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2020 (12) TMI 720 - AT - Income TaxTDS u/s 194A - interest payment to GE Capital and Tate Motors Ltd. without deduction of tax as prescribed- addition u/s. 40(a)(ia) for non-deduction of tax) - CIT(A) has deleted the addition holding that once the payments are made and no amount is payable as on 31/03 of the relevant previous year, no disallowance u/s. 40(a)(ia) can be made - HELD THAT:- As gone through the decision of the Hon’ble Gujarat High Court in the case of CIT-IV v. Sikanderkhan N. Tanwar [2013 (5) TMI 457 - GUJARAT HIGH COURT] wherein it is held that section 40(a)(ia) would cover not only the amounts which are payable as on 31st March of a particular year but also which are payable at any time during the year. Accordingly, this issue is restored back to the file of Assessing Officer for adjudicating afresh as per the direction laid down in the decision of Hon’ble Gujarat High Court in the case of Sikandar Tunwar [2013 (5) TMI 457 - GUJARAT HIGH COURT]. Therefore this ground of appeal of the revenue is allowed for statistical purposes. Disallowance of interest expenses - advances to Company owned by one of the partners on account of diesel and petrol expenses.and no interest was charged from the said partnership firm - Proof of sufficiency of own funds - HELD THAT:- The assessee has not brought any material on record to substantiate that aforesaid huge amount of advance was extended to Ramjibhai and Company exclusively for the purpose of petrol and diesel. The ld. Departmental Representative has pointed out that loan amount was very old which was given in the earlier years and there was no sufficient interest free fund available with the assessee. During the course of course of appellate proceedings before us, the ld. counsel has stated that opening debit balance was ₹ 61,14,336/- and closing debit balance was ₹ 59,31,445/- and the interest free fund available with the assessee was ₹ 64,75,145/-. However, to controvert the submission of the ld. Departmental Representative the ld. counsel has not furnished any information and material to disprove the claim of the Ld. Departmental Representative that the loan amount was pertained to earlier years when the assessee was not having sufficient interest free fund - no merit in the ground of appeal of revenue after considering that the ld. CIT(A) has judiciously restricted the disallowance to the extent of ₹ 3,98,436/- on pro-rata basis. Addition u/s. 41(1) in respect of outstanding creditors shown in balance sheet - CIT(A) has restricted the addition to the extent of outstanding balance pertaining to Shri Bhemjibhai L. Chaudhary wrongly classified as sundry creditor as the same was pertained to unsecured loan and that person had never filed income tax return and creditworthiness remained unproved - HELD THAT:- After perusal of the information in respect of the aforesaid cases it is clear that complete information has not been furnished. On this issue both the representatives agreed to restore these cases to the file of the Assessing Officer for deciding afresh after examination/verification of the information. Therefore, we restore these cases to the file of Assessing Officer for deciding afresh after verification and examination of the details to be produced by the assessee. This ground of appeal of the revenue is partly allowed. Sustaining the addition to the extent of ₹ 8,39,727/- , the ld. counsel has submitted that the said person has confirmed that this amount was due to him and later the amount was paid to the lender in the subsequent year. In the light of the above fact and circumstances, we also restore this issue to the Assessing Officer for deciding this issue afresh. Depreciation on the Paver machine @ 15% - AO noticed that the said asset was in the name of HMS Construction Pvt. Ltd. and same was not owned by the assessee - HELD THAT:- It is undisputed fact that HMS Construction Pvt. Ltd. had given the possession of the Paver Machine and stock transfer of Paver Machine was done in favour of Gayatri Construction Co. (assessee) and machine was used for the purpose of business. The assessee has made part payment by various cheques and the amount due as on 31-03-2009 as it was decided between them that the ownership paper would be provided to the assessee after making full payment of the consideration. In the light of facts and considering the finding of ld. CIT(A) based on the decision of Deepak Nitrate [2008 (5) TMI 233 - GUJARAT HIGH COURT] wherein it is held that since assessee acquired possession and was running factory on payment of a substantial part of price, assessee was entitled to grant of deprecation. In view of the above facts and findings, this ground of appeal of the Revenue is dismissed. GP Addition - rejection of books of a/c u/s. 145 & confirming addition of G.P. @ 1.5% of the turn over - HELD THAT:- No merit in the appeal of the Revenue on this issue as the ld. CIT(A) has judicially restricted the addition to the extent of 1.5 % G.P. rate after following the direction laid down in the various judicial findings relevant to the facts and circumstances pertained to the case of the assessee. It is observed that no separate addition for sub-contract expenses is justified since these expenses ultimately also affect the gross profit therefore the ld. CIT(A) has rightly held that addition of 1.5% in G.P. would also covered addition of sub-contract expenses. No merit in the appeal and alternative contention of the assessee because assessee has failed to co-relate the incurring of entire expenses in cash to the different projects therefore labour expenses of ₹ 3.57 crores and diesel/ petrol expenses of ₹ 2.20 crores could not be verified.The assessee has failed to furnish basic detail i.e. project wise details corresponding income and expenditure. To prove the genuineness of the sub-contract expenses claimed to be paid to the three sub-contractors in the initial period of F.Y. 2008-09 the assessee has not even furnish the primary detail as addresses of the subcontractors.The copies of these ledger accounts of these sub-contractors placed at pages no. 87 to 88 contained only the entries of initial payment made in the month of April 2008. There was no further details of nature of contract work and income received from such sub-contract. There are no entries for the remaining period from April 2008 to 31st March 2009. These facts demonstrate that the assessee has failed to substantiate the genuineness of this claim.
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