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2017 (5) TMI 713 - AT - Income TaxAddition under section 40A(2) - excessive or unreasonable expenditure - onus on the AO - Held that:- The hon'ble Supreme Court in the case of Upper India Publishing House P. Ltd. v. CIT [1978 (12) TMI 2 - SUPREME Court] held that before section 40A(2) of the Act is applied, the Assessing Officer should have proved expenditure is excessive or unreasonable. The assessee has explained before the authorities below all the facts and circumstances that reasonable payments have been made to the sister concern and there is nothing unreasonable in this regard. In any case, even for applying the provisions of section 40A(2), it is for the Assessing Officer to make out a case that the expenditure incurred is excessive or unreasonable having regard to the fair market value of such services. However, nothing has been done by the Assessing Officer in this case, therefore, considering the totality of the facts and circumstances as explained above, there is no justification for the Assessing Officer to invoke the provisions of section 40A(2) of the Income-tax Act to make the addition. We, therefore, do not find any justification for making the above addition. - Decided in favour of assessee Addition under section 40(a)(ia) - non deduction of tds - Held that:- Assessee has specifically pleaded before the authorities below that on brokerage and forwarding and handling charges, TDS has been deducted and paid in the Government account. As regards freight, customs house agent loading and unloading charges, it was pleaded that since it was for railways indent, therefore, no TDS was required to be deducted. The learned Commissioner of Income- tax (Appeals) found the contention of the assessee to be correct that TDS has been deducted on most of the items and deposited in the Government account, therefore, there is no question of disallowance of the same. As regards the transportation through railways indent, no TDS is required because it is a payment made to the Government undertaking. The findings of the fact recorded by the learned Commissioner of Income-tax (Appeals) has been supported by TDS return, tax challans filed in the paper book, therefore, finding of the fact arrived at by the learned Commissioner of Income-tax (Appeals) have not been disputed through any evidence or material on record, therefore, part addition deleted by the learned Commissioner of Income-tax (Appeals) is wholly justified and no interference is called for - Decided against revenue TDS on amount reimbursed by the assessee to the agents - Held that:- in the seized papers details of payments made to these agencies have been mentioned, therefore, we are of the view one more chance should be given to the assessee to explain this issue before the Assessing Officer, whether the amounts paid to these persons are reimbursement of expenses incurred on behalf of the assessee. In this view of the matter, we set aside the orders of the authorities below to that extent in which the addition is confirmed by the learned Commissioner of Income-tax (Appeals) and restore part of the issue to the file of the Assessing Officer with a direction to redecide this issue by providing reasonable opportunity of being heard to the assessee. The assessee is directed to produce sufficient material before the Assessing Officer to explain whether it was reimbursement of expenses and why no TDS was required to be deducted on these payments made to J. D. Prasad and Sons Pvt. Ltd. and Sukhvinder Singh through Leaf. - Decided in favour of assessee for statistical purposes. Unexplained cash credits under section 68 - Held that:- The assessee has explained the circumstances in which the amount of ₹ 4.60 crores was received in the bank account of the assessee which was paid by M/s. Adani Exports Limited through M/s. Nav Bharat Enterprises. The confirmations of accounts and bank statements support the explanation of the assessee and ultimately the amount of ₹ 4.60 crores has been transferred to M/s. Lakshmi Overseas Industries Ltd. immediately. Since the amount in question belongs to M/s. Lakshmi Overseas Industries Ltd. therefore, there was no justification to make any addition in the hands of the assessee. The assessee has filed copies of the bank statement and copies of the accounts of Nav Bharat Enterprises and Adani Exports Ltd. in the paper book in support of the above explanation. The learned Commissioner of Income- tax (Appeals), therefore, rightly found that the explanation of the assessee is correct, therefore, no addition can be made against the assessee. - Decided in favour of assessee Unexplained cash credit received from Smt. Vijay Lakshmi - Held that:- No merit in this ground of appeal of the Revenue. The assessee filed complete details and evidences before the authorities below to prove the identity of the creditor, her creditworthiness and genuineness of the transaction in the matter. The confirmation of Smt. Vijay Lakshmi, her ledger account, shareholding and receipt of dividend are filed in the paper book, which proves her creditworthiness to advance genuine loan to the assessee. The learned Commissioner of Income-tax (Appeals) had properly appreciated all the evidence and material on record and correctly deleted the addition Deemed dividend addition under section 2(22)(e) - Held that:- The chart given by the assessee to the Commissioner of Income-tax (Appeals) shows that shareholding pattern did not exceed 10 per cent. of the total shareholding, therefore, the condition of section 2(22)(e) of the Act have not been fulfilled. Thus as the assessee-firm was holding less than 10 per cent. shareholding of the voting power and any amount advanced by closely held company to the assessee-firm was not to be treated as deemed dividend under the provisions of section 2(22)(e). It appears that the Assessing Officer has clubbed all the shareholdings of the Uppal group for applying the provisions of section 2(22)(e) of the Act. The intention of section 2(22)(e) is to tax dividend in the hands of the shareholders. The learned Commissioner of Income-tax (Appeals) therefore, on a perusal of the shareholding pattern upheld in the impugned order correctly found that the assessee and its shareholders, while they may be registered shareholders are not beneficiary holders of shares. Therefore, the learned Commissioner of Income-tax (Appeals) has correctly deleted the addition - Decided in favour of assessee
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