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2021 (4) TMI 708 - AT - Income TaxAdditions under section 40A(2) - Interest expenses paid the related parties in excess of interest @15% per annum - AO noted that assessee has paid interest to certain related parties @18% per annum and treated the interest rate @15% as reasonable based on rate of interest on other loans i.e. to non related parties and, accordingly worked out disallowance under section 40A(2) - HELD THAT:- Before us, the Ld. AR for the assessee vehemently argued that interest @18% per annum to related parties is reasonable as funds obtained from related parties are without any security; such funds are not to be repaid in the near future and since the loans are without any security and are not to be repaid short, the same falls within the high risk category thus on account of the above factors, loans obtained from related parties deserve some premium as compared to loans obtained from outsiders which are usually against any security, need to be repaid in the specified time and do not fall within the high risk category. We find convincing force in the above submissions of the Ld. AR for the assessee. The Hon'ble Gujarat High Court in CIT Vs Sarjan Realities Ltd [2014 (8) TMI 206 - GUJARAT HIGH COURT] held that unless payment of interest was in excess of market rate, merely because the assessee has paid interest at the different rate to different companies, payments of interest could not be held to be excessive or unreasonable. In view of the above factual and legal discussions, ground No. 2 of the appeal is allowed. TDS u/s 194J OR 194C - Disallowance of exhibition expenses u/s 40(a)(ia) - no tax was deducted at sources while making payment made to Focus Trade Fairs Pvt. Ltd -assessee submits that it is not a case of "non-deduction" of tax at source, rather it is a case of "short deduction" of tax at source - HELD THAT:- The Hon'ble Calcutta High Court in CIT Vs SK Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] and CIT Vs Prayas Engineering Ltd. [2014 (11) TMI 1086 - GUJARAT HIGH COURT] held that there is nothing in this section to treat the assessee as a defaulter where there is a shortfall of the deduction. It was also held that section 40(a)(ia) of the Act refer only to the duty to deduct tax and pay to Government account. If there is any shortfall due to any difference of opinion as to taxability of any item or the nature of payments falling under the TDS provisions, the assessee can be declared in default under section 201 of the Act no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act. In view of the aforesaid factual ground No. 3 of the appeal is allowed. Disallowance in respect of foreign tour expenses - CIT(A) has upheld the ad hoc disallowance - assessee submits that the books of accounts are duly audited under section 44AB and the expenses in question are supported by documentary evidences - HELD THAT:- Before us the assessee has filed certain documentary evidences with regards to foreign travel expenses, consisting of ledger of foreign expenses, receipt of travel agencies, insurance receipts and foreign exchange receipts only. No documents with regard to purpose and place of visits or meetings details in overseas countries if place on record to substantiate the expenses. We have further noted that the assessing officer has already allowed substantial part of the foreign tour expenses and disallowed only ₹ 1.00 lakhs. In absence of sufficient evidence, we do not find any merit in the ground of appeal raised by the assessee. In the result this ground of appeal is dismissed. Disallowance of job-work expenses - Addition for the want of verification of bills and vouchers and non-maintenance of karigar register containing the details of job work and charges thereof - HELD THAT:- Before us the Ld. AR for the assessee vehemently argued that job-work done from outsiders and not from in-house labourers. Hence, there is no requirement to maintain any such karigar register. No such plea was raised before the lower authorities. Now the assessee has come with new pleas, which was not raised before lower authorities. The new explanation given by the assessee does not inspire confidence. Further, we have noted that the assessing officer have made ad hock disallowance of ₹ 2.00 lakhs only, out of the total job work expenses of ₹ 34 Lakhs claimed by the assessee. Considering the above discussions, we do not find any merit in the ground of appeal raised by the assessee. In the result this ground of appeal is dismissed.
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