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2019 (5) TMI 542

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..... ch 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. We find no infirmity in the order of CIT(A) and it is justified. Addition under the head “cutting charges” - HELD THAT:- 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 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 disallowance made by the AO was without any sustainable basis, and therefore, the grounds of appeal is allowed in favour of the appellant-assessee Addition of telephone and fax charges for personal use - CIT(A) deleted the said addition by observing that the AO failed to specifically pinpoint as to whic .....

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..... n 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 - Dated:- 3-5-2019 - Sh. J. Sudhakar Reddy, Accountant Member And Sh.S.S. Viswanethra Ravi, Judicial Member For the Appellant : Sh.C.J.Singh, JCIT Sr.DR For the Respondent : Sh. Miraj D.Shah, FCA ORDER PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER This appeal filed by the Revenue against the order dated 27.03.2017 passed by CIT(A)-10, Kolkata for AY 2014-15. 2. Ground No.1 raised by the Revenue questioning the action of CIT(A) in deleting the addition made on account of diversion of interest bearing fund for giving interest free advance. 3. Heard both parties and perused the materials available on record. During the course of assessment proceedings, on verification of balance sheet and ledger copies, the AO found that the assessee advanced interest free funds to two entities i.e. SBIW Steel Pvt. Ltd. and Shree Bishandas Iron Works to the extent of ₹ 7,96,74,518/-. In explanation, the assessee stated that M/s. SBIW Steel Pvt. Ltd. and Shree .....

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..... d 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 made [2013] 29 taxmann.com 221 (Kolkata - Trib.) (TM) IN THE ITAT KOLKATA BENCH 'A' (THIRD MEMBER) S.P. Jaiswal Estates (P.) Ltd.v. Assistant Commissioner of Income-tax, Central Circle IV, Kolkata* PRAMOD KUMAR, ACCOUNTANT MEMBER (AS A THIRD MEMBER) MAHAVIR SINGH, JUDICIAL MEMBER AND C.D. RAO, ACCOUNTANT MEMBER IT APPEAL NOS. 488 AND 525 (KOL.) OF 2011 [ASSESSMENT YEARS 2006-07 AND 2007-08] MAY 31, 2012 Section 36(1)(1ii) of the Income-tax Act, 1961 - Interest on borrowed capital - Interest free loans to subsidiaries - Assessment years 2006-07 and 2007-08 - Whether when an assessee gives an interest free advance to a one hundred per cent owned subsidiary for its business purposes, it cannot but ordinarily be said to be commercial expedient - Held, yes - Assessee-company had made interest free advance to its subsidiary and group companies - Assessing Officer on finding that ass .....

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..... 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 noted that advance to subsidiary company became Imperative as a business expediency in view of undertaking given to financial institutions by assessee to effect that it would provide additional margin to subsidiary company to meet working capital for meeting any cash losses - Insofar as loans to directors were concerned, said loans were granted out of assessee's own surplus funds - Whether in view of aforesaid, impugned order passed by High Court was to be set aside - Held, yes [In favour of assessee] In the above circumstances, and respectfully following the ration as laid down by the superior Courts of the land, I find that the action of the. Ld. AO in disallowing a sum of ₹ 71,70,707/ - on account of disallowance of proportionate interest was not justified, and I find that the same cannot be sustained. The ground is therefore allowed in favour of the appellantassessee. 5. .....

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..... xpenses 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 been rendered services in consideration of the same. As a matter of fact, It is not even revenue's case that no services have been rendered at all. The fact that services have been rendered by a party other than the agent to whom commission is paid is wholly immaterial so far as deductibility in the hands of the assessee is concerned. " 12. I find that the Hon'ble Delhi High Court in the case of Printers House Pvt Ltd, reported in 188 Taxman 60, has held that where there is no evidence on record to show that the commission was paid to nay near relative, family member or sister concern, there was no iota of evidence to show that the commission came back to the assessee in any form and the payment of commission represented only accommodation entry, there was no justification to disallow the same, particularly when the assessee gave full details including address of the b .....

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..... 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 of the Tribunal, Mumbai Bench (Third Member) discussed herein above, we allow the appeal of the assessee. " Heard Mr. Das, learned advocate appearing for the appellant revenue and Mr. J. P. Khaitan, learned senior advocate appearing for the respondent assessee. Before us the revenue could not demonstrate either the money was not paid or the money was paid and routed back to the assessee. In the circumstances interference with the order of the Tribunal is not warranted. No question arise for adjudication. The application and the appeal are dismissed. (SOUMITRA PAL, J.) (ARINDAM SINHA, J.) msen" Overall, from the facts and circumstances emanating in the case, and the judicial decisions applicable, especially that of the Hon'ble Kolkata High Court I find that the Ld. AO was not justified in making the impugned disallowance of ₹ 41,28,331/-, and therefore the same .....

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..... e 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 disallowance made by the Ld.AO was without any sustainable basis, and therefore, the grounds of appeal is allowed in favour of the appellant-assessee. 12. In view of the reasons recorded by the CIT(A) in his impugned order at Page 35, we find no infirmity in the order of CIT(A) and it is justified. Thus, Ground No.3 raised by the Revenue is dismissed. 13. Ground No.4 is relating to the deletion of telephone and fax charges for personal use. 14. Heard both parties and perused the materials available on record. It is noted that the assessee debited an amount of ₹ 1,36,145/- under the head telephone and fax charges . For not giving suitable explanation, the AO added an amount of ₹ 1,36,145/- @ 10% to the total income of the assessee. The CIT(A) deleted the said addition by observing that the AO failed to specifically pinpoint as to which the voucher for personal use and not for bu .....

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..... er 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 of ledger inward, 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. 19. Ground No.7 is relating to deletion of addition of ₹ 1,70,177/- on account of undisclosed TDS. 20. Heard both parties and perused the materials available on record. The AO found from individual transaction statement (ITS) details that the assessee did not disclose TDS to the tune of ₹ 11,402/-. In explanation, the assessee submitted that it had no transaction with the concerned parties as mentioned in AO s order in .....

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