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2017 (2) TMI 586 - AT - Income TaxUnaccounted sales - difference in party wise details of receipts and TDS made vis a vis the receipts shown in the profit and loss account - Held that:- As could be seen from the assessment stage itself the assessee has tried to explain the difference between the receipts as per TDS certificate and as per profit and loss account by explaining that the difference was due to 4% VAT element. In fact, we have noticed from the facts and material placed before us,the assessee has submitted before the A.O a list containing party wise details of receipts as per TDS certificate and as per profit and loss account to demonstrate the fact that the difference is on account of VAT. We have noticed, the assessing officer in the assessment order has admitted the fact that the assessee has furnished the details. That being the case, in our view, the departmental authorities should have examined assessee’s claim by properly verifying the details submitted by the assessee. Thus we remit the issue back to the file of the assessing officer for fresh examination after carefully considering the materials brought on record by the assessee for reconciling the difference. Addition u/s 40 A (2) (b) - Held that:- As could be seen out of five years for which payment of royalty was to be made by the assessee, except the impugned assessment year, in no other assessment year assessee’s claim has been disallowed, though, assessments have been completed u/s 143 (3) of the Act. Therefore, applying the rule of consistency no disallowance should have been made in the impugned assessment year. Further, on perusal of the assessment order we have noted that the assessing officer has not recorded any reason to demonstrate that the payment made by the assessee is unreasonable as mandated by Section 40 A (2)(b). That being the case disallowance of the expenditure claimed by invoking Section 40 A (2) of the Act, is not proper. Hire charges paid for hiring equipment - revenue or capital expenditure - Held that:-Assessee has brought material on record to demonstrate that it has brought on hire computers and peripherals from third parties and deduction claimed was on account of payment made to those parties towards hire charges. This fact is demonstrated from the TDS certificate submitted by the assessee before the departmental authorities. It is also a fact on record that assessee has deducted tax at source on payment of hire charges in terms of Section 194J of Act. Thus, prima facie it is proved that the payment is towards hire charges and not for acquiring any capital assets. That being the case, the expenditure claimed is allowable. As far as the observation of the assessing officer that the amount is otherwise disallowable u/s 40 (a)(ia), we do not find any merit in the same considering the fact that the assessee has deducted tax at source on such payment u/s 194 J. As far as the allegation of the department that CIT (A) has admitted additional evidence in violation of rule 46A we are not convinced with the same. It is evident on record that the TDS certificate on the basis of which Ld. CIT (A) has come to his conclusion were available before the assessing officer and in any case of the matter the TDS certificate cannot be treated as additional evidence. No infirmity in the order of the CIT (A) on this issue. Accordingly, we uphold the same by dismissing the grounds raised by the department.
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