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TMI Blog2018 (7) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... ises of the assessees on 18.02.2009. During the course of survey, physical verification of cash and stock was undertaken. Excess cash and stock vis-a-vis cash/stock recorded in books of account was found in the case of both the assessees. Statement of Shri Aslam H. Tamboli, Director/Partner of assessees was recorded. He offered the difference in cash and stock as additional income in the hands of assessee company/firm. The Assessing Officer made addition of the excess cash and stock as deemed income u/s.69 of the Act. Apart from above, disallowance u/s.40(a)(ia) of the Act was made by the Assessing Officer in respect of both the assessees. 3. Aggrieved by the assessment orders passed u/s.143 (3) of the Act, both the assessees filed appeal before the Commissioner of Income Tax (Appeals) in their respective cases. The Commissioner of Income Tax(Appeals) rejected the contention of the assessee and confirmed the assessment order in toto. Now, both the assessees are in second appeal before the Tribunal assailing the findings of Commissioner of Income Tax(Appeals). ITA No. 102/PUN/2015 A.Y. 2009-10 4. The assessee in ITA No.102/PUN/2015 has raised following grounds: "1.On the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of total income. 5.1 The ld. AR further submitted that during the course of scrutiny assessment proceedings, the Assessing Officer made disallowance of Rs. 6,87,882/- u/s.40(a)(ia) of the Act in respect of payment of brokerage/contract labour charges without deduction of tax at source. The ld. AR submitted that the issue can be remitted to the file of Assessing Officer in view of the second proviso inserted by the Finance Act, 2012 for verification. The ld. AR further submitted that the assessee would furnish necessary details/ documents before the Assessing Officer to show that the recipients of the amount have offered to tax the brokerage in their respective return of income. As regards retrospective applicability of newly inserted proviso to section 40(a)(ia) of the Act, the ld. AR placed reliance on the decision of Hon'ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd reported as 337 ITR 635. 5.2 In respect of ground No. 4, the ld. AR submitted that he is not pressing the same on account of smallness of the amount involved. 6. On the other hand, Shri Mukesh Jha representing the Department vehemently defended the order of Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose. 10. In ground No. 2 of the appeal, the assessee is seeking set off of current year losses against declaration made u/s.133A of the Act. The relief sought in ground No. 2 of the appeal is corollary to ground No.1. Since, we have remitted the issue raised in ground No.1 of appeal for examination of the additional income declared during survey, we deem it appropriate to remit the ground No.2 as well. If the assessee is successful in establishing that excess cash and stock is part of regular business income, the Assessing Officer is directed to allow the benefit of set off of current year losses to the assessee. The ground No. 2 raised in appeal by the assessee is allowed for statistical purpose in the terms aforesaid. 11. The ground No. 3 raised in appeal by the assessee is with respect to disallowance of Rs. 6,87,882/- u/s. 40(a)(ia) of the Act. The assessee has made following payments without deduction of tax at source. Sr. Name of the party Nature of payment Amount 1. Dalal Adinath Canvassing Brokerage 4,904/- 2. Dalal Shreyas Broker Brokerage 85,006/- 3. Dalal Govindbhai Brokerage 5,000/- 4. Rajtulla Khan Contract Labour 5,92,972/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding and Profit & Loss account as well as partner's statement recorded on oath that the declaration belongs to same business, therefore appellants claim of treating this income as business income shall be accepted. 2. On the facts and in the circumstances of the case and in the law the Lower authorities have erred in disallowing remuneration to partners a sum of Rs.1,30,262/- claimed on account of disclosure made during the course of survey of excess stock/cash. 3. On the facts and in the circumstances of the case and in the law the Lower authorities have erred in disallowing a sum of Rs. 9,95,840/- being interest of debit balance of partners' capital account by disregarding appellants contention in this regards. 4. On the facts and in the circumstances of the case and in law the Lower authorities have erred in disallowing a sum of Rs. 8,88,554/- by invoking the provisions of section 40(a)(ia) of the Income Tax Act, 1961 by disregarding appellant's contention in this regards. 5. On the facts and in the circumstances of the case and in law the Lower authorities have erred in making an addition of Rs. 97,844/- being difference in balance of sundry creditors accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs while deciding ground No.1 raised in ITA No.102/PUN/2015 would mutatis-mutandis apply to ground No.1 raised in the present appeal. Thus, ground No. 1 raised in the present appeal is allowed for statistical purpose. 20. The ground No. 2 raised in the present appeal is interlinked to ground No.1. Since the ground No.1 is restored to the Assessing Officer for fresh adjudication, the issue raised in ground No. 2 of the present appeal is also remitted back to the file of Assessing Officer for re-adjudication along with ground No. 1 of the appeal. Hence, ground No.2 raised in appeal by assessee is allowed for statistical purpose. 21. In ground No. 3 of appeal, the assessee has assailed disallowance of Rs. 9,95,840/- on account of interest on debit balance of partner's capital account. The ld. AR has pointed that there are credit balances as well and the assessee is not charging interest on the credit balances of the partners. We are of considered view that this issue requires verification. The issue is restored to Assessing Officer for verification. The Assessing Officer shall decide the issue afresh after re-verification. Thus, the ground No. 3 of the appeal is allowed for statisti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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