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2015 (12) TMI 396 - ITAT MUMBAI

2015 (12) TMI 396 - ITAT MUMBAI - TMI - Disallowance under section 40(a)(ia) - non-deduction of TDS on payments in the nature of purchases Held that:- Disallowance will not be attracted, if the respective payee has paid the required taxes in accordance with law. For verification of the actual position, we restore this issue to the file of the AO to verify whether the payee had paid the due taxes after computation of its income including the payments received from the assessee.- Decided in favour .....

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e of filing of return of income. We decide this issue accordingly and restore the matter to the file of the Assessing Officer (hereinafter referred to as the AO) to verify whether the TDS was deducted and deposited within the due date of filing of return and if found so, then the AO to allow the claim of the assessee accordingly. - Decided in favour of assessee for statistical purposes.

Disallowance of salary paid to Mr. Hardik Kothari, son of the partner of the assessee firm - Held t .....

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to the written submissions dated 29.08.11 submitted by the assessee to the Ld. CIT(A) wherein it has been explained that the amount of salary paid to Mr. Hardik Kothari was reasonable. The Ld. A.R. has further explained that the payment of salary was routed through salary account. He has further submitted that the payment of salary to Mr. Hardik Kothari has been allowed in the past. Considering the above submissions of the Ld. A.R., we do not find any justification on the part of lower authoriti .....

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for the firm. The Ld. CIT(A) has overlooked the contentions raised by the assessee and has disallowed the claim. It is not disputed that the services were provided by Mr. Vinit Kothari to the firm. It has also been explained that the software developed by him was very important to the business of the assessee firm. Considering the above facts and circumstances, in our view, the disallowance is not justified on this issue also and the same is accordingly ordered to be deleted. - Decided in favou .....

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the assessee in this regard and decide the issue afresh in accordance with law.- Decided in favour of assessee for statistical purposes. - ITA No. 3688/Mum/2012 - Dated:- 21-10-2015 - R C Sharma, AM And Sanjay Garg, JM For the Appellant : Shri Vijay Mehta, AR For the Respondent : Shri Neil Philp, DR ORDER Per Sanjay Garg The present appeal has been preferred by the assessee against the order dated 22.03.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] rele .....

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ate of filing of the return of income by the appellant. The disallowance being bad in law the same needs to be deleted. 2. On the facts and circumstances of the case and in law the learned CIT(A) erred in confirming disallowance of rent of ₹ 2,40,000/- u/s.4O(a)(ia) without appreciating the fact that the TDS of ₹ 36,720 on the above amount had been deducted and deposited on 15.05.2008 i.e. within due date stipulated u/s 200(1). The addition being bad in law the same needs to be delet .....

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March 2008 and therefore, provisions of section 40(a)(ia) would not apply as section 40(a)(ia) provides for disallowance in relation to the amounts payable and not to amounts already paid during the previous year. The addition being bad in law the same needs to be deleted. 4. On the facts and circumstances of the case and in law the learned CIT(A) erred in confirming disallowance of ₹ 1,50,000/- towards salary paid to Mr Hardik Kothari holding that no payment of salary has been reflected .....

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r bills for job charges were filed before the learned CIT(A). Learned CIT(A) erred in not appreciating the fact all the details and explanations in relation to payment towards software charges including return of income of Mr Vinit Kothari were filed before the learned CIT(A). The addition being bad in law the same needs to be deleted. 6. On the facts and circumstances of the case and in law the learned CIT(A) erred in confirming the addition of unsecured loans of ₹ 1,79,400/- under sectio .....

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ion to ground No.1 vide which the disallowance has been made by the lower authorities under section 40(a)(ia) on account of non deduction of TDS on payments made to M/s. M.R. Enterprises. It is the contention of the Ld. A.R. that M/s. M.R. Enterprises has already discharged the tax liability by duly filing the return of income. He has contended that as per the new proviso inserted in section 40(a)(ia) vide Finance Act, 2012 w.e.f. 01.04.13 wherein it has been provided that if the assessee fails .....

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fact clarificatory in nature and should be applied/retrospectively for the year under consideration and as such no disallowance is attracted on this issue. 4. On the other hand, the Ld. D.R. has contended that it has been specifically provided in the Act that the said proviso comes into operation w.e.f. 01.04.13 and that where the language of the section as well as the date of operation of such provisions has been mentioned specifically the courts cannot supply words to the provisions or amend .....

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Vs. ACIT" in ITA No.183/Bang./13 for A.Y. 2005-06 vide order dated 21.02.14. The relevant part of the findings of the Tribunal given in the said case, are reproduced as under: "3.4.1 We have heard the rival submissions and perused and carefully considered the material on record. Admittedly, the assessee has not deducted tax at source on the payments made to Sri G.Shankar of ₹ 2,69,21,500 and to Sri Ramesh Kotian of ₹ 1,54,75,000. As pointed out by the learned Authorised Rep .....

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udited under section 44AB of the Act; declared and offered the same to tax in their returns of income for the relevant period, thus by virtue of the amendment to the provisions of section 40(a)(ia) of the Act by insertion of the second proviso to section 40(a)(ia) of the Act w.e.f. ;1.4.2013, the provisions of section 40(a)(ia) of the Act would not be attracted to the payments made by the assessee i.e. Sri G. Shankar of ₹ 2,69,21,500 and to Sri Ramesh Kotian of ₹ 1,54,75,000. This vi .....

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#8377; 1,54,75,000 since the object of introduction of section 40(a)(ia) of the Act is achieved for the reason that the payees / recipients have declared and offered to tax the payments received from the assessee in their respective hands. 3.4.2 As regards the issue of non-furnishing of Form No.26A, we are of the view that since the second proviso to section 40(a)(ia) of the Act is held to be retrospective in operation w.e.f. 1.4.2005, similarly, Form 26A was to be filed for an assessee not to b .....

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ing to ₹ 4,23,96,500; being the payments made by the assessee to Sri G. Shankar of ₹ 2,69,21,500 and to Sri Ramesh Kotiar, of ₹ 1,54,75,000 after affording the assessee adequate opportunity to file Form No.26A and only after due verification of whether the aforesaid two payees / recipients have reflected the same receipts in their books of account and have offered the some to tax. In these circumstances, we hereby set aside the order of the learned CIT (Appeals) to the file of .....

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llowance under section 40(a)(ia) of the Act will not be attracted, if the respective payee has paid the required taxes in accordance with law. For verification of the actual position, we restore this issue to the file of the AO to verify whether the payee had paid the due taxes after computation of its income including the payments received from the assessee. This issue is accordingly allowed for statistical purposes. Ground Nos. 2 & 3: 7. The contentions raised by the assessee in ground No. .....

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quot;Virgin Creations" in ITA No.302 of 2011 decided on 23.11.2011, has held that the said amendment is retrospective in nature. Following the said decision, the Mumbai Bench of the Tribunal, in the case of "Piyush C. Mehta" 52 SOT 27, has allowed the claim of the assessee if the deposit has been made before the due date of filing of return of income. We decide this issue accordingly and restore the matter to the file of the Assessing Officer (hereinafter referred to as the AO) to .....

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thod adopted by the assessee for diversion of taxable profits. The Ld. CIT(A), however, observed that the ledger account of Mr. Hardik Kothari showed a commission of ₹ 1,79,400/- only and there was no further credit for the salary shown in his name of ₹ 1,50,000/-. He, therefore, observed that no salary had been paid to Mr. Hardik Kothari of an amount of ₹ 1,50,000/-. He, therefore, disallowed the entire amount of ₹ 1,50,000/- as the same was not reflected in the ledger a .....

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nd commission on sale of products. It has been explained that he has been looking after production quality and customer relationship. The Ld. A.R. has further invited our attention to the written submissions dated 29.08.11 submitted by the assessee to the Ld. CIT(A) wherein it has been explained that the amount of salary paid to Mr. Hardik Kothari was reasonable. The Ld. A.R. has further explained that the payment of salary was routed through salary account. He has further submitted that the pay .....

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77; 1,48,250/- towards purchase of software. The Ld. A.R. of the assessee has invited our attention to page 20 of the paper book which is a letter dated 31.08.2010 addressed to Commissioner of Income Tax wherein it has been explained that Mr. Vinit Kothari had developed a software which was useful for looking after the day to day production, quality and other requirements. Mr. Vinit Kothari also gave training regarding the said software. The assessee paid the amount in question to Mr. Vinit Koth .....

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