TMI Blog2016 (4) TMI 1158X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars as may be prescribed. After perusing the provisions of section 35(2)(iii) of the Act as above, we find that the expenses incurred for increasing the size of the authorized capital specifically mentioned in the said section to be admissible expenses. We, therefore, find no infirmity in the order of the ld. CIT(A) and dismiss the ground raised by the revenue. This ground of revenue stands dismissed. TDS u/s 194A - non deduction of tds on payments of labour charges, painting, repairs and maintenance, electricity, godown charges etc - Held that: - As the assessee had made payment to four companies on account of repayment of finance borrowd from them by way of EMI which were inclusive of interest element and the assessee had not deducted any tax at source. Similarly, as regards the amount which represents the payments of labour charges, painting, repairs and maintenance, electricity, godown charges etc, the assessee did not deduct any tax at source and consequently, the AO during the course of scrutiny found that these payments are covered under the provisions of section 40(a)(ia) of the Act and added the same to the income of the assessee. In the appellate proceedings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore CIT{A} which clearly shows that it is directly related to the capital expansion of the assessee and hence required to be treated as capital expenditure. 3 Whether on the facts and circumstances of the case and in law, the Ld CIT{A} erred in treating the expenditure of ₹ 1,63,842/- as preliminary expenditure qualifying for deduction u/s.35D {2} {iii} whereas the said expenditure has actually been incurred as ROC payment in connection with the raising of equity capital and not incurred for registration of company . 4 Whether on the facts and circumstances of the case and in law, the Ld CIT{A} erred in allowing the appeal of the assessee and directing the AO to delete the addition of ₹ 39,75,OOO/- made u/s.69 of Income Tax Act 1961, being unaccounted cash payment made by the assessee for the acquisition of a commercial property, by holding that the principles of natural justice has been violated by the AO without appreciating the fact that there was no violation of the principles of natural justice. The MD of the assessee was confronted with the incriminating evidence during the course of survey. 5 Whether on the facts and circumstances of the case and in la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmercial property for which two payments are by cheque) 3. Grounds of cross-objection are reproduced below: ― 1. That on the facts and in the circumstances of the case of the cross-objector and in law, the ld. CIT(A) has erred in upholding the disallowance u/s 40(ia) of the Act of amounts aggregating to ₹ 9,11,683/- from EMI payments made to financier; 2. That on the facts and in the circumstances of the case of the cross-objector in law, ld. CIT(A) has erred in upholding the disallowance u/s 40(ia) of the Act of amounts aggregating to ₹ 426,138/- being amounts paid to various parties in the course of business of the cross-objector 4. The fact of the case in brief are that the assessee filed its return of income on 30.9.2008 declaring a total income of ₹ 14,26,16,170/-. The case was selected for scrutiny. The notices under section 143(2) and 142(1) were issued and served upon the assessee. The assessee was engaged in the business of transport and logistics business and having its income during the year from transport business. A survey was conducted on 20.2.2008 at the business premises of the assessee, i.e. head office and its branches. Ultimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,421/- was made and added to the total income of the assessee on account of mismatch information with books of account on the ground that the assessee failed to furnish confirmations from the parties from whom the assessee received the payments and contract receipts. Aggrieved by the decision of the AO, the assessee preferred an appeal before the ld. CIT(A) who vide para 4.7 of the appellate order held as under : 4.7 I have considered the submissions of the Appellant. The issue in question is of addition of Non-reconciled amount of ₹ 1,45,43,421/- of the AIR information to the total income of the appellant for the relevant year. The facts which are not in dispute are already outlined in earlier paragraphs. As per the second (and final) Remand Report of the AO, an amount of ₹ 81,52,127/- in respect of 42 parties is already reconciled. In respect of 5 other parties (total amount as per AIR data ₹ 36,40,676/-), the accounts of the appellant tally with those of the concerned parties. A number of parties have not replied even to notice u/s 133(6)/131 which shows that the parties had either closed down their business or have shifted and the particulars are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sses provided in the AIR information twice but all the notices were returned back undelivered to the department which proved that the AIR information could not be relied upon to make addition in the hands of the assessee. The ld. AR further submitted before us that the issue was covered in favour of the assessee by the decision of co-ordinate Bench in its own case in ITA No. 3057/Mum/2012(AY-2007-08) dated 24.5.2013. The ld.AR also relied upon the decision of the Tribunal in the case of Shri S Ganesh V/s ACIT in ITA No.527/Mum/2010 (AY 2006-07) dated 8.12.2010, wherein it has been held that in absence any record contrary to the fact, the revenue authorities could not make any addition on account of AIR information. We find from the above, that the case of the assessee is squarely covered by its own decision in M/s. BLR India Pvt. Ltd (supra) the relevant findings of the said order are reproduced below : ― 2.4. We have heard the rival submissions and perused the material before us. We find that the assessee had shown higher income than the income reported in the report received by the AO. It reconciled all the accounts wherever ledger entries were made available to it. Only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment of India would not have permitted the assessee to enter into a fresh collaboration agreement with the UK parent company, which was needed to run the business of the assessee more profitably and thus held that the facts of the assessee s case were squarely covered by the said decisions and directed to delete the addition of ₹ 15 lakhs. 8. We have carefully considered the rival submissions and perused the material placed before us. We find that the assessee had clearly stated in para 6 of the statement of facts filed with memorandum of appeal before the ld.CIT(A) that 32,21,222 equity shares were issued to Reliance Capital Ltd and also incurred legal and professional charges and due diligence charges for raising share capital for assessee to carry on its business more efficiently and to earn more profit. In such a case expenditure incurred in connection with increase in share capital to meet the working capital requirements in the business of the assessee. For the sake of convenience we reproduce para 6 of statement of facts filed by the assessee before FAA:- ―During the year, the Appellant issued 32,21,222 equity shares to Reliance Capital Ltd. and incurred Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition holding that the said expenditure was covered under the provisions of section 35D of the Act. The ld. CIT(A) appeal accepted the arguments of the Ld.AR that these were allowable expenses as there were mentioned specifically in Sub-Clause (iii) of clause (c ) of subsection (2) of section 35D. Similarly, the expenditure on issue of shares were also covered by sub-clause (4) of the Act. 11. The ld. DR argued before us that ₹ 1,63,842/- were paid to Registrar of Company as fee for increase in authorized shares capital of the company and submitted that the same was not covered by the provisions of section 35(2)(iii) and (4) of the Act and therefore the order of the AO be upheld by setting aside the findings of the ld. CIT(A). 12. Per contra, the ld. AR drew our attention to the provisions of section 35D (2)(c) (iii) of the Act which specifically provides for admissibility of the expenses incurred on increase in the size of the capital under the said section. The ld. AR argued that the order of the ld.CIT(A) deserves to be upheld as it did not suffers from any infirmity. 13. We have carefully considered the rival contentions and perused the material available before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untant and setting forth such particulars as may be prescribed. After perusing the provisions of section 35(2)(iii) of the Act as above, we find that the expenses incurred for increasing the size of the authorized capital specifically mentioned in the said section to be admissible expenses. We, therefore, find no infirmity in the order of the ld. CIT(A) and dismiss the ground raised by the revenue. This ground of revenue stands dismissed. 14. The issue raised in grounds of appeal No.4 to 8 is against the deletion of addition of ₹ 39,75,000/- by the ld. CIT(A) as made by the AO u/s 69 of the Act. 15. The brief facts of the case are that during the course of survey on 29.2.2008. The statement u/s 131 of the Act was recorded of Mr.Ashok Goyal, Managing Director of the Company. The material impounded during the course of survey was shown to Mr.Ashok Goyal and asked him to explain the contents of pages 75 to 80. Mr. Goyal replied that the pages 75 to 80 comprises of comprises Memorandum of Understanding (MOU). The AO added the same to the total income of the assessee u/s 69 of the Act as unexplained investment on the basis of letter as found by the survey team dated 24.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) be upheld. 17. We have carefully considered the rival contentions and perused the material placed before us. The ld. DR submitted before us that the said letter was found from the business premises of the assessee company in which it was specifically mentioned that a sum of ₹ 39,75,000/- was paid to the builder in cash notwithstanding denied by Mr. Goyal two times in his statement recorded by the survey team u/s 131 of the Act and thus strongly supported the order of the AO. Per contra, the ld. AR submitted before us that the payment of ₹ 39,75,000/- was specifically denied during the course of survey by Managing Director Mr. Goyal and also submitted that the assessee was not allowed access of the said letter thereby causing miscarriage of principle of natural justice and the AO simply on the basis of letter found during the survey added the same u/s 69 of the Act to the total income of the assessee as unexplained investment. During the course of hearing before us and from the rival contentions of the parties, we find that the AO made the addition on the basis of letter dated 24.10.2007 found during the course of survey which was specifically denied by the Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bour charges Promod Monde 50,313/- 4 Furniture repairs and painting charges Ramesh Sharma (Baroda) 26,252/- 5 Lorry engine repairs Sandeep Sharma (Bhlai) 29,303/- 6 Air conditioning repairs and maint. L G electronic India Pvt Ltd. 29,182/- 7 Furniture making labour charges Shiv Shanti Interior (Goregaon) 10,820/- Excluded 8 Electrical repairs Yadav electrical (Goregaon) 24,510/- 9 Office cabin repairs Abhishek engineering (Mumbai) 24,301/- 10 Godown repairing N J Bhoir 128,325/- Total 436958/- - Item no.7 10,820/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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