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2019 (5) TMI 542

r, he found that the immediate preceding assessment proceedings for Ay 2012-13 & 2013-14, no objection was raised by the AO in respect of alleged interest free loans and the CIT(A) accepted the submissions of the assessee and held that it was a trade account with the said both concerns on account of pure commercial expediency and in the case of S.A. Builders Ltd. [2006 (12) TMI 82 - SUPREME COURT] and in the case of S.P. Jaiswal Estates Pvt.Ltd. [2012 (5) TMI 622 - ITAT KOLKATA] deleted the addition made on account of interest free loans. Addition made on account of payment of commission - commission agents represent themselves as our sales managers - HELD THAT:- According to CIT(A) on examination of the record found that the agents replied in response to the notices u/s 133(6) of the Act and found that they submitted fair amount of details and documentary evidences before the AO such as tax invoices of the commission, proof of payment, TDS certificate and P&L A/c of the parties. The CIT(A) by placing reliance on the decision of Hon’ble High Court of Calcutta in the case of Rajarani Exports Pvt. Ltd. 2013 (5) TMI 410 - CALCUTTA HIGH COURT] and deleted the addition. .....

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d, bills, vouchers services, tax return etc. Therefore, it is clear that the assessee submitted the relevant evidence before the AO but it was not considered by the AO in the assessment proceedings. Since the CIT(A) examined the record and found the same in support of the expenditure claimed under carriage inward. Therefore, we find no infirmity in the order of CI(TA) and it is justified. Thus, Ground No.6 raised by the Revenue is dismissed. Addition on account of undisclosed TDS - According to CIT(A), the said details of TDS is not reflected in 26AS and the addition is not maintainable when the assessee denies the transactions with the said parties - HELD THAT:- Responsibility is upon the AO to conduct independent inquiry in respect of those parities regarding the information with the said transactions. We find no independent inquiry as rightly pointed out by the CIT(A). Therefore, when there is no proper inquiry by the Assessing Officer in proper perspective and the addition deleted by the CIT(A) is justified. We find no infirmity in the order of CIT(A). - Ground raised by the Revenue is dismissed. - ITA No.1411/KOL/2017 - 3-5-2019 - Sh. J. Sudhakar Reddy, Accountant Member .....

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lowing the principal laid down by the Hon ble Supreme Court in the case of S.A. Builders Ltd. [2007] 288 ITR 01 (SC) and also in the case of S.P. Jaiswal Estates Pvt.Ltd. reported in 147 TTJ 649 (Kol. Trib.) (TM) of the Kolkata Benches deleted the addition made on account of interest free loans for the reasons stated herein under:- 7. Overall in view of the facts and circumstances, as emanating from the case, I find that the arguments and reasoning of the appellant / Ld A.R find favour with most of the Hon'ble Courts and more specifically with the judgments emanating from the Jurisdictional ITAT Kolkata Bench 'A' in the case S.P. laiswal Estates (P.) Ltd. vs Assistant Commissioner of Income-tax, Central Circle IV, Kolkata[2012] 147 TTJ 649(Kolkata-Trib.)(TM), also reported in [2013] taxmann.com 221(Kolkata -Trib) (TM). The haed motes are as under IT : Where profit earned by assessee before depreciation was more than total Interest free advance given to its subsidiary and group companies, it would not be said that same were given out of interest bearing funds available to It, and interest on borrowings would not be disallowed on account of said interest free advances mad .....

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n position of Board of Directors and assume role to decide how much is reasonable expenditure having regard to circumstances of case [2015] 63 taxmann.com 308 (SC) SUPREME COURT OF INDIA Hero Cycles (P.) Ltd. v. Commissioner of tncome-tax (Central), Ludhiana* A.K. SIKRI AND ROHINTON FAll NARIMAN, JJ. CIVIL APPEAL NO. 514 OF 2008 NOVEMBER 5, 2015 Section 36( l)(iii) of the Income-tax Act, 1961 - Interest on borrowed capital (Interest free loans) - Assessment year 1988-89 - Whether once it is established that there is nexus between expenditure and purpose of business (which need not necessarily be business of assessee itself), revenue cannot justifiably claim to put itself in arm-chair of businessman or in position of Board of Directors and assume role to decide how much is reasonable expenditure having regard to circumstances of case - Held, yes - Assessee filed its return claiming deduction of interest paid on borrowed sums from Bank under section 36(l)(iii) - Assessing Officer finding that assessee had used borrowed funds for giving interest free loans to its subsidiary company and directors, rejected assessee's claim - High Court upheld order of Assessing Officer - It was not .....

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l and obviously not known to the customers. The CIT(A) also examined the submissions made by the agents during the course of proceedings u/s 133(6) of the Act and found the assessee had affected sales of ₹ 42,51,70,851/- during the year under consideration and commission of ₹ 41,28,331/- was payable/paid on account of said sales. According to CIT(A) on examination of the record found that the agents replied in response to the notices u/s 133(6) of the Act and found that they submitted fair amount of details and documentary evidences before the AO such as tax invoices of the commission, proof of payment, TDS certificate and P&L A/c of the parties. The CIT(A) by placing reliance on the decision of Hon ble High Court of Calcutta in the case of Rajarani Exports Pvt. Ltd. [2014] 361 ITR 152 (Cal.) and deleted the addition made by the AO on account of trading commission expenses as bogus. The relevant portion of which is reproduced herein below:- 11. Hon'ble Jurisdictional Calcutta High Court in the case of CIT vs Rajarani Exports (P) Ltd.[2014] 361 ITR 152 (CAL) in para 5 of the order said as under: Para 5. " The assessee has made payment for commission and has .....

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ival submissions and gone through the facts of the case. We find that in the present case there is a binding contract between the parties by which the recipients of the commission had the right to enforce realisation of commission stipulated between the parties. We also find from the communication between the parties that the payment was duly received by the parties and paid by the assessee by account payee cheques. The revenue has not alleged that the parties to the transactions are related to each other or that the payments are not genuine or that the payments having been made by the assessee to the recipients have found their way back to the assessee some way or the other. Such being the case, we find that the authorities below were not justified in rejecting the claim of the assessee for payment of commission. Since all the Ingredients necessary for genuine business transaction exist in this case, we do not find any merit in the addition made by the AO and in the action of the CIT(A) in confirming the same. In reversing their orders, and respectfully following the decision of the Hon'ble Calcutta High Court in the case of Mather & Plant (India) Ltd. (Supra) and the case .....

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at the assessee was asked to submit details of TDS made in this regard if any. According to the Ld. AO, as there was no compliance, the entire amount to the tune of ₹ 7,01,459/- under the head 'Cutting charges' was to be disallowed and added ck to the total income of the assessee firm. 2. In appeal, it is the contention of the assessee that it had submitted all the document requisitioned by the Ld. AO, and the same is evident form the firm's submission letter dated 21.12.2016 which is on record. The relevant TDS certificates were also filed before this appellate forum along with a copy of the written submissions before the Ld. AO. 3. I have also examined the assessment record in this matter, and find that the appellant's contentions made in the matter are on record and found to be correct. In any case the necessary TDS has been effected, and the legality of the disallowance made by the Ld.AO gets questionable. On careful consideration of the appellant s submission along with the supporting details/evidences furnished, perusing the facts of the case including the impugned Assessment order thereon and other materials available on record, I find that the disallow .....

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n made by the AO in our opinion is reasonable and not excessive. Therefore, the order of AO is restored. Thus, Ground No.5 raised by the Revenue is allowed. 17. Ground No.6 relating to deletion of addition made under the head carriage inward . 18. Heard both parties and perused the materials available on record. The AO found that the assessee debited an amount of ₹ 19,44,313/- under the head carriage inward . For not submitting any bills/ vouchers/ledger copy, the AO added 10% of such expenditure being ₹ 1,94,431/- to the total income of the assessee. It was contended before the CIT(A) that this expenditures were incurred for business and there was no claim of any excess expenditure for the year under consideration compared to other three years period. It is noted that the AO on the basis of estimation added to the estimation disallowed 10% of such expenditure but however it is seen that in the impugned order, the CIT(A) after examination of record found fault with the AO for observing that no evidence is filed in this respect and held that the assessee filed all relevant documents vide covering letter dated 21.12.2016 along with documentary evidences i.e. ledger copy o .....

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