Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (5) TMI 920 - AT - Income TaxTDS u/s 194C - disallowance of salary paid to the security guards on the ground that such payments have been made to the contractor without deducting tax - assessee has not disclosed mode of payment of salary - HELD THAT:- We find the assessee in the instant case is a small assessee and has produced confirmation of the persons on the letter head of its firm as proof of payment of salary to these persons. Merely because the assessee has not disclosed mode of payment of salary i.e. either by cheque or cash, the same in our opinion should not doubted by the learned CIT(A) especially when such salary to security guards comes to ₹ 27,000/- per month for four persons. Even, if the payment is made in cash, there will be no violation of section 40A(3) of the Act. We, therefore, hold that the learned CIT(A) is not justified in sustaining the addition paid to four individual persons towards salary to security guards. The first issue raised by the assessee is accordingly allowed. Disallowance on account of shop rent and on account of godown rent - assessee did not file any reply to the query raised by AO - HELD THAT:- We find the assessee neither at the assessment stage nor at the remand stage has produced sufficient documents or evidence for the allowability of the rent. Considering the totality of facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the AO with a direction to grant one more opportunity to the assessee to substantiate her case and decide the issue as per fact and law. Accordingly, the second issue raised by the assessee in the grounds of appeal is allowed for statistical purpose. Disallowance being proportionate interest on advance to different persons - HELD THAT:- As in view of the decision of the Hon’ble Supreme Court in the case of S.A. Builders ltd. vs CIT [2006 (12) TMI 82 - SUPREME COURT] no disallowance is called for. However, the learned CIT(A) dismissed the ground holding that no plausible explanation was offered for the query raised on this issue except stating that it was needed for business dealings. From the various details furnished by the assessee, we do not find what was the reason for giving such advance. The commercial expediency of the same has not been established - as not been established as to whether the assessee’s own capital and free reserves are more than the interest free advance extended by the assessee during the impugned assessment year. Considering all we restore this issue to the file of the AO with a direction to give one more opportunity to substantiate the commercial expediency or to substantiate that her own capital and free reserves is more than the interest free advances given. The AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. Disallowance of low house hold expenses - HELD THAT:- We find the AO disallowed of ₹ 25,000/- on estimate basis being probable house hold expenditure on the ground that the assessee’s withdrawal is only ₹ 1,06,000/- and her husband is earning approximate ₹ 2.50 laksh per annum and the family of the assessee consists of the assessee, her husband and two school going children in the age group of 14 and 11 years. It is the submission of the learned counsel for the assessee that contribution of her husband is about ₹ 2 lakhs and the assessee has shown withdrawal at ₹ 1,06,000/- and such combined withdrawal is reasonable for meeting house hold expenses. We find some force in the above arguments of the learned counsel for the assessee. The addition made by the AO is purely on surmises and conjectures and nothing has been brought on record to show any extravagant expenditure incurred by the assessee during the year. Since, the addition made by the AO is based on surmises and conjectures, which has been upheld by the learned CIT(A), therefore, we set-aside the order of the learned CIT(A) and direct the AO to delete the disallowance.
|