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2016 (1) TMI 245 - ITAT JAIPUR

2016 (1) TMI 245 - ITAT JAIPUR - TMI - Disallowance u/s 40(a)(ia) - payment of transport charges - Held that:- As decided in assessee's own case for the assessment year 2008-09 nature of between assessee & M/s. Sachin Cargo Movers, C&F Agent, was for reimbursement of expenses. Besides, the TDS thereon has been deducted by the agent as mentioned above. By now, it has been settled by various Courts that reimbursement of expenses are not liable for deduction u/s 40(a)(ia) of the Act. In any case th .....

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sessee.

Delay in TDS payment on job work - Held that:- It has not been disputed that the requisite TDS was paid by assessee before due date of return. In view thereof this claim of the assessee is allowed.

Increase in valuation of the closing stock - whether to be allowed in next year as increase in opening stock in next year i.e. 2010-11 - Held that:- It has not been disputed that the assessee has not claimed any benefit by increase in valuation of stock in subsequent yea .....

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.P. TOLANI, JM:- Both these appeals are the cross appeals filed against the order of the ld. CIT(A-III, Jaipur dated 13-02-2013 for the assessment year 2009- 10. Respective grounds are as under:- ITA No. 479/JP/2013 -Revenue (i) The ld. CIT(A) has erred in fact and in law in allowing deduction u/s 10BA albeit however by adjusting it for the amount of DEPB. (ii) The ld. CIT(A) has erred in fact and in law in directing that the disallowance u/s 40(a)(ia), made for TDS not deposited by due date, sh .....

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g that duty draw back amounting to ₹ 85,93,907/- received by assessee is not eligible for deduction u/s 10BA of I. T. Act, 1961. 2. That the Ld. CIT (A) is wrong and has erred in law in confirming the action of Ld. A.O. of invoking provisions of section 145 (3) of I. T. Act, 1961 and of rejection of books of accounts of assessee and further confirming the application of G.P. rate of 17.20% on declared turnover of ₹ 20,95,87,304/- as against declared G.P. rate of 12.03% thereby confir .....

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charges to transporters and deducted due TDS therefrom. (b) payment to job work contractors for ₹ 30,92,718/- from whom due TDS was deducted for the month of January & February, 2009 deposited late but before due date of filing of return u/s 139 (1) are hit by provisions of section 40 (a) (ia) of I. T. Act, 1961. (c) Without prejudice to ground No. 3(b) above the Ld. CIT (A) is wrong in not accepting the contention of assessee that the disallowance u/s 40 (a) (ia) is added to the incom .....

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eated as unexplained investment of assessee u/s 69 of the Act and thereby confirming addition of ₹ 30,96,050/- in income of assessee as against addition of ₹ 32,47159/- made by A.O. as profit @ 17.20% on alleged shortage of stock of ₹ 1,88,78,833/- as on date of survey. 2.1 Brief facts of the case of the case are that the assessee is a proprietor of M/s. The Art Palace, an industrial undertaking engaged in the manufacturing and exporting of handmade articles using wood as main .....

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assessee contends that the assessee paid no transport charges. The assessee appointed an agent M/s Sachin Cargo Movers, B-56, Model Town, Jagatpura Road, Jaipur for shipping the goods from factory site to inland port for onwards export out of India. The agent reimburses all expenses made by it therein and raises a bill there for which assessee reimbursed. The total charges paid are ₹ 1,23,24,384.26 which are debited in P & L A/c as C & F charges. The breakup of charges are as unde .....

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owed the same u/s 40(a)(ia) of I.T. Act, 1961. In this connection it is submitted that assessee has not directly paid these transport charges but are reimbursed by him to Sachin Cargo Movers. M/s Sachin Cargo Movers who has paid the transport charges and deducted due TDS from transporters and deposited the same in accordance with provisions of I.T. Act, 1961. This is neither disputed in earlier or current year. Since the agent who paid these transport charges deducted due tax there from, the ass .....

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port charges were paid by appellant on which TDS was required to be made. If agent paid TDS on behalf of assessee it will not exonerate assessee from liability. It is submitted that both the authorities below did not appreciate that transportation charges were incurred by agent on behalf of assessee and relationship between assessee and agent is principal and agent and in such case assessee is not required to deduct tax at source and there can be no disallowance u/s 40 (a) (ia). The agent reimbu .....

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in assessee's own case for the assessment year 2008-09 by observing as under:- 10.6 We have heard the rival contentions and perused the materials available on record. In our considered view the nature of between assessee & M/s. Sachin Cargo Movers, C&F Agent, was for reimbursement of expenses. Besides, the TDS thereon has been deducted by the agent as mentioned above. By now, it has been settled by various Courts that reimbursement of expenses are not liable for deduction u/s 40(a)( .....

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5,372/- u/s 40 A(3) being 20% of ₹ 76,860/- being payment exceeding ₹ 20,000/- which is in accordance with amendment made in Section 40 A(3) by Finance Act, 2008 w.e.f. 1-4-89 (i.e. from A.Y. 2009-10). However, it is submitted that the amount disallowed u/s 40A(3) will correspondingly increase the profits and gains of eligible business and same is allowable to assessee while computing deduction u/s 10BA. The Ld. CIT (A) has wrongly rejected the contention of assessee without apprecia .....

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008 was ₹ 1,90,48,730/-. (ii) There was a difference of ₹ 37,41,134/- in the amount of purchases as adopted by the A.O. and as adopted by the appellant. Bills to the extent of ₹ 31,56,040/- are verifiable from the impounded material and credit can be given to that extent only . (iii) There was difference of ₹ 21,03,292/- in the amount of direct expenses as adopted by the A.O. and as adopted by the appellant. These expenses included labour payments of ₹ 15,17,915/- w .....

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uting the book profit as on date of survey. The assessee on the above report of A.O. claimed before Ld. CIT (A) that in working of trading A/c by assessee as above the opening stock taken is closing stock as per Trading account as on 31-3-08 filed along with return of income for A.Y. 2008-09 and accepted in assessment. The purchase, sales and direct expenses up to 23-9-2008 are as per books of accounts produced before A.O. in assessment proceedings. The sales are mostly exports supported by expo .....

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ansfer of amounts to purchases which stood debited to supplier s accounts for bills of purchases pending approval of goods and/or debit notes received which were reconciled while finalizing the accounts at the time of the audit. The difference in direct expenses, the labour payments and job work payments were accepted by the AO in the assessment order and disallowance u/s 40 (a) (ia) was made there from and certain direct expenses on account of carriage inward, transportation charges inward, loa .....

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irmed addition of ₹ 30,96,050/- in income of assessee as against addition of ₹ 32,47,159/- made by Ld. A.O. as profit @ 17.20% on alleged shortage of stock of ₹ 1,88,78,833/- as on date of survey. It is submitted that Ld. CIT (A) has erred in law in working stock on date of survey as per remand report sent by A.O., while the working of assessee was as per books of accounts produced before Ld. A.O. in course of assessment proceedings wherein declared sales and purchase were acce .....

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₹ 30,96,050/- confirmed by Ld. CIT on account of excess stock due to difference of valuation is wrong and not sustainable. Without prejudice to above, it is submitted that addition on account of excess stock for valuation difference is to be allowed to the assessee firm in next year as opening stock which will reduce profits of next year. The assessment of assessee for A.Y. 2010-11 has been completed u/s 143 (3) wherein opening stock was taken by assessee as that was shown by him as closi .....

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CIT (A) is wrong and has erred in law in confirming addition of ₹ 30,96,050/- in the hands of assessee as unexplained excess stock found in course of survey which deserves to be deleted. 7.1 The ld. DR is heard 8.1 Adverting the Revenue s appeal, Ground Nos. 2 and 3 have already been considered along with Ground No. 3 of the assessee. 9.1 Apropos Ground No. 1 of the Revenue, ld. Counsel for the assessee contends that the issue is covered with the appeal order passed by ITAT, Jaipur Bench i .....

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phold the order of ld. CIT (A) on this issue, Revenue s ground is dismissed. 10.1 We have heard the rival contentions and perused the materials available on record. Apropos assessee's appeal Ground Nos. 1 and 2 are dismissed being not pressed. 11.1 Apropos Ground No. 3 (a) of the assessee, respectfully following our own judgement dated 21-11-2014 for the assessment year 2008-09 in assessee's own case (surpa), we hold that impugned payment was not liable for deduction of TDS. Consequently .....

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