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2019 (9) TMI 774 - ITAT DELHIAddition u/s 68 - unexplained cash credit - non-compliance of notice issued u/s. 133(6) - HELD THAT:- As decided in ORISSA CORPORATION PVT. LIMITED [1986 (3) TMI 3 - SUPREME COURT] it is for the department to pursue a creditor particularly once the assessee had duly furnished the complete particulars of the person from whom monies have been received by the assessee. In absence of such a burden having been discharged, the AO could not have mechanically proceeded to make impugned addition in the instant case. It is a settled law that non-compliance of notice issued u/s. 133(6) of the Act to all the entities giving unsecured loan cannot be a basis to make the addition u/s. 68 . The nature of income and source of income can be examined only by the AO of the lenders and not by the AO of the assessee. In this case there is lack of enquiry by the AO to rebut the burden discharged by the assessee as no enquiries were made either from corporate entity providing unsecured loan or enquiry from AO of such corporate entity or its banker or Registrar of Companies by issuing notice u/s. 131 of the Act - we delete the addition on account of sums received as unsecured loan and erroneously held as unexplained cash credit under section 68 - Decided in favour of assessee Addition on account of alleged excess remuneration paid to the partners and disallowed by invoking clause (v) of section 40(b) - HELD THAT:- Remuneration to the working partners are duly authorized by the Partnership deed dated 1.4.2013 and such payment has been made as per clause 7 and 8 of the deed of partnership, ‘working partners’ and the amount of remuneration payable and the manner of quantifying such remuneration is to be decided mutually between them from time to time. We further note that this disallowance is contrary to the principle of consistency as no disallowance made in the preceding years i.e. from assessment year 2010-11 to 2014-15 and only from the instant assessment year i.e. AY 2015-16 the addition was made which action is not tenable. This view is fortified by the decision of the Hon’ble Supreme Court of India in the case of CIT vs. Excel Industries Ltd. [2013 (10) TMI 324 - SUPREME COURT] TDS u/s 194C - addition invoking section 40(a)(ia) - HELD THAT:- We note that since assessee is not liable to deduct TDS on in interest payment on borrowed loan and the second proviso to section 40(a)(ia) of the Act is retrospective, therefore, the provisions u/s 40(a)(ia) of the Act read with section 194A of the Act were inapplicable and as such, disallowance so made is not in accordance with law. In any case since the payee had paid the taxes on the interest paid by the assessee, no disallowance was warranted in view of second proviso to section 40(a)(ia) of the Act. Accordingly, the addition confirmed by the Ld. CIT(A) is hereby deleted - Assessee appeal allowed.
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