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2018 (4) TMI 987 - ITAT MUMBAIAddition u/s 40(a)(ia) - non deduction of TDS on the payments made to non banking finance companies towards interest on loans - Held that:- The provisions of tax deduction at source are applicable to the interest payments made to NBFCs as these companies are not excluded from the application of provisions of section 193 and 194 of the Act. However, in view of the 2nd proviso to section 40(a)(ia) of the Act, we are of the view that if the payees of the interest i.e. the above stated NBFCs have disclosed the said income in their respective returns of income and paid income tax as per the applicable provision of law then there was no requirement of deduction of tax at source as the payees have paid the tax on the said receipts and the assessee can not be treated as assessee in default. Thus this matter needs further examination and verification at the level of the AO whether the payees have disclosed these payments as receipts in their respective returns of income. - Decided in favour of assessee for statistical purposes. Addition u/s 40A(3) on account of cash payments exceeding ₹ 20,000/- - Held that:- Having examined the issue in depth and after looking to the facts and circumstances and nature of purchases, we are of the view that assessee should be given one more opportunity to bring out and forth circumstances necessitating the cash payments for the purchase of sand/water and the issue should be decided denovo. Accordingly, we set aside the issue to the file of the AO with a direction to decide the matter - Decided in favour of assessee for statistical purposes. Expenditure on account of refundable deposit to BMC and MHADA - revenue or capital exp - Held that:- CIT(A) has examined the issue at great length and reached a conclusion that the said deposits were given wholly and exclusively for the purpose of business of the assessee and are not capital of nature and covered under the provision of section 37(1) of the Income Tax Act. Having perused and examined the materials on record, we are in complete agreement with the Ld. CIT(A) that the said finances/deposits are wholly and exclusively for the purpose of business and are admissible. Therefore, we are inclined to affirm the order of Ld. CIT(A) on this issue - Decided against revenue Accepting the loss incurred by proprietary concern namely, S.D. Hospitality (Restaurant) - assessee does not maintain consumption register and has shown different ratio of consumption of materials for different restaurants - Held that:- Perusal of assessment order reveals that AO has not pointed out any specific defect in the consumption but made a general observation that in absence of consumption records, the consumption can not be relied. The issue has been examined in depth by the Ld. CIT(A) and recorded a conclusion that entire purchases were vouched and therefore, the consumption of materials cannot be doubted and thus allowed the appeal. Since there is no infirmity in the order of the Ld. CIT(A), the same is hereby affirmed on this issue by dismissing the ground raised by the Revenue. Bogus and non genuine purchases - CIT-A deleted the addition admitting additional evidence - Held that:- Addition was deleted by the Ld. CIT(A) after verifying the evidences filed by the assessee which were not filed before the AO despite sufficient opportunities being given to the assessee. The Revenue has also challenged that this has caused a contravention of rule 46 and AO has not been afforded opportunity to examine these documents as furnished by the assessee. Under these circumstances, we are of the view that the CIT(A) clearly erred in not confronting the evidences to the AO and therefore of the view that AO should be given an opportunity to examine these records and documents as filed before the Ld. CIT(A). - Decided in favour of revenue for statistical purposes. Addition on adhoc basis in respect of various expenses incurred in cash when the assessee failed to produce the necessary supporting evidences - Held that:- Disallowances to the tune ₹ 8,52,725/- on account of various expenses were made purely on adhoc basis without pointing out any specific defect in the books of accounts except the general observation that there were no bills and vouchers for some expenses. We find that a general observation made by the AO that cash bills in respect of various expenses were not produced by the assessee is not sufficient to justify the adhoc disallowance. - Decided against revenue Applicability of section section 40(a)(ia) on assessee trust registered under section 12A and 80G - Held that:- As in view of the 2nd proviso to section 40(a)(ia) of the Act, we are of the view that if the trust has shown the receipts in its income and dealt with this income as per the provision, then the assessee can not be treated as assessee in default as regards non deduction at source are reached and the payment has to be allowed to the assessee but the same requires verification at the end of AO. Accordingly, we restore the issue to the file of the AO with a direction to see whether the case is covered under 2nd proviso to section 40(a)(ia) of the Act and decide the issue afresh Addition of deemed ALV of vacant flats which are lying in the stock in trade of the assessee’s books of account - Held that:- The issue is squarely covered in favour of the Revenue by the decision of Hon’ble Delhi High Court in the case of Ansal Housing Finance & Leasing Co. Ltd. (2013 (7) TMI 776 - DELHI HIGH COURT) wherein it has been held that even in the case of unsold flats held in stock in trade the income has to be assessed by way of deemed rent.
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