There is no illegality in the reopening of the assessment since the AO in original assessment proceedings has not examined this issue and no enquiry was made. Therefore, we see no reason to interfere on this issue and assessee’s this ground of appeal is rejected. - Decided against assessee. Disallowance of employees’ contribution towards PF/ESIC - Held that:- There is no dispute with regard to the fact that the Hon’ble Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation reported at (2014 (1) TMI 502 - GUJARAT HIGH COURT ) has decided this issue in favour of the Revenue. Disallowance of employer’s contribution towards PF/ESIC - Held that:- . We find that the disallowance is made on the basis that the PF/ESIC contribution was not deposited even before the due date of payment but contention of the assessee is that the same was deposited before due date of filing of return. This fact is not controverted by the ld.DR and, therefore this ground of appeal is allowed. - Decided in favour of the assessee. Disallowance of sundry balances - Held that:- As decided in TRF Ltd. vs. CIT reported at (2010 (2) TMI 211 - SUPREME COURT ) after 1st April, 1989, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. However, in the present case, the AO has not examined whether the debt has, in fact, been written off in accounts of the assessee. When bad debt occurs, the bad debt account is debited and the customer's account is credited, thus, closing the account of the customer. In the case of companies, the provision is deducted from sundry debtors. As stated above, the AO has not examined whether, in fact, the bad debt or part thereof is written off in the accounts of the assessee. This exercise has not been undertaken by the AO. Hence, the matter is remitted to the AO for de novo consideration of the above-mentioned aspect only and that too only to the extent of the write off. - Decided in favour of assessee.
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