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2018 (11) TMI 1819 - AT - Income TaxTDS u/ 194C - Addition u/s 40(a)(ia) - transactions relate to sale of material which cannot be termed as contract for work and labour - HELD THAT:- Section 194C is not applicable in assessee’s case. Ld. CIT(A) also noted that since assessee had paid VAT on sale of goods to its customers, Section 194C of the Act is not applicable. Therefore, provisions of section 40(a)(ia) applied by the A.O. is not justified. Entire addition have been deleted. In the aforesaid transactions Section 194C is not applicable, therefore, there is no need to deduct the TDS. The issue is covered in favour of the assessee by the decision of the Tribunal. We, therefore, do not find any merit in the departmental appeal on this ground. Ground No.1 is accordingly dismissed. Addition under section 14A - Assessee submitted that there is no borrowed funds utilised by the assessee for purchase of investment in shares. Hence, disallowance of interest under sub-rule 2(ii) of Rule 8D is not applicable in assessee’s case - HELD THAT:- The Hon’ble Punjab and Haryana High Court in the case of Abhishek Industries Ltd.,[2015 (2) TMI 672 - PUNJAB AND HARYANA HIGH COURT] held that “onus is upon A.O. to record satisfaction that interest bearing funds have been used for investment to earn tax free income”. Since no borrowed funds have been used by assessee to make investment, therefore, Ld. CIT(A) correctly deleted the addition. Ground No.2 of appeal of Revenue is dismissed.
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