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2023 (6) TMI 1167 - AT - Income TaxDisallowance of interest expenses - AO observed that the loans/advances were given without charging interest whereas the assessee had paid interest on funds borrowed from Syndicate Bank and Allahabad Bank - CIT-A deleted the addition - HELD THAT:- If there are funds available both interest-free and over draft and / or loans taken, then a presumption would arise that investments would be out of the interest-free fund generated or available with the company, if the interest-free funds were sufficient to meet the investments. Thus respectfully following the decision of Reliance Utilities [2009 (1) TMI 4 - BOMBAY HIGH COURT] and assessee’s own case [2014 (11) TMI 1272 - ITAT DELHI] we uphold the order of CIT (Appeals) in deleting the disallowance of interest expenses and reject ground No. 1 of appeal of the Revenue. Addition towards unexplained stock - HELD THAT:- Contentions made during search, seizure and survey operations do not serve any useful purpose if such contentions are not based upon credible evidence collected in the course of search and survey operations. See S. Khader Khan Son [2007 (7) TMI 182 - MADRAS HIGH COURT] We hold that addition on account of undisclosed difference in stock discrepancy cannot be made merely on the basis of the statement given by the partner at the time of survey without any corroborative evidences found in the course of survey. In this case the assessee explained that there is no discrepancy in stock along with various evidences and explanations and, therefore, the ld. CIT (Appeals) has rightly deleted the addition of Rs. 4,00,84,677/- (4,29,63,309 - 28,78,632). Thus, the order of the ld. CIT (Appeals) is sustained to this extent. Ground No. 2 of grounds of appeal of Revenue is rejected. Bogus fabrication expenses - Merely because the summons could not be served, in our opinion, the addition cannot be sustained. The assessee in respect of these fabrication expenses furnished copies of bills, copies of ledger account, copy of Form 16A issued to the fabricators wherein the assessee has deducted TDS and remitted to the Govt. account. All these evidences cannot be brushed aside simply because the summons issued to the parties could not be served. There may be various reasons for non-service of summons on the parties. Thus simply because the summons could not be served the fabrication expenses incurred by the assessee cannot be treated as not proved. Thus, allowing ground No. 2 of grounds of appeal of the assessee, we direct the Assessing Officer to delete the addition. TDS u/s 195 - Disallowance being the commission paid to foreign agents - We hold that the commission paid to non-resident for procuring sales cannot be said to be fee paid for any technical services within the meaning of Explanation (2) to section 9(1)(vii) - Thus, we reverse the order of the ld. CIT (Appeals) on this issue and direct AO to delete the disallowance made u/s 195 for non-deduction of TDS. Ground of appeal of the assessee is allowed.
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