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2015 (9) TMI 1004 - ITAT HYDERABAD

2015 (9) TMI 1004 - ITAT HYDERABAD - TMI - Addition made on account of disallowance u/s 40(a)(ia) - CIT(A) deleted the addition - submissions of assessee concluded that organsations to whom assessee has made payments are within the purview of section 194A(3)(iii) of the Act, hence, there is no requirement for assessee to deduct tax at source on the payments made to them - Held that:- the only reason on which disallowance u/s 40(a)(ia) was made is, Citi Corp and AB Builders Fund Co-op. Society ar .....

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e relevant PY and nothing remained outstanding at the end of the PY. The aforesaid factual position has not been controverted by the department. That being the case, following the decisions cited by ld. AR as referred to by ld. CIT(A), no disallowance u/s 40(a)(ia) can be made. In view of the above, we uphold the decision of ld. CIT(A) on this issue - Decided against revenue.

Bogus purchases - Outstanding closing balance in respect of three creditors - CIT(A) deleted the addition - He .....

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xtent proves the genuineness of the transaction between parties. That being the case, in our view, AO cannot treat the outstanding balance due to the creditors as bogus purchases of the assessee on purely conjectures and surmises. In the aforesaid view of the matter, having not found any infirmity in the order of ld. CIT(A) in deleting addition made by AO in respect of the three creditors, we uphold the same by dismissing the grounds raised by the department.- Decided against revenue. - ITA No. .....

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isallowance u/s 40(a)(ia). 4. Briefly the facts are, assessee a partnership firm is carrying on business of execution of civil contract works. For the AY under dispute, assessee filed its return of income on 30/09/2009 declaring total income of 2,01,90,884. During the assessment proceeding, AO noticed that assessee has debited an amount of ₹ 27,32,230 to the P&L A/c as finance charges. On going through the ledger extract, AO noticed that interest payments were made to the following org .....

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ction (3) of section 194A. Since assessee has not deducted tax at source on payments made to these two organsations, he accordingly, invoking the provisions of section 40(a)(ia) of the Act, disallowed the amount of ₹ 12,29,055. Being aggrieved of such disallowance, assessee challenged the same in appeal preferred before ld. CIT(A). 5. Before ld. CIT(A), it was submitted by assessee that both the organizations payment to which were considered for disallowance by AO are covered under proviso .....

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f the Hon ble Allahabad High Court dated 09/07/13 in case of CIT Vs. Vector Shipping Pvt. Ltd. and decision of the Chennai ITAT Bench in case of ITO Vs. Theekathir Press, ITA No. 2076/Mad/12, dated 18/09/13. 6. Ld. CIT(A) after considering the submissions of assessee concluded that organsations to whom assessee has made payments are within the purview of section 194A(3)(iii) of the Act, hence, there is no requirement for assessee to deduct tax at source on the payments made to them. On that basi .....

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)(iii) of the Act. Therefore, ld. CIT(A) was correct in holding that there is no requirement for assessee to deduct tax at source on the payments made. Even otherwise also, it is the contention of assessee that the entire finace charges were paid by assessee during the relevant PY and nothing remained outstanding at the end of the PY. The aforesaid factual position has not been controverted by the department. That being the case, following the decisions cited by ld. AR as referred to by ld. CIT( .....

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n amount of ₹ 4,99,85,846 as credits for supply of goods and outstanding expenses. He, therefore, called upon assessee to furnish details like ledger extract, PAN, names and addresses of the creditors against whom the liability has been shown. On verifying the details submitted by assessee, AO noticed that majority of the creditors are individuals and the outstanding liability represents payments towards sand, gravel stone, crushed stone, etc. As noted by AO, after causing necessary enquir .....

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ting. AO noted that assessee has entered into transactions with Shri Syed Sadiq Mohiuddin in April and May 08 and after initial payments from assessee for ₹ 13,50,000 on 08/04/08, no other transactions happened till January 09, which is surprising since no labour contractor will wait for his payment for more than 8 months. He also observed that Shri Syed Sadiq Mohiuddin even failed to respond to the summons issued u/s 131. AO observed, though, assessee has furnished bills certified by Shri .....

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were not responded to. PAN submitted by assessee also did not match with PAN data. AO observed, though, assessee has submitted the bills certified by Shri Shankar regarding supply of materials, but, in absence of proof regarding the existence of the creditor, closing balance of ₹ 23,64,500 could not be accepted as genuine. Accordingly, he added back the amount to income of assessee. In so far as M/s KSL Constructions is concerned, AO also found the facts to be identical. The party did not .....

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creditor. In respect of Shri Syed Sadiq Mohiuddin, it was submitted by assessee that the concerned person was supplying materials to assessee from earlier FYs also and as on 01/04/08, there was outstanding liability to the said creditor amounting to ₹ 23,50,000. During the accounting year, assessee effected transaction to the tune of ₹ 70 lakhs and out of the total amount of ₹ 93,50,000, assessee made payment during the year to the extent of ₹ 45,50,000 leaving the balan .....

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om the earlier years. As on 01/04/08, assessee was having an opening balance due to the said creditor amounting to ₹ 7,21,000. During the year under consideration, assessee made further purchases to the tune of ₹ 18,51,500 and made payments to tune of ₹ 3,09,000, leaving balance outstanding of ₹ 23,64,500 as on 31/03/09. Therefore, when AO does not dispute the purchases or the payments made by assessee to the concerned party, he cannot doubt the closing balance. Similar a .....

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of assessee, deleted the addition by observing as under: 7.3 I have seen carefully the facts and evidence. With respect to each of the three creditors, the assessing officer has accepted the genuineness of the payments. The assessing officer has held that each of the three persons were suppliers of the appellant with respect to stone and metal. The purchases have been accepted as genuine and the payments made have been accepted as genuine. For example in the case of Mis KSL Constructions, the a .....

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ses are bogus or the payments are bogus. It is also seen that the credits appearing are in the form of supplies of stone or metal purchased on credit and these are not cash credits introduced during the year. 7.5 In view of the above facts and circumstances, the additions made are ordered to be deleted as the purchases and the payments are genuine. 12. Ld. DR justifying the addition made by AO submitted before us, since assessee during the assessment proceeding failed to establish the identity o .....

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oubt the closing balance and treat it as unexplained credit. Reiterating the submissions made before ld. CIT(A), ld. AR submitted, all the creditors are existing and identified by assessee and all of them are income tax assessees, therefore, the doubt raised by AO is nonexistent. Further, he submitted, outstanding balance in respect of each of the creditor has been cleared in subsequent AY. In this context, he referred to the respective ledger account of the creditors as submitted in the paper b .....

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