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2016 (9) TMI 1560 - AT - Income TaxTDS u/s 194I - Disallowance on account of Plant and Machinery hire charges u/s.40(a)(ia) - HELD THAT:- The machineries were actually used by the assessee and the lease rent paid by SIL was reimbursed by the assessee. It is clear from the order of CIT(A) elaborating the details of payment made by M/s. Sanghi Industries Ltd to Sanghi Infra Ltd towards lease rent and the similar amount recovered by the SIL from the assesse as reimbursement of expenditures. The SIL had made the payment on account of plant and machinery, hire charges after deduction of TDS under the provisions of section 194I of the Act and the reimbursement of these payments by the assessee to the SIL has no income element. Findings, the assessee has not committed any default under the provisions of sec. 40(a)(ia) of the Act, therefore, we uphold the order of the Ld. Commissioner of Income Tax(A) and ground of appeal of the Revenue is rejected. Disallowance of operation & maintenance charge and Repairs & Maintenance - HELD THAT:- Assessee has made provisions for the expenses incurred during the year pertaining to operation & maintenance, repairs & maintenance but their bills were not received during the year. The assessee has made these provisions on the basis of actual estimation of liability because of this fact these provisions cannot be included in the category of contingent liability. CIT(A) has shown in his order the table reflecting the actual payment made by the assessee to the various parties in the subsequent year along with particulars of date of credit, name of party, PAN No, amount, TDS, date of payment of TDS. The assessee has been following the mercantile system of accounting and correctly made estimation of its liability. In view of above stated facts and findings, we justify the order of CIT(A) deleting the additions made by the Assessing Officer. We also agreed with the findings of CIT(A) that the provisions of section 40(a)(ia) are also not applicable to the case of the assessee as the assessee has only made the provisions in the account but not credited the same in the account of concerned parties. Disallowance on account of legal and professional expenses u/s.40(a)(ia) - HELD THAT:- We noticed that the Ld. Commissioner of Income Tax(A) has shown the complete chart in his order with particulars of date, amount, nature of expenses etc. reflecting the nature of payment made and application of TDS provisions. We find that above stated facts and findings prove that the assessee has made reimbursement of the expenses to the SIL to which no income element involved. In view of above stated facts and findings, we justify the decision of Ld. Commissioner of Income Tax(A) to delete this addition. Disallowance under the head “Operation and Maintenance charges - HELD THAT:- Assessee has not produced supporting documents and evidences of the other parties with detail of services availed by the assessee, or any material purchased by the assesssee for which these three parties have made payment on behalf of the assessee. Even in the paper book, the claim of the asssessee is not supported with proper evidences from these three parties that they have made payment on behalf of the assessee to the third parties. In view of above stated facts and circumstances, we justify the findings of the Ld. Commissioner of Income Tax(A) that the copies of the ledger provided do not clearly show that nature of payment and the fact that whether any profit element was there in the so-called reimbursement. We, therefore, dismiss this ground of cross objection filed by the assessee. Addition under the head “Legal and Professional Expenses” - HELD THAT:- Commissioner of Income Tax(A) has disallowed the part payment made by Tapan Jha as the assessee failed to furnish the supporting evidences for its claim that this is reimbursement payment. We noticed that the pages referred in the paper book by the Ld. A.R. are pertained to the Sanghi Industries Ltd and the supporting documents/evidences as proof of reimbursement payment to Shri Tapan Jha was not furnished. In view of the above facts and findings, we uphold the order of the Ld. Commissioner of Income Tax(A) disallowing Disallowance of interest u/s. 36(1)(iii) - HELD THAT:- Commissioner of Income Tax(A) has proved in his findings that assessee has not charged any interest on the advances made to the Sanghi Cement Ltd and Sanghi Energy Ltd. The assessee failed to prove with supporting evidences that these are not the advances made to these concerns. There was no surplus interest free funds available for that advances with the assessee. Since the advances were given for one day on the last day of the financial year so we uphold the decision of the Ld. Commissioner of Income Tax(A) to disallow the interest for one day only.
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