TMI Blog2017 (5) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 40A(2) of the Income-tax Act to make the addition. We, therefore, do not find any justification for making the above addition. - Decided in favour of assessee Addition under section 40(a)(ia) - non deduction of tds - Held that:- Assessee has specifically pleaded before the authorities below that on brokerage and forwarding and handling charges, TDS has been deducted and paid in the Government account. As regards freight, customs house agent loading and unloading charges, it was pleaded that since it was for railways indent, therefore, no TDS was required to be deducted. The learned Commissioner of Income- tax (Appeals) found the contention of the assessee to be correct that TDS has been deducted on most of the items and deposited in the Government account, therefore, there is no question of disallowance of the same. As regards the transportation through railways indent, no TDS is required because it is a payment made to the Government undertaking. The findings of the fact recorded by the learned Commissioner of Income-tax (Appeals) has been supported by TDS return, tax challans filed in the paper book, therefore, finding of the fact arrived at by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessee Unexplained cash credit received from Smt. Vijay Lakshmi - Held that:- No merit in this ground of appeal of the Revenue. The assessee filed complete details and evidences before the authorities below to prove the identity of the creditor, her creditworthiness and genuineness of the transaction in the matter. The confirmation of Smt. Vijay Lakshmi, her ledger account, shareholding and receipt of dividend are filed in the paper book, which proves her creditworthiness to advance genuine loan to the assessee. The learned Commissioner of Income-tax (Appeals) had properly appreciated all the evidence and material on record and correctly deleted the addition Deemed dividend addition under section 2(22)(e) - Held that:- The chart given by the assessee to the Commissioner of Income-tax (Appeals) shows that shareholding pattern did not exceed 10 per cent. of the total shareholding, therefore, the condition of section 2(22)(e) of the Act have not been fulfilled. Thus as the assessee-firm was holding less than 10 per cent. shareholding of the voting power and any amount advanced by closely held company to the assessee-firm was not to be treated as deemed dividend under the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee which according to the Assessing Officer is excessive purchase price given to the sister concern. The Assessing Officer noted that no details of payments made to the group concern for purchases made from them as per the provisions of section 40A(2)(b) of the Act were reported in the tax audit report. The Assessing Officer also noted that despite given opportunity, the assessee failed to furnish the trail of the source of such damaged wheat. The Assessing Officer, therefore, was of the view that excessive price have been paid for purchase from the sister concern and made addition of ₹ 7,54,31,103. 4. The assessee submitted before the learned Commissioner of Income-tax (Appeals) that it has given five copies of the invoices for sale made by M/s. Lakshmi Energy and Foods Ltd. at the prevailing market which were ₹ 5.50 per kg. and ₹ 6.10 per kg. The assessee submitted some of the evidences before the Assessing Officer that proved that purchases has been made on competitive price in the market. The assessee purchased damaged wheat from M/s. Lakshmi Overseas Industries Ltd. at 5.25 per kg. The assessee furnished bills to show that the seller has made sales of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been placed on the judgment of the hon'ble Supreme Court in the case of CIT v. Glaxo Smithkline Asia (P) Ltd. reported in [2010] 236 CTR (SC) 113 in which it has been held that if the entire exercise is revenue neutral, no interference is called for. The findings of the learned Commissioner of Income-tax (Appeals) that trail of such damaged wheat is not there is misconceived, since the source of purchase is evidently clear that the same has been purchased from M/s. Lakshmi Overseas Industries Ltd. who in turn had purchased from the Government agency. For error of the auditor, the Assessing Officer cannot make such addition. All the accounts have been reconciled. He has also filed details of sales made to various parties of the same items at ₹ 7.55 per kg. as against the purchase price of ₹ 5.25 per kg. The learned counsel for the assessee, therefore, submitted that the assessee has not paid any excessive price of the wheat so purchased from the sister concern. Therefore, the addition is unjustified. 6. On the other hand, the learned Departmental representative relied on the orders of the authorities below and submitted that trail of source of such damaged wheat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of them paid maximum rate of tax, therefore, the revenue is not at loss and it is merely revenue neutral exercise. The hon'ble Supreme Court in the case of Upper India Publishing House P. Ltd. v. CIT [1979] 117 ITR 569 (SC) held that before section 40A(2) of the Act is applied, the Assessing Officer should have proved expenditure is excessive or unreasonable. The assessee has explained before the authorities below all the facts and circumstances that reasonable payments have been made to the sister concern and there is nothing unreasonable in this regard. In any case, even for applying the provisions of section 40A(2), it is for the Assessing Officer to make out a case that the expenditure incurred is excessive or unreasonable having regard to the fair market value of such services. However, nothing has been done by the Assessing Officer in this case, therefore, considering the totality of the facts and circumstances as explained above, there is no justification for the Assessing Officer to invoke the provisions of section 40A(2) of the Income-tax Act to make the addition. We, therefore, do not find any justification for making the above addition. 8. Considering the above di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount which is evident from the copy of the TDS return in requisite Form 27A in which compete details have been noted. The assessee also deducted TDS on forwarding and handling charges and deposited the same into the Government account. As regards others, it was submitted that there was no requirement to deduct TDS. The learned Commissioner of Income-tax (Appeals) noted that it has been stated that evidence of TDS deductions on most of the items have been furnished. In the case of P. D. Prasad and Sons P. Ltd. it was put forth that entity is its authorised representative for booking goods through railways and as the payment was to a Government authority, no TDS was deductible. As the TDS stands deposited before the filing of the return of income in reference to Vass Exports and Prathyusha Associates and Liladhar Forwarders P. Ltd, the question of disallowance would not arise. The transportation through railways indent does not require any TDS to be done. However, the job executed through authorised agencies i.e. M/s. P. D. Prasad and Sons Ltd. and Sukhvinder Singh through Leaf are liable for deduction of tax at source and accordingly ₹ 15,61,196 and ₹ 16,65,114 in refere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) found the contention of the assessee to be correct that TDS has been deducted on most of the items and deposited in the Government account, therefore, there is no question of disallowance of the same. As regards the transportation through railways indent, no TDS is required because it is a payment made to the Government undertaking. The findings of the fact recorded by the learned Commissioner of Income-tax (Appeals) has been supported by TDS return, tax challans filed in the paper book, therefore, finding of the fact arrived at by the learned Commissioner of Income-tax (Appeals) have not been disputed through any evidence or material on record, therefore, part addition deleted by the learned Commissioner of Income-tax (Appeals) is wholly justified and no interference is called for. The Departmental appeal on ground No. 4, therefore, stands dismissed. 15. However, as regard to the job executed through authorised agencies i.e. P. D. Prasad and Sons Pvt. Ltd. and Sukhvinder Singh through Leaf, the assessee pleaded that since they conducted the job for the assessee for booking goods through railways and payment was made to the Government agency, therefore, no TDS was liable to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.60 crores was received from two parties namely M/s. Nav Bharat Exports-Rs. 3 crores and M/s. Nav Bharat Enterprises-Rs. 4.60 crores. Summons under section 131 of the Act were issued to both the parties and the statement of the director was recorded under oath and are placed on record. M/s. Nav Bharat Exports have confirmed given a loan of ₹ 3 crores only in the year under consideration. Confirmed copy of the account and statement of the director was placed on record. However, M/s. Nav Bharat Enterprises has categorically denied having advanced any money to the assessee. The statement of the director recorded under section 131 is placed on record. During the remand proceedings, the Assessing Officer contended that addition was made on money received under the garb of loan from M/s. Nav Bharat Enterprises. However, the confirmation given in the paper book says that loan of ₹ 4.60 crores was advanced on behalf of M/s. Adani Exports Ltd., Ahmedabad, therefore, it is contradictory. The assessee in the rejoinder explained that the assessee prayed to the Assessing Officer vide letter dated December 20, 2007 to issue summons to M/s. Nav Bharat Enterprises (formerly known as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) considering the explanation of the assessee noted that the Assessing Officer has already accepted the sum of ₹ 3 crores by recording the statement of the concerned persons. The learned Commissioner of Income-tax (Appeals) considering the explanation of the assessee and the material on record noted that all the transactions have been conducted through banking channel and fully clarified. The confirmation of account filed by M/s. Nav Bharat Enterprises as additional evidence, clearly stated that a sum of ₹ 5 crores was received from Adani Exports Ltd. had been debited. The adjustments had been made immediately as is evident from the ledger account and bank statement. The learned Commissioner of Income-tax (Appeals) accepted the explanation of the assessee and deleted the addition of ₹ 4.60 crores. 19. We have considered the rival submissions. We do not find any merit in this ground of appeal of the Revenue. The assessee has explained the circumstances in which the amount of ₹ 4.60 crores was received in the bank account of the assessee which was paid by M/s. Adani Exports Limited through M/s. Nav Bharat Enterprises. The confirmations of accounts and ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kshmi who is holding equity share of public limited company namely Lakshmi Energy and Foods Ltd. and she is a promoter director. She had advanced the amount to the assessee out of dividend amounting to ₹ 11,82,660. The assessee filed copy of the confirmation by Smt. Vijay Lakshmi, copy of certificate of payment of dividend, copy of the bank account and copy of the shareholding pattern. The learned Commissioner of Income-tax (Appeals) noted that Smt. Vijay Lakshmi is one of the founder directors of M/s. Lakshmi Energy Foods Limited holding number of shares and her shareholding is at 3.8 per cent. The company has paid dividend of ₹ 11,82,660 to the creditor which is supported by all the certificates. The learned Commissioner of Income-tax (Appeals) accordingly deleted the addition. 22. After considering the rival submissions, we do not find any merit in this ground of appeal of the Revenue. The assessee filed complete details and evidences before the authorities below to prove the identity of the creditor, her creditworthiness and genuineness of the transaction in the matter. The confirmation of Smt. Vijay Lakshmi, her ledger account, shareholding and receipt of divide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y substantial interest in the assessee-company. The assessee relied upon several decisions in support of his contention that the provisions of section 2(22)(e) of the Act was not attracted in the case of the assessee. 25. The learned Commissioner of Income-tax (Appeals) noted that it is a case of the Assessing Officer that the beneficial shareholding of the alleged bogus companies are held primarily by various family members of Uppals. The learned Commissioner of Income-tax (Appeals) on a perusal of the shareholding pattern tabulated in the impugned order noted that it is apparent that the assessee/its shareholders while they may be registered shareholders are not beneficiary holders of the shares. Payment must be to a registered shareholder who is also beneficiary shareholder. They must also hold substantial interest in the companies who have given the loans. The companies should also have accumulated profits. The learned Commissioner of Income-tax (Appeals) found that none of these conditions are satisfied in the case of the assessee. The addition was deleted. 26. After considering the rival submissions, we do not find any merit in this ground of appeal of the Revenue. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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