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M/s. Optitech Software (P) Ltd. Versus Income Tax Officer, Ward 13 (4) , New Delhi

2015 (7) TMI 357 - ITAT DELHI

Disallowance u/s 40(a)(ia) - Disallowance for salary paid - Held that:- The issue duly covered in favour of assessee because it is an undisputed fact that payments were made during the year itself and therefore, were not outstanding as payable. The Special Bench in the case of Merylin Shipping &Transport Co. in [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] has clearly held that disallowance u/s 40(a)(ia), can be made of the amounts which are payable and cannot be made of the amounts which have already .....

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assessee is entitled to application of judgement benefiting to it - Decided in favour of assessee.

Addition u/s 41(1) being salary payable - Held that:- Various courts have decided that addition u/s 41(1) can only be made if the provisions of liability are written back in the P & L account and in the absence of such write back, addition u/s 41(1) cannot be made. It is undisputed fact that provisions were not written back and were outstanding in the balance sheet and reflection of such .....

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irming the action of A.O. in initiating penalty u/s 271D is not justified - Decided in favour of assessee. - ITA No.1584 /Del/2013 - Dated:- 25-3-2015 - G. C. Gupta, VP And T. S. Kapoor, AM,JJ. For the Appellant : Shri P C Yadav, Adv. For the Respondent : Shri P Dam Kanunjha, Sr DR ORDER Per: T S Kapoor: This is an appeal filed by assessee against the order of Ld. CIT(A) dated 30.08.2012. The assessee has raised following grounds of appeal: "i) On the facts and in the case, the Ld. CIT(A) h .....

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during assessment proceedings, the A.O. observed that he assessee had made certain payments to professionals without deduction of TDS in accordance with the provisions of Section 194J and, therefore, he disallowed the payment u/s 40(a)(ia) of the Act and he disallowed an amount of ₹ 4,28,675/-. The A.O. further observed that the assessee in its balance sheet had reflected a provision of ₹ 1.80 lacs on account of salary payable. He further observed that the assessee had paid only S .....

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er obtaining loan of ₹ 1,19,928/- from the Director Mrs. Poonam Wadhwa and Dilip Wadhwa. The A.O. observed that since the assessee had taken the loan from Direct10ors in cash which was in violation of the provisions of Section 269SS, therefore, he held that penalty proceedings u/s 271D are being initiated separately. Aggrieved, the assessee filed appeal before Ld. CIT(A). Ld. CIT(A) did not agree with the contentions of the assessee and upheld the action of A.O. Aggrieved, the assessee is .....

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355 ITR 642. Regarding the 2nd ground of appeal, Ld. A.R. submitted that the provisions were outstanding in the books of account and it was not written back by the assessee and, therefore, the provision of Section 41(1) were not applicable. As regards the 3rd addition for violation of the provision of Section 269SS, Ld. A.R. submitted that the assessee had not accepted the loan in cash and rather the director had directly paid to Hundai Motors and assessee had just passed a journal entry by cred .....

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arties and have gone through the material placed on record. We find that the issue of addition u/s 40(a)(ia) is duly covered in favour of assessee because it is an undisputed fact that payments were made during the year itself and therefore, were not outstanding as payable. The Special Bench in the case of Merylin Shipping &Transport Co. in 136 ITD 23 has clearly held that disallowance u/s 40(a)(ia), can be made of the amounts which are payable and cannot be made of the amounts which have al .....

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the case of CIT VS Vegetable products 88 ITR 192, the assessee is entitled to application of judgement benefiting to it and, therefore, applying the Hon'ble Allahabad High Court judgement, the 1st ground of appeal is decided in favour of assessee and is therefore, allowed. 6. Regarding 2nd ground of appeal, with respect to addition u/s 41(1), we find that various courts have decided that addition u/s 41(1) can only be made if the provisions of liability are written back in the P & L acco .....

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e provisions of section 269SS are applicable in the case of acceptance of loan or deposit in cash. However, these provisions are not applicable in a case where the assessee had received loans or deposits by way of passing of a journal entry. The auditors in the auditors' report u/s 44AB vide Annexure D placed at paper book page 22 has stated that no cash loan was accepted by assessee from Dilip Wadhwa and Poonam Wadhwa. Ld. A.R. had submitted that A.O. wrongly noted that amount was received .....

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rovision is limited) it applies to a transaction where a deposit or a loan is accepted by an assessee, otherwise than by an account payee cheque or an account payee draft. The ambit of the Section is clearly restricted to transaction involving acceptance of money and not intended to affect cases where a debt or a liability arises on account of book entries. The object of the Section is to prevents transactions in currency. This is also clearly explicit from clause (iii) of the explanation of Sec .....

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; In the present case, admittedly no money was transacted other than' through 'banking channels. M/s P ACL India Ltd. made certain payments through banking channels to land owners. This payment made on behalf of the assessee was recorded by the assessee in its books by crediting the account of M/s PACL India Ltd. In view of this admitted position, no infringement of Section 269SS of the Act is made out. This Court, in the case of Noida Toll Bridge Co. Ltd. (supra), considered a similar c .....

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