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2016 (4) TMI 524 - AT - Income TaxTDS u/s 194C - reimbursement of expenses - Held that:- We hold that reimbursement of expenses paid by the assessee to S. Natesa Iyer and company for reimbursement of air freight , insurance charges and postal charges in connection with export consignment shipped from India to Lusaka(Zambia) cannot be disallowed by invoking provisions of Section 40(a)(ia) of the Act as there is no liability on the assessee to deduct tax at source u/s 194C of the Act on these reimbursement of expenses paid by the assessee company. However, payment which was paid to M/s S. Natesa Iyer & Co. vide invoice dated 12-01-2008 for work performed by them for handling custom clearance etc. was subject to deduction of tax at source u/s 194C of the Act but the same was below the threshold exemption limit provided u/s 194C of the Act as per the facts emerging from the records, hence the same stood out of the applicability of provisions of Section 194C of the Act. In our considered view , the order of the CIT(A) is to be set aside and disallowance made by the A.O. and confirmed by the CIT(A) is ordered to be deleted. - Decided in favour of assessee. Addition of notional interest as income from other services - Held that:- Assessee which was outstanding to be receivable to the tune of ₹ 9,86,874.18 as on 31-3-2008 and ₹ 12,33,772.00 as on 31-3-2007 as per audited financial statements submitted by the assessee . The assessee’s total owned interest free funds being owned capital is ₹ 41,93,799.52 as at 31-03-2008 and ₹ 34,89,597.58 as at 31-03-2007 as per audited financial statements and there is a presumption that assessee has utilized its own interest free funds being owned capital for granting interest free loans to employee and his wife who are also relatives of the assessee. As could be observed that the assessee owned capital invested in the concern of ₹ 34.89 lacs as at 31-03-2007 is much higher than the interest free loan advanced of ₹ 12.34 lacs as at 31- 03-2007 , whereby it could be seen that interest free funds of ₹ 34.89 lacs owned by the assessee are much more than the amount of ₹ 12.34 lacs advanced by the assessee as interest free loans and the presumption as laid down by the judgments of jurisdictional Hon’ble High Court of Bombay in the case of CIT v. Reliance Utilities and Power Limited (2009 (1) TMI 4 - BOMBAY HIGH COURT ) and CIT v. HDFC Bank Limited (2014 (8) TMI 119 - BOMBAY HIGH COURT) shall squarely apply that the assessee has deployed its owned funds for grant of interest free loans and hence the additions made by the AO and as confirmed by the CIT(A) with respect of interest as ‘income from other sources’ is ordered to be deleted - Decided in favour of assessee.
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