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2018 (1) TMI 1293 - AT - Income TaxDisallowance u/s 40(a)(ia) - non deduction of tds on interest paid to Non–Banking Financial Companies (NBFC) towards loans availed from them - Held that:- A careful reading of the second proviso to Section 40(a)(ia) would make it clear that it will apply if the assessee is not deemed to be an assessee in default in terms of first proviso of section 201(1) of the Act. As per the conditions of Section 201(1) of the Act, the onus is on the assessee to demonstrate through documentary evidence that the recipients have offered the amount paid to them, without deducting tax at source, as income in the return of income filed for the relevant assessment year. Since the aforesaid claim of the assessee requires factual verification and the assessee has to bring proper evidence on record to prove its claim, we restore the issue to the file of the Assessing Officer for fresh adjudication after due opportunity of being heard to the assessee. In case assessee’s claim that the recipients have offered the interest paid to them as income in the relevant assessment year is found to be correct, no disallowance under section.40(a)(ia) should be made. With the aforesaid observations, the ground is allowed for statistical purposes. Addition on account of bogus purchases - quantum of disallowance to be made out of bogus purchases - Held that:- It is a fact that the assessee is engaged in the business of builder and developer (Civil Construction Work). Therefore, it cannot be expected to earn profit of 20%. Further, in similar types of cases, the tribunal is consistently upholding disallowance at 12.5% of the alleged bogus purchase. In tune with the aforesaid consistent view of the Tribunal, we restrict the disallowance to 12.5% of the alleged bogus purchases.
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