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2020 (1) TMI 215 - AT - Income TaxAddition u/s.68 - Unexplained cash credit - HELD THAT:- M/s. Rama Krishna Electro Component Pvt. Ltd. is a debtor in the books of the assessee which is also evident from list of debtors on 31.03.2013 given in Schedule 8 of the balance sheet. It has been further claimed that the said amount has not been adjusted against the debt as it still appears as unsecured loan in the name of M/s. High Ground Enterprises Ltd., because during that period the final verdict of the Hon’ble High Court had not come. Now that the judgment of Hon’ble High Court has come therefore, it is no longer in the nature of loan. Under these facts and circumstances, it cannot be held that the source of credit of ₹ 75 lacs remained unexplained, because admittedly the said amount has come from M/s. High Ground Enterprises Ltd. in pursuance of suit filed by the sister concern of the assessee which is an amount due by the said party to the sister concern, i.e., M/s. Rama Krishna Electro Component Pvt. Ltd.. Accordingly, the addition made by the Assessing Officer is directed to be deleted. TDS u/s 194C - Addition u/s.40(a)(ia) - freight charges paid - HELD THAT:- Now it is a well settled law in view of the Hon’ble Jurisdictional High Court judgment in the case of Ansal Land Mark Township (P) Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT] that said proviso is clarificatory in nature and will apply respectively. Before us, ld. counsel had placed copies of income tax return of the parties to prove that these parties are regularly assessed to tax and has also shown these payments in the return of income and have paid taxes thereon. However, merely from the return the same is not very discernable. Accordingly, we are of the opinion that this matter should be restored back to the file of the Assessing Officer to verify, whether the payees have offered this amount in their return of income and have taken into account such sum for computing the income and have paid taxes thereon. Addition u/s.14A on account of interest and bank charges - HELD THAT:- From the assessment order, it is seen that the ld. Assessing Officer has observed that funds over drawn by the payee were never utilized for the purpose of business and has tried to make the disallowance u/s.14A without any giving any reasoning or basis. There is no whisper as to why the provision of Section 14A is attracted on addition of ₹ 25,49,658/- for disallowance of interest in bank charges, when there is no exempt income earned by the assessee during the year. The fact of the matter is that the assessee had made investment amounting to ₹ 10,50,000/- in shares of unlisted company on which Assessing Officer has made separate addition of ₹ 1,05,000/- u/s.14A which stands deleted by the ld. CIT(A). Even otherwise also, it is seen that assessee had huge interest free funds and capital of ₹ 68,64,871/- and there is no material or finding by the Assessing Officer that any interes-tbearing fund have been diverted for the non-business purpose. We are unable to appreciate the reasoning given by the Assessing Officer for making such kind of addition without application of mind and thus same is directed to be deleted. Adhoc disallowance of expenses - HELD THAT:- A short reasoning given by the Assessing Officer is that the element of personal use cannot be ruled. Nothing has been stated by him as to whether there is any discrepancy in the bill and vouchers and whether there is any defect in the books of account. If at all, there could be some element of personal use that could be only on account of car running and telephone expenses. The observation of the Assessing Officer is not only general but also vague and purely based on adhoc without finding any defect in the evidence submitted by the assessee. Accordingly, such an adhoc addition is directed to be deleted.
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