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2015 (3) TMI 354 - AT - Income TaxPayment of employees contribution towards provident fund disallowed - Held that:- The payment has been made within due date of filing of return of income i.e. 30/9/2008 and there is a judgment in favour of the assessee in the case of CIT vs. Ghatge Patil Transport (2014 (10) TMI 402 - BOMBAY HIGH COURT) wherein, it was held that when the payments of employees contribution to the PF, employees state insurance and pension fund within due date of filing of return of income to be allowed as deduction while computing income of the assessee and amendment to section 43B w.e.f. 1/4/2004 wherein two changes were made in section 43B, firstly, by deleting the 2nd proviso and further amendment in the first proviso and thereby, this amendment provided by Finance Act 2003, put on par the benefit of deduction of tax, duty, cess and fee on the one hand with contribution to various employees welfare fund on the other. - Decided in favour of assessee. Disallowance under section 41(1) - sundry creditors outstanding for more than 3 years - CIT(A) deleted addition - Held that:- The AO treated these liabilities as cessation liabilities as since there was no response to the notice issued to these parties under section 133(6) of the Act. Just because the parties did not appear personally before the AO it cannot be deemed that liabilities ceased to exist. There is no positive material brought on record to suggest that this liability ceased to exist. More so, when the assessee itself offered as income in respect of sl.no.4 of the above item and payments were made in respect of sr.no.2,3, and 5 and in respect of s.no.1 the amount is still shown as outstanding in the books of account of the assessee it is pre-postrous to treat these credits as non-existing in the assessment year under consideration by AO. Accordingly, in our opinion the deletion in addition made by the AO under section 41(1) by CIT(A) is justified - Decided in favour of assessee. Undervaluation of closing stock - CIT(A) deleted the addition - assessee follows FIFO method of valuation of closing stock - AO taken value of purchases made during last week of the month - Held that:- In this case the assessee consistently valuing closing stock based on the weighted average purchase of last three months for the last several years. Same method was followed for this assessment year. Contrary to this the AO has taken the purchase value only for the month of March 2008. He has disregarded/disturbed the method followed by the assessee consistently which is not proper with the method followed by the AO to value the closing stock giving the distorted picture of assessee’s financial position which is to be avoided. Section 145A stipulates that valuation of inventory should be done in accordance with the method of accounting regularly employed by the assessee. As such, the AO is precluded from disturbing the method of valuation followed by the assessee consistently. In our opinion CIT(A) has taken an appropriate view in this case and has deleted the addition and the same is upheld. We find that the finding of ld. CIT(A) is in conformity with the judgment in the case of ACIT vs. Torrent Cables Ltd. (2012 (11) TMI 190 - SUPREME COURT ) wherein it was held that where the assessee is following net method of valuation of closing stock, and included excise duty at the time of removal of goods. - Decided in favour of assessee. Disallowance u/s. 40(a)(ia) - Section 194C is applicable to the sums paid by M/s. Vishal Shipping Agency P. Ltd. and no TDS had been deducted as held by AO - CIT(A) deleted the disallowance - Held that:- Similar issue was considered in the case of CIT vs. Gujarat Narmada Valley Fertilizer Co. Ltd. (2014 (4) TMI 235 - GUJARAT HIGH COURT), wherein it was held that the expenses were incurred by the agent on behalf of the assessee for transportation and other charges, which has been spelt out in the bill itself including the commission to the agent. The relation between the assessee and the agent was principal. The obligation to deduct tax at source from the payment of transport charges and other charges was complied with by the agent, who had made payment on its behalf. In such circumstances no disallowance can be made u/s. 40(a)(ia) of the Act, on the amount reimbursed where obligation to deduct tax at source for payment was complied with by the agent. - Decided in favour of assessee. Disallowance made u/s. 40(a)(ia) - amount of ₹ 2,60,846/- was paid by Tri-lad to Kuehne Negel P. Ltd. who was a foreign freight agent - income accrues or arises in India to the NRI transport agent - CIT(A) deleted the disallowance - Held that:- In this case the respondent is having no business connection in India and no income accrued to it in India. The respondent is also not having any permanent establishment in India. Thus the provisions of section 9(1)(i) is not applicable and the said amount is not taxable in India. Being so CIT(A) is justified in deleting the addition made by the AO - Decided in favour of assessee.
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