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2021 (4) TMI 116 - AT - Income TaxAdditions towards excessive wastage as making charges - - Additions for non deduction of tds u/s 40(a)(ia) - TDS u/s 194C - CIT(A) opined that, TDS has to be deducted, even if a sum is payabe by any other name or accounted under any other head in the books of account. - HELD THAT:- There is no uniform yardstick to quantify making wastage in any process of manufacturing of goods, including manufacturing of gold ornaments. But, it all depends upon nature of goods manufactured or types of gold ornaments manufactured by the parties. AO has considered 1% wastage and to support his stand taken statement from goldsmiths, where they have stated that they have returned 94 gms of gold out of 100 gms gold received from the assessee. Except this, no other independent evidence was brought on record to support his findings. Assessee has filed affidavit from goldsmiths to support its arguments, where they have clearly stated that normal wastage in manufacturing of gold ornaments is between 6 to 7%. AO as well as learned CIT(A) erred in assuming wastage charges at 1% without any evidence to support their stand, ignoring specific evidences filed by the assessee to prove that normal wastage incurred while manufacturing gold ornaments was at 6 to 7%. AO has quantified excessive wastage purely on arbitrary and suspicious manner, which cannot be justified in the given facts and circumstances of the case. Assessee has also produced necessary evidences to prove that it has separately paid making charges to goldsmith and further, deducted TDS, wherever applicable. AO as well as learned CIT(A) were erred in estimating making charges mere relying upon statements of two goldsmiths recorded at the back of the assesse, even though the assessee has demonstrated with evidences that statement given by goldsmiths was incorrect. Further, the learned CIT(A) was also not justified in ipso facto, affirming version of the AO without giving due credence to the facts put forth by the assessee. Wastage allowed by the assessee to goldsmiths is as a matter of business prudence /commercial expediency and the same cannot be called upon to question by the AO unless, he had evidence to prove that the same is excessive. Case laws relied on the assessee in the case of Interactive Avenues (P) Ltd. [2020 (12) TMI 81 - ITAT MUMBAI] supports the case of the assessee that unless deduction is claimed for any expenditure, the provisions of section 40(a)(ia) of the Act cannot be pressed into service at all. The ITAT., Delhi in the case of Green Valley Tower Pvt.Ltd. [2021 (1) TMI 737 - ITAT DELHI] has taken a similar view and held that if assessee has not claimed deduction for any expenditure, then the provisions of section 40(a)(ia) cannot be invoked to disallow such payments. We are of the considered view that addition made by the AO and confirmed by the learned CIT(A) towards estimated making charges by treating wastage claimed by the assessee in process of manufacturing gold ornaments is purely on suspicious and conjecture manner without there being any material evidence and hence, additions made by the Assessing Officer u/s.40(a)(ia) of the Act for non-deduction of TDS u/s.194C of the Act cannot be sustained - we direct the Assessing Officer to delete addition made u/s.40(a)(ia) - Decided in favour of assessee.
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