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Rank computers Pvt. Ltd. Versus ITO 7 (2) (1) , Mumbai

2017 (2) TMI 586 - ITAT MUMBAI

Unaccounted sales - difference in party wise details of receipts and TDS made vis a vis the receipts shown in the profit and loss account - Held that:- As could be seen from the assessment stage itself the assessee has tried to explain the difference between the receipts as per TDS certificate and as per profit and loss account by explaining that the difference was due to 4% VAT element. In fact, we have noticed from the facts and material placed before us,the assessee has submitted before the A .....

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the file of the assessing officer for fresh examination after carefully considering the materials brought on record by the assessee for reconciling the difference. - Addition u/s 40 A (2) (b) - Held that:- As could be seen out of five years for which payment of royalty was to be made by the assessee, except the impugned assessment year, in no other assessment year assessee’s claim has been disallowed, though, assessments have been completed u/s 143 (3) of the Act. Therefore, applying the ru .....

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e - Held that:-Assessee has brought material on record to demonstrate that it has brought on hire computers and peripherals from third parties and deduction claimed was on account of payment made to those parties towards hire charges. This fact is demonstrated from the TDS certificate submitted by the assessee before the departmental authorities. It is also a fact on record that assessee has deducted tax at source on payment of hire charges in terms of Section 194J of Act. Thus, prima facie it i .....

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46A we are not convinced with the same. It is evident on record that the TDS certificate on the basis of which Ld. CIT (A) has come to his conclusion were available before the assessing officer and in any case of the matter the TDS certificate cannot be treated as additional evidence. No infirmity in the order of the CIT (A) on this issue. Accordingly, we uphold the same by dismissing the grounds raised by the department. - ITA no.193/Mum./2015, ITA no.7613/Mum./2011 - Dated:- 10-2-2017 - SHRI S .....

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in the business of trading and giving on hire IT equipments like PC s, Laptop, servers, projectors etc. During the assessment proceeding the assessing officer while examining the party wise details of receipts and TDS made vis a vis the receipts shown in the proft and loss account found a difference of ₹ 6,65,330/-. On being asked by the assessing officer to reconcile the difference, the assessee submitted party wise list of gross receipts as per TDS certificate and as appearing in the pro .....

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. Accordingly, he added back the amount of ₹ 6,65,330/-. Assessee challenged the addition before the CIT(A). However, Ld. CIT(A) also confirmed the addition by agreeing with the reasoning of the AO. 2. The Ld. AR submitted before us, the assessee in course of the assessment proceeding itself and again before the CIT (A) has not only explained the reason for difference in receipts but also furnished all necessary and relevant details reconciling the difference. In this context the Ld. AR dr .....

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itted by the assesse and without appreciating the material brought on record have made the addition. 3. The Ld. DR though, relied upon the observations of the assessing officer and CIT (A), however, he submitted that the issue can be remitted back to the assessing officer for re-examination. 4. We have heard the parties and perused the material on record. As could be seen from the assessment stage itself the assessee has tried to explain the difference between the receipts as per TDS certificate .....

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he details. That being the case, in our view, the departmental authorities should have examined assessee s claim by properly verifying the details submitted by the assessee. The departmental authorities having failed to do so, we are inclined to remit the issue back to the file of the assessing officer for fresh examination after carefully considering the materials brought on record by the assessee for reconciling the difference. The assessing officer must afford a reasonable opportunity of bein .....

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ssee has debited an amount of ₹ 9,99,984/- towards royalty paid to directors. When the assessing officer called upon the assessee to justify the claim of deduction, the assesses in its explanation submitted that both the directors were having their proprietary business of hiring computers and peripherals. Both the directors decided to merge their proprietary business with the assessee company in order to conclude business, improve synergies and get better scales of economy. It was submitte .....

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s were submitted by the assessee to indicate that directors were instrumental in bringing business. The assessing officer observed, since the payment were made to related parties provisions of section 40A (2)(b) is applicable. Accordingly, he proceeded to disallow the deduction claimed by the assessee. Assessee challenged the disallowance before the CIT (A). The CIT (A) appreciating the fact that the directors have merged their proprietary concern with the company and the royalty paid was in ter .....

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s issue was first examined in the first year of claim of deduction viz. A.Y 2007-08, wherein, the assessing officer called upon the assessee to justify the claim of payment of royalty. He submitted, in reply assessee had justified claim by furnishing necessary details. The Ld. AR submitted, the assessing officer after examining the assessee s claim in detail allowed the payment of royalty. He submitted except the impugned assessment year, in no other assessment year the assessing officer has dis .....

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ssessing officer to indicate that payment made by the assessee is unreasonable. He therefore submitted, disallowance was rightly deleted by the CIT (A). 6. We have considered the submissions of the parties and perused the materials on record. The fact that the directors of the company were running their proprietary business in the same line has not been controverted by the assessing officer. He has not disputed the fact that the directors have merged their proprietary business with the assessee .....

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as allowed assessee s claim of deduction on account of payment of royalty. Thus, as could be seen out of five years for which payment of royalty was to be made by the assessee, except the impugned assessment year, in no other assessment year assessee s claim has been disallowed, though, assessments have been completed u/s 143 (3) of the Act. Therefore, applying the rule of consistency no disallowance should have been made in the impugned assessment year. Further, on perusal of the assessment ord .....

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ment proceedings the assessing officer noticing that assessee has debited an amount of ₹ 45,67,901/- towards purchase of leased assets called for necessary detail and after verifying them found that the assessed has offered revenue from trading activity at ₹ 22,11,851/- and from hiring activity at of ₹ 1,63,72,661/-. From the aforesaid figures he found that major part of revenue is generated from hiring activity. Whereas, assessee has debited an amount of ₹ 73,65,319/- to .....

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, did not find merit in the submission of the assessee. He observed, there is no reason why purchase cost of assets given on hiring activity should not be capitalized. Further, he observed, since the assessee has paid VAT at 4% on the purchases the claim that they are for hiring of equipment is not acceptable. Accordingly, he held that the expenditure claimed is not allowable. Further, he observed that if assessee s claim of hire charges is accepted then he should have deducted tax u/s 194 I. Si .....

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so deducted tax at source on such payments u/s 194J held that the assessing officer was not justified in disallowing assessee s claim. Accordingly, he deleted the addition. 7. The Ld. DR relied upon the reasoning of the assessing officer. Ld. AR supported the finding of the CIT (A). 8. We have considered the submission of the parties and perused the materials on record. As could be seen, the assessing officer being of the view that the payments made by the assessee were towards purchase of asset .....

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