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2019 (9) TMI 1336 - AT - Income TaxUndisclosed sales - Addition on the basis of the papers found in search conducted by the Central Excise Department - HELD THAT:- The whole case of the Revenue regarding undisclosed sales rest on the orders of the Central Excise authorities which has since been set-aside by the CESTAT vide its order dated 7.02.19. In view of the same, the additions so made by the Assessing officer towards gross profit on unrecorded sales and unaccounted purchases is directed to be deleted. At the same time, the Revenue would be at liberty to take action as per law where the matter so decided by the CESTAT is appealed against by the Revenue and is decided in its favour. Disallowance u/s 40(a)(ia) - AR submitted that an amendment has been made by the Finance Act, 2014 w.e.f. 01.04.2015 in Section 40(a)(ia) whereby it is provided that 30% of any sum payable to a resident shall be disallowed if tax is not deducted at source under Ch. XVIIB as against the 100% disallowance presently made - HELD THAT:- In the instant case, there is no dispute that the assessee is liable to deduct TDS on interest payment to Shri Ramesh Chand and non-deduction of the TDS will entail disallowance u/s 40(a)(ia) of the Act. However, in view of the consistent position taken by the Coordinate Benches of the Tribunal wherein the amendment in section 40(a)(ia) has been held retrospective in nature, the disallowance is restricted to 30% of the total amount. In the result, the crossobjection is partly allowed. Addition towards telephone expenses and the personal/other than business use of telephone could not be ruled out and therefore, made disallowance being 10% of the expenses - HELD THAT:- CIT(A) held that the personal use of telephone by Director cannot be ruled out and no evidence is brought to consider the same as perquisite. Thus, the disallowance made by AO is reasonable and accordingly, confirmed the addition. It was submitted by the ld AR that the telephone expenses are incurred in respect of telephone installed at factory and mobile of directors and employee. The telephones are used for the purpose of the business. Hence, the adhoc disallowance of 10% of the expenses cannot be made. Even otherwise, in case of a company, no disallowance can be made on account of personal use. We donot see any infirmity in the order of the ld CIT(A) and the same is hereby confirmed. In the result, the cross-objection is dismissed.
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