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2016 (1) TMI 614 - ITAT AHMEDABAD

2016 (1) TMI 614 - ITAT AHMEDABAD - TMI - TDS u/s 194C - non deduction of tds - payment of preservation charges - Held that:- It is an undisputed fact that Assessee has paid preservation charges to the cold storage, the aggregate of the payments/credit to the account. During the relevant time, subsection (5) and proviso of Section 194C provided that no deduction of TDS was required from the amounts paid or credited if the sum did not exceed ₹ 20,000/- or the aggregate of the amounts of sum .....

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h Court in the case of CIT vs. Rajkumar (2009 (5) TMI 17 - DELHI HIGH COURT ) has held that trade advances which are in the nature of money transacted to give effect to a commercial transaction would not fall with the ambit of the provision of Section 2(22)(e) of the Act. Hon’ble Delhi High Court in the case of CIT vs. Creative Dyeing & Printing Pvt. Ltd. (2009 (9) TMI 43 - DELHI HIGH COURT ) has also held that amount advanced for business transaction do not fall within the definition of Section .....

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DICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTNAT MEMBER For The Appellant by : Ms. Urvashi Shodhan, AR For The Respondent by : Shri Dinesh Singh, Sr. D.R. ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER 1. This appeal filed by the Assessee is against the order of CIT(A)-XX, Ahmedabad dated 04.04.2012 for A.Y. 2008-09. 2. The relevant facts as culled out from the material on record are as under. 3. Assessee is an individual stated to be engaged in the business of construction and trading of Potato .....

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Aggrieved by the aforesaid order of ld. CIT(A), Assessee is now in appeal before us and has raised the following ground:- 1. Ld. CIT (A) erred in law and on facts in confirming disallowance of ₹ 1, 96, 945/- made by AO under section 40(a)(ia) of the Act on account of non deduction of TDS from storage charges paid for agricultural product. By confirming this addition the Id. CIT (A) has failed to appreciate the fact that storage charges for agricultural product not in the nature of renting .....

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ent of accumulated reserves when the same was neither loan nor advance. Ld. CIT (A) ought to have deleted addition made u/s 2(22)(e) of the Act. 3. Both the lower authorities have erred in law and on facts in not considering various explanations, submissions and evidences placed on record by the appellant in its proper perspective and further erred in not appreciating contractual liability of the company towards the appellant. This action of both the lower authorities is in clear breach of Princ .....

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and that Assessee has not deducted TDS on the same. He was of the view that non deduction of TDS would result in attraction of provisions of Section 40(a)(ia) and he accordingly disallowed the amount of ₹ 1,96,945/-. Aggrieved by the order of A.O., Assessee carried the matter before ld. CIT(A) who upheld the order of A.O by holding as under:- 3.2. In the assessment order, AO observed that the impugned amount was paid by way of rent for cold storage of potatoes; appellant was liable to dedu .....

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l before us. 6. Before us, ld. A.R. reiterated the submissions made before A.O and ld. CIT(A) and further submitted that preservation charges paid on agricultural produce is not liable for deduction of TDS because it being a agricultural commodity. As an alternate argument she submitted that each of the payments of preservation charges was below ₹ 20,000/- and therefore also Assessee was not liable to deduct TDS and in support of each payment/credit being less than ₹ 20,000/-. She po .....

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₹ 1,96,945/- which was in excess of ₹ 50,000/- being the limit prescribed u/s. 194C(5) and therefore the Assessee was liable to deduct TDS and therefore A.O. has rightly disallowed the expense and therefore no interference to the order of A.O. was called for. 7. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to addition made u/s. 40(a)(ia) on account of non deduction of TDS. It is an undisputed fact that Assessee .....

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f the view that since the amount credited/paid during the year was ₹ 1,96,945/-, which was in excess of the monetary limit prescribed under subsection (5) and in proviso, the exemption from non-deduction of TDS would not be applicable. In view of these facts, we find no infirmity in the order of ld.CIT(A) and thus the ground of Assessee is dismissed. 2nd ground is with respect to addition made u/s. 2(22)(e) of the Act. 8. On perusing the Balance Sheet, A.O noticed that Assessee has receive .....

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ceived under development agreement contract entered by the assessee with the company. It was further submitted that it was in the nature of business advance and it would not fall within the ambit of provisions of Section 2(22)(e) of the Act. The submissions of the Assessee was not found acceptable to the A.O. as he was of the view that the agreement that was entered between the Assessee and the company was to use the funds of the company as and when required by the Assessee. Therefore, provision .....

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sh Khatri. Payment made to Prakash Khatri for the existing debt already incurred by M/s. Vaibhav Corporation Pvt. Ltd. 3.2. Considering the above facts of the cases, we request your honour to kindly delete the addition ofRs.1,30,205/-." 5.1. This issue was discussed by the AO at para-10 of the assessment order. Written submissions filed in this regard are as follow: "Regarding addition U/s. 2(22) (e) of the Act of ₹ 1,30,205/-. During the course of assessment proceedings, the Ld. .....

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copy of Contract, ledger account from VCPL is enclosed herewith. . In view of the above facts, your honour is requested to kindly direct the Ld. AO to delete the addition of ₹ 1,30,205/- made on account of deemed dividend U/s. 2(22)(e) of the Act (Page No. 184-228)," 5.2. In the assessment order, AO observed that the appellant is a director in M/s. Vaibhav Corporation Ltd. holding 93% share in the said company; he received loan of ₹ 2,31,01,000/- from the said company; the accum .....

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her submitted that Assessee is owner of land which it wanted to develop and for the purpose of development of land and construction it had engaged Vaibhav Corporation Pvt. Ltd. and for which assessee had entered into agreement with it and the advance that was received by the Assessee was as part of the aforesaid agreement. She also placed on record the translated copy of the agreement entered by the Assessee and pointed to clause 9 at page 49 of the paper book wherein it was stated that the sale .....

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) and the decision in the case of CIT vs. Ambassador Travels Pvt. Ltd. reported in 318 ITR 376 (Del.) and other decisions. She therefore submitted that the addition be deleted. The ld. D.R. on the other hand supported the order of A.O and ld. CIT(A). 8. We have heard the rival submissions and perused the material on record. The issue in the present case is with respect to addition made on account of deemed dividend u/s. 2(22(e) of the Act. It is an undisputed fact that Assessee has received the .....

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