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TMI Blog2015 (4) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... 5000/- made within the meaning of Section.40(a)(ia) r.w.s 194J of the IT Act for not deducting tax at source while making payment/crediting the amount of the income 'tax consultant fees, auditors remuneration to the respective persons. [3] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of Rs. 19,253/- made by invoking section 40(A)(3) of the IT Act. in respect of payment exceeding Rs. 20,000/- at one time in a single day. [4] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of Rs. 34,992/-out of total addition made by the AO of Rs. 150635/- on account of personal use of telephone, petrol, car and for want of proper check over the diesel, repair and maintenance expenses. [5] On the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in deleting the addition of Rs. 3,50,000/- out of total addition of Rs. 9,57,810/- made on account of disallowances of bogus unverifiable agriculture income." 2.1 In ITA No. 541/Ahd/2011 for A.Y. 2006-07, assessee has filed appeal on the following grounds: "(1) Lr. A.O. has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In assessment order, Assessing Officer has given reasons for addition of Rs. 1 lac on account of a credit in name of Nanak Sadi Centre and Rs. 2,50,000/- cash received from Nilkanth Industries u/s. 68 of Income Tax Act. Stand of assessee before Assessing Officer has been that these are not advances received but were the receipts of repayments made to both entities i.e. Nanak Sadi Centre and Nilkanth Industries. However, Assessing Officer did not accept the same and made the addition of Rs. 3,50,000/- under the provision of Section 68 of the Act. 3.2 Matter was carried before the First Appellate Authority, wherein assessee filed (1) a copy of confirmation from Shree Nanak Sadi Centre, Chikhli i.e. copy of assessee,s account in their books (2) Copy of Centurian Bank's current account's statement for a period of 30.6.2005 to 27.07.2005 showing an amount of Rs. 1,00,000/- advanced by Nilkanth Quarry Works to Nanak Sadi Centre on 21.7.2005 vide cheque No.248384 shown withdrawn on 27.07.2O05. Advance made by assessee vide above cheque No.248384 dtd. 18.07.2005 drawn on his Centurian Bank was cleared on 21.07.2005 which is shown as credited / withdrawn on 21.07.2005. Nanak Sadi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore coming to the conclusion. Stand of assessee has been that as per guidelines of CBDT in view of Supreme Court's judgement in case of Associated Cement Company Ltd. Vs. CIT (1993) 201 ITR 435 (SC) wherein it has been held that provisions of Section 194C would not be made applicable to the payment made for hiring or renting of equipment. Referring the said decision, it was contended on behalf of assessee that Hydraulic Truck was hired for removing blasted boulders to the crusher machine for crushing boulders into different sizes of stone. Hire charges were fixed per trip. Moh Mangal prepares one bill for every month and therefore, Section 194C does not apply in said case. Similar contentions were made for other payments. Assessing Officer rejecting the stand of assessee disallowed above amounts by invoking provisions of Section 40(a)(ia) of theAct. 4.1 Matter was carried before the First Appellate Authority, wherein various contentions were raised as discussed above and having considered the same CIT(A) also confirmed the addition. With regard to addition made to MohMangal Carting Contractor, Ramaiya Compressorwala and Ladubhai Compressorwala while deleted the addition made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,366/-. CIT(A) having considered the submission of assessee observed that assessee has been hiring equipment from year to year and the payments are made on regular basis even if no written agreement exists between the contractor and contractee. The equipment is specialized one hired for the drilling work. Hiring of such equipment and payment on such hiring squarely falls within the scope of Section 194C. In view of above, CIT(A) confirmed the order with regard to above payments, disallowed by Assessing Officer by invoking provision of Section 40(a)(ia). This factual and reasoned finding of CIT(A) needs no interference from our side. We uphold the same. 4.2.3 Regarding disallowance of payment made for accounting work, Audit fees and Income Tax fees payable. Assessing Officer disallowed the payment made for accounting work, audit fees and income tax fees which fall under Section 194J and TDS was not made, expenses payable and paid disallowed u/s. 4o(a)(ia) as per para 7 of Assessment Order. The details of additions made by AO are as under: (1) Income Tax Consultant fees- Rs.30,000/- (2) Accountant Fees- Rs.20,000/ (3) Auditor's Remuneration- Rs.10,000/ (4) Provision for A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e but a discharging of liability which is not exigible to TDS Provision made of Rs. 20,000/- of Accounting fees for A.Y.2006-07 was as good as amount of fees payable for A.Y.2006-07. Amount of provision does not exceed Rs. 20,000/-, so, it was held not deductible to TDS and therefore non-deduction of Tax does not attract the provision of Section 4o(a)(ia). In view of the above, CIT(A) agreed with the contention of assessee that payment made on this account is not subject provision of Section 40(a)(ia) of the Act. Accordingly, CIT(A) rightly directed the Assessing Officer to delete the additions made on this account. This reasoned finding of CIT(A) needs no interference from our side. We uphold the same. This take care of ground no.1 & 2 raised in assessee's appeal and ground no.2 of Revenue's appeal. 5. Next issue is with regards to disallowance of Rs. 19,253/- made by the Assessing Officer by invoking provision of Section u/s. 40A(3) of the Act. Assessing Officer in para (6) of his Order has given the particulars of amount of Rs. 96,296/- paid to Laxmanbhai and 3 others Compressorwalas in Tabular form. Assessing Officer after verifying vouchers and books of accounts treated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made addition of Rs. 1,14,672/- being 5% out of above v & vi aggregate expenses of Rs. 22,93,423/-. In appeal, CIT(A) estimated lump sum 5% disallowance on Telephone expenses (Rs.70,825/-), petrol expenses (Rs.48,610/-) and diesel expenses (Rs.21,93,423/-) and directed the Assessing Officer to restrict the disallowance to 5% of Rs. 23,12,858/- [(Rs.70,825/- ) + (Rs.48,610/-) + (Rs.21,93,423/-) = 23,12,858/-]. This reasoned finding of CIT(A) need no interference from our side. We uphold the same. 7. Next issue is with regards to disallowance of agricultural income of Rs. 9,57,810/-. Assessing Officer after making inquiry from land records and from APMC gave the finding that assessee had inflated income from vegetables. Further, while accepting the income from paddy and mango, Assessing Officer disputed that income from vegetables grown are exorbitant and therefore, major portion of income from vegetables was treated as business income and added to the income of assessee. Stand of assessee has been that Assessing Officer has not disputed the land owned by assessee and vegetables, Mango and paddy were grown there. The dispute was only on the income from vegetables. It was also state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs. 6,50,000/-out of total addition of Rs. 11,54,930/- made on account of bogus unverifiable agriculture income and treating it as business income." 8.1 In ITA No. 542/Ahd/2011 for A.Y. 2006-07, assessee has filed appeal on the following grounds: "(1) Lr. A.O. has erred in law and on facts to add an amount of Rs. 6,15,320/-. It is paid to Manoj C. Patel, Proprietor of Mohmangal Carting Contractor who hired out hydraulic truck for shifting crushed material from stone-mine and crushed stones from crusher machine to storage site, does not attract provisions of Sec.194C. A.O. and Lr. CIT(Appls.), Valsad presumed without any evidence that there was oral contract between assessee and Manoj C. Patel for such carting work. Payment of Rs. 6,15,320/- does not attract provisions of Sec.194C of I.T.Act, 1961 and therefore invocation of provisions of Sec. 40a(ia) is not just and proper. Lr. A.O. was not justified to disallow payment of Rs. 6,15,320/- u/s. 40a(ia) and Lr.CIT(Appls.), Valsad has also erred to confirm addition. (2) Lr. A.O. has erred in law and on facts to treat an amount of Rs. 11,95,145/- out of total agricultural income claimed of Rs. 12,74,936/- as business inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance of excess payment of Royalty. Assessing Officer noticed that assessee had debited excess royalty charges in profit and loss account. He collected information form the Mining Department which confirmed royalty paid was Rs. 13,58,098/- whereas assessee had claimed Rs. 14,74,038/-. Therefore, Assessing Officer proposed to disallow the excess amount of Rs. 1,15,940/-. In appeal, matter was carried before the First Appellate Authority, wherein CIT(A) observed that royalty is a kind of cess allowable as deduction on actual payments amounting to Rs. 13,74,038/- during year. In this Case, assessee furnished date-wise payments amounting to Rs. 13,74,038/- before him. Thus, assessee was entitled for deduction of Rs. 13,74,038/-. Accordingly, Assessing Officer was rightly directed to allow the deduction of royalty expenses of Rs. 13,74,038/-. Same is upheld. 12. Next issue is with regards to various miscellaneous expenses. Assessing Officer made disallowance of Rs. 41,469/- being 10% of various expenses claimed. In appeal, CIT(A) observed that in assessee's appeal for A.Y. 2006-07, personal element can be attributable for telephone and petrol/diesel expenses. Assessing Officer has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mangos N.A N.A 4,06,155/- O-37-43 Hector Paddy N.A N.A 79,719/- O-72-68 Hector Total N.A N.A 12,74,963/ On the basis of comparison of Table A & B, it was submitted that assessee has increased agricultural income at 30% which appears to be higher side particularly the area of cultivation remains same. In this background, CIT(A) observed that there is no dispute on land holding . However, Assessing Officer had disputed the produce of mango and vegetables thereby he treated the income from those items as unaccounted income from business. Assessing Officer disputed the income by way of sale of vegetables and mango. In earlier year, Assessing Officer had given finding that assessee has been producing mango and vegetables but income from them was high. Accordingly, income from sale of mango and vegetables was estimated and allowed as agricultural income. Once, mango trees start giving fruits, it continues to do so till trees are uprooted. CIT(A) found it incorrect to assume that this year there was no vegetable cultivation when record shows otherwise. Assessing Officer should take appropriate view in this matter. Precisely, issue before CIT(A) was regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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