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2016 (8) TMI 325 - AT - Income TaxTDS u/s 194J - license fees paid to IRCTC (Indian Railway Catering & Tourism Corporation) due to non deduction of tax from the payment - Held that:- The license fee is paid consequent to regular system devised by IRCTC which calls for tenders offering the license for food catering rights on passenger trains on a particular train route. The successful bidders are given licenses against payment of license fee and the contractee renders the services not IRCTC. The tenders, license and payment of license fee are a part of a routine and regular legal process as approved by Railway Ministry for everyone at large. There is neither any skill, special knowledge or element of service involved in discharge of this legal obligation. IRCTC neither deputed as any special personnel to render any service to assessee. In these circumstances even an iota of rendering any service is missing, when there is no service, there is no question of applicability of sec. 194J as contemplated by ld. AO. Assessee’s licence fee payments to IRCTC were not liable for TDS and cannot be disallowed u/s. 40(a)(ia). - Decided in favour of assessee Treatment to Embezzlement loss - Held that:- The embezzlement claim of the assessee is genuine, legal and the loss there from is allowable. Revenue takes a stand that the assessee should have claimed the entire loss in AY 2010-11. Per contra, the assessee claims that some ray of hope was remaining to recover the part of the amount and to be on a safer side and its commercial wisdom, it was felt expedient to claim 30% for AY 2010-11 and 70% in AY 2011-12. Revenue has no objection in allowing the entire loss in AY 2010-11. This rather proves the assessee’s contention that instead of claiming in one year, by a prudent business decision it was decided to bifurcate the loss as a ray of partial recovery existed. In any case, the embezzlement amount was due from the said employee-manager Shri Rajesh Joshi. Therefore, alternatively, it becomes a debt due from Shri Rajesh Joshi, consequently, the amount is allowable either as embezzlement loss and when ray of partial recovery faded out; relevant bad debt is actually written off and thirdly as a business loss. Thus the embezzlement loss should be allowed in this year. In view of Hon’ble Supreme Court judgment in the case of Excel Industries Ltd (2013 (10) TMI 324 - SUPREME COURT) also, there is no prudence in not allowing the claim in this year and giving a direction to allow in AY 2010-11. In cumulative consideration of all these facts and circumstances, legal position and substantial justice, we have no hesitation in allowing the claim in this year as claimed by the assessee. - Decided in favour of assessee Leakage of revenue - Held that:- We have heard both the parties and are of the firm view that there is no concept of plugging any possible leakage of revenue which becomes a general and sweeping way of disallowance not contemplated by the law. Any disallowance should be specific and properly quantified. In view of these facts, we are unable to sustain this presumptive and ad-hoc addition based on an outlandish consideration of plugging possible leakage or revenue; consequently the same is deleted. Thus, this ground of the assessee is allowed and that of revenue dismissed. Addition u/s 40A - Held hat:- Cash payments are made in exceptional circumstances and the same are covered by Rule 60DD and cannot be disallowed u/s 40A(3). Unexplained expenditure u/s 69C - purchases which have not been effected due to non-delivery of goods - Held that:- The assessee cannot adopt such a self defeating approach, human conduct, surrounding circumstances and business exigencies on a moving train; the contention of the assessee is reasonable and acceptable and cannot be disregarded on presumption. In moving train, it may happen that the bill is given to the moving train staff and goods will not reach in time and payment is not given due to non-delivery, i.e., non-purchase. In view of the foregoing, we delete this disallowance. Thus, this ground of the assessee is allowed
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