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The DCIT, Circle- 2, Jaipur Versus M/s. Sand Dune Construction (P) Ltd. and Vica-Versa

2015 (9) TMI 15 - ITAT JAIPUR

Rejection of books of accounts - trading addition - CIT(A) deleted addition - Held that:- It emerges from the record that the AO failed to conduct any further enquiry as to rejection of books of account of the assessee. The rejection of books of account by the AO does not appear to be justifiable and the G. P. addition made is also not sustainable in view of the fact that the assessee has shown better gross profit and net profit rate on increased turnover. Thus we find no reason to interfere in .....

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ani Brands (P) Ltd. vs. ITO (2012 (5) TMI 138 - ITAT MUMBAI) is fully applicable in the case of the assessee. Once the actual recipient of the income i.e. M/s. A. G. & Company has paid taxes on the rental income then it cannot be taxed twice by disallowing the TDS in the hands of the assessee company. Thus we find no reason to interfere in the order of the ld. CIT(A) which is sustained. - Decided in favour of assessee.

Disallowance u/s 40(a)(ia) on advertisement expenses - short deduc .....

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COURT]. Revenue’s SLP against the same has also been dismissed by the Hon'ble Supreme Court. Thus, the issue stands settled in favour of the assessee - ITA No. 304/JP/2013, C.O. No. 26/JP/2013 - Dated:- 11-8-2015 - SHRI R.P. TOLANI AND SHRI T.R. MEENA, JJ. For The Revenue : Shri Raj Mehra , JCIT For The Assessee : Shri S.L.Poddar, Advocate ORDER PER T.R. Meena, AM This is an appeal filed by the Revenue against the order of the ld. CIT(A)-I, Jaipur dated 24-01-2013 for the assessment year 2009-1 .....

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work in progress. 2. Directing to allow credit of TDS deducted on the rental receipts which does not belong to the assessee company. 2.2 The assessee has raised solitary ground in its cross objection. 1. Under the facts and circumstances of the case the ld. CIT(A) has erred in confirming the action of the ld AO in disallowing of ₹ 2,33,735/- u/s 40(a)(ia) of the I. T. Act, 1961. 3.1 The ground No.1 of the Revenue pertains to deletion of trading addition of ₹ 14,33,722/-. Brief facts .....

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978 3.67% 2008-09 102346109 14826281 14.37% 2784703 2.72% 2007-08 83772100 4486120 5.35% 2973994 3.35% The AO asked the assessee company to produce the books of account alongwith the supporting bills and vouchers. The assessee company produced the supporting bills and vouchers before the AO who has observed as under:- (i) On examination of the vouchers in respect of construction expenses claimed at ₹ 1,46,99,999/-, the AO observed that certain payments have been made without supporting ori .....

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t it could not explain the basis for this valuation of this work in progress before the AO. It is observed that the assessee company has taken the valuation of the unsold goods on estimate basis where project is under construction. The AO did not accept the valuation of work in progress as declared by the assessee company because the assessee company did not fulfill statutory requirement of Section 145 wherein it has been notified that AS2 shall be applied while valuing inventories including wor .....

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he expenditure. In the case of Shri Ravi Mathur, no mention of purpose or work has been made on the vouchers. The AO observed that the payments on account of contracts have been shown in the name of the other family members of the Directors of the Company and they are not corroborated with the mention of nature of expenses as well as business purpose within the meaning of Section 37(1) of the Act. In view of the above discrepancies, the AO issued the show cause notice to the assessee vide order .....

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all the details for purchase of raw materials like bajri, rodi and water etc. are maintained and in the business of construction activity it is not possible to obtain 100% vouchers from registered dealers. The total purchases made during the year are at ₹ 4,40,81,824/- and they are fully supported by vouchers. (iii) The assessee company submitted that the company has to carry out construction activities and it is not possible to maintain stock register of raw materials like cement, bajri, .....

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he year as well as comparison of earlier two years. The assessee submitted that the gross profit rate and net profit rate is better than earlier years and the turnover is also increased by more than 100% during the year. Therefore, there is no reason for invoking the provisions of Section 145 of the Act. The assessee has maintained complete books of account and they are audited u/s 44AB of the Act and also there is no defect in them. Thus there is no case for application of provision of Section .....

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ld. CIT(A) who deleted the addition by observing as under:- 4.3 I have carefully perused the order of the AO and the submissions of the A. R. The appellant was engaged in the work of civil construction and the AO has primarily rejected the books of accounts of the assessee on the grounds that the assessee had not maintained stock register or sitewise stock register and details of the vouchers of certain expenditures were not mentioned. The basis of valuation of closing stock was not clarified. I .....

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ere understated or that the expenses were inflated or bogus. It was held by the Hon'ble High Court in the case of CIT vs. Jas Jack Elegance Exports, 324 ITR 95 that there was no provision in the I. T. Act or Rules requiring an assessee to maintain a stock register as part of its accounts. Particularly in cases where it was not feasible to maintain the stock register given the nature of business. In the present case, the AO has not brought on record any material discrepancy in the books of ac .....

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hat the books of accounts cannot be rejected light heartedly without pointing out any specific defects. Reliance is placed on the following cases. (a) Hon'ble Jodhpur Tribunal in the case of Haridas Parikh vs. ITO, 113 TTJ 274. (b) Hon'ble Tribunal, Hyderabad Bench A in the case of Vishal Infrastructure Ltd. vs. ACIT, 104itd 537. In the aforementioned case, the Hon'ble Bench held that non-maintenance of record does not give a license to the AO to reject the books of account. There wa .....

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. The Hon'ble Amrtisar Tribunal held in the case of Ashok Kumar & Co. vs. ITO (2 SOT 518) that rejection of books could not be resorted to simply on the basis of some vouchers and failure to produce the same by the assessee. In other words, any situation should only warrant a specific addition by the Assessing Officer if he came to a conclusion that such expenditure had not been incurred or was not verifiable. Instead of adopting this accepted approach, if an Assessing Officer resorted t .....

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led to conduct any further enquiry so as to enable her to reject the books of accounts. Therefore, the rejection of the books of accounts of appellant does not appear to be justifiable and the GP addition made is also not sustainable in view of the fact that the appellant ha shown a gross profit rate and net profit rate on increased turnover. Therefore, the G. P. addition of ₹ 14,3,722/- is deleted. 3.4 The ld. DR supported the order of the AO. 3.5 The ld. AR of the assessee supported the .....

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othra International (2008)117 TTJ 672(Jd.) 3.6 We have heard the rival contentions and perused the materials available on record. It emerges from the record that the AO failed to conduct any further enquiry as to rejection of books of account of the assessee. The rejection of books of account by the AO does not appear to be justifiable and the G. P. addition made is also not sustainable in view of the fact that the assessee has shown better gross profit and net profit rate on increased turnover. .....

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ived by the assessee company till Dec. 2008. The AO observed that the rent received on that property from 01-01-2009 was to be the income of M/s. A. G. & Company. The AO further observed that assessee company had transferred the rent so received on behalf of M/s. A. G. & Company to it after claiming TDS deducted on these receipts. Since the amount so transferred to M/s. A. G. & Company was not assessee's income, the TDS made on the same could not be claimed by the assessee. There .....

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facts are that the property had been transferred to A. G. & Company and the rent received during the transit period was transferred to M/s. A. G. & Co. and the latter paid taxes on the same. Given the above facts, it is held that the findings of the Hon'ble ITAT Bench in the case of Arvind vs. ITO (supra) is totally logical to the facts of the case of the appellant. Moreover, even logically once the actual recipient of the income i.e. A. G. & Co. has paid taxes on the rental inco .....

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ome and paid taxes thereon. Therefore, the credit of TDS deducted by the payee should be allowed and the action of the AO deserves to be quashed. 4.5 We have heard the rival contentions and perused the materials available on record. We find from the records that the property had been transferred to M/s. A. G. & Company and the rent received during the transit period was transferred to M/s. A. G. & Company and the taxes were paid. The decision of ITAT Mumbai Bench as relied on by the ld. .....

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ismissed. 5.1 Now we take up the C. O. of the assessee wherein the solitary issue of the assessee is as under:- 1. Under the facts and circumstances of the case the ld. CIT(A) has erred in confirming the action of the ld AO in disallowing of ₹ 2,33,735/- u/s 40(a)(ia) of the I. T. Act, 1961. 5.2 Briefly, in this case the AO observed that the advertisement expenses of ₹ 14,86,679/- was debited by the assessee in profit and loss account and TDS was deducted by the assessee @ 1.03% even .....

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40(a)(ia) of the Act by the AO and the same was added back to the income of the assessee. 5.3 The assessee challenged this issue before the ld. CIT(A) who disallowed this ground of the assessee by observing as under:- 6.2 I have carefully perused the order of the AO and submission of the A. R. I do not concur with the submissions of the A. R. The A. R. of the appellant has not rebutted the finding of fact by the AO that TDS was not deducted at prescribed rates and on payments which were subject .....

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