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Facts
The assessee, a heavy goods transporter, appealed against various disallowances made by the Assessing Officer and confirmed by the Ld. CIT(A) for Assessment Year 2013-14. These disallowances included significant amounts for oil and fuel expenses, truck running expenses, finance charges for self-occupied property, finance charges to STF Co. Ltd without TDS, and an alleged difference in a secured loan.
Held
The Tribunal set aside the disallowances for oil & fuel expenses and truck running expenses, finding the AO's basis to be surmises without valid proof. It directed the AO to allow interest on the self-occupied house loan under Section 24(b). For the non-deduction of TDS on finance charges and the difference in secured loan, the issues were restored to the file of the AO for verification and re-adjudication after providing sufficient opportunity of hearing to the assessee.
Key Issues
Disallowance of business expenses (oil & fuel, truck running); eligibility of interest on self-occupied house property under Section 24(b); non-deduction of TDS on finance charges under Section 40(a)(ia)/194A; and unexplained difference in secured loan.
Sections Cited
24(b), 40(a)(ia), 194A
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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR & SHRI SONJOY SARMA
(नििाारण वर्ा / Assessment Year : 2013-2014) Tiriyogi Narayan Singh, Vs ACIT, Circle-28, Kolkata C/o: Subash Agarwal & Associates, Advocates Siddha Gibson, 1, Gibson Lane, Suite 213, 2nd Floor, Kolkata-700069 PAN No. :APMPS 8395 D (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररती की ओर से /Assessee by : Shri Siddharth Agarwal, Advocate राजस्व की ओर से /Revenue by : Shri Ashutosh Kumar Sr. DR सुनवाई की तारीख / Date of Hearing : 27/02/2025 घोषणा की तारीख/Date of Pronouncement : 25/04/2025 आदेश / O R D E R
Per Rajesh Kumar, AM :
This is an appeal filed by the assessee against the order dated 21/08/2024, passed by the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2013-2014, on the following grounds :-
1. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in sustaining the disallowance of Rs. 1,82,18,524/- made by the A.O. on account of oil and fuel expenses.
2. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in sustaining the disallowance of Rs. 53,40,091/- made by the A.O. on account of Truck Running Expenses as against 80,35,546/-claimed by the assessee.
3. (a) For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in sustaining the disallowance of Rs. 3,71,736/- made by the A.O. on account of finance charges paid for acquisition of self occupied house property.
(b) For that the Ld. CIT(A) ought to have granted appropriate relief as per the provision of section 24(b) in regard to interest paid for acquisition of self occupied house property.
For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in sustaining the disallowance of Rs. 3,52,603/- made by the A.O. on account of finance charges allegedly paid to M/s S.T.F. Co. Ltd without deduction of TDS.
5. For that on the facts and in the circumstances of the case, the Ld. CIT(A) erred in sustaining the disallowance of Rs. 10,20,499/- made by the A.O. on account of alleged difference in secured loan obtained from banks.
6. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing.
2. The issues raised in ground No.1 is against the addition made by the Assessing Officer of Rs.1,82,18,524/- on account of oil and fuel expenses which was confirmed by ld CIT(A).
Facts relating to the ground No.1 are that the assessee is a heavy goods transporter and is also engaged in cargo lifting business at ports. During the course of assessment proceedings, the Assessing Officer noticed that there was some upward increase in expenses under the head of Oil & fuel. Accordingly, the Assessing Officer disallowed Rs.1,82,18,524/-. The also noted that the previous year expenditure figures, the total yearly expenditure of fuel allowable for this year would at Rs.2,89,69,537/- and also observed that a percentage marginal increase of 3% in revenue and allowed the expenditure on fuel to be at Rs.2,98,38,6236/- and thus disallowed the remaining amount of Rs.1,82,18,524/-. The addition made by the AO was confirmed by CIT(A).
4. After considering the rival submissions of the parties and perusing the material available on record, we find that the Assessing Officer has made the addition only on the ground that there was certain differences between the original return and the revised return filed by the assessee, wherein the amount of depreciation claimed in revised return of income and original return of income was Rs.90,73,007/- and a similar difference was there in the oil and fuel expenses i.e. as per the revised return of income and as per the original return of income, there was an increase in the fuel and oil expenses to the tune of Rs.90,73,007/-. Though the assessee furnished before the Assessing Officer the bills and vouchers supporting the said expenses and also the reasons for difference in the amount of depreciation, however, the Assessing Officer without going into those evidences, made an adhoc disallowance of Rs.1,82,18,524/- out of the total oil and fuel expenses of Rs.4,80,67,257/- as claimed by the assessee in the profit and loss account by bench marking the same on the basis of previous year’s percentage of oil and fuel expenses to the turnover and also considered the increase of 3% in the cost of diesel surcharge. In our opinion, the said estimation of disallowance by the Assessing Officer is based on the presumption and surmises without there being any valid basis. We note that the total turnover of the assessee during the impugned assessment year was Rs.12,62,83,946/-, which was Rs.8,94,32,745/- in A.Y.2012-2013. We further note that there was escalation in the prices of diesel as on 01.04.2011 from Rs.37.75 to Rs.48.63 as on 01.04.2013, which is approximately around 28%. Thus, Assessing Officer is devoid of appropriate basis and accordingly sustenance of addition by the ld. CIT(A) is also wrong and cannot be accepted. In view of these facts, we are inclined to set aside the order of the ld. CIT(A) and direct the Assessing Officer to delete the addition. The ground no. 1 is allowed.
The issue raised in ground No.2 is against the disallowance of Rs.53,40,091/- made by the Assessing Officer on account of truck running expenses as against Rs.80,35,546/- claimed by the assessee which was affirmed by ld. CIT(A).
Facts qua the above ground are that the assessee has claimed truck running expenses amounting to Rs.80,35,546/- and filed copy of account before the Assessing Officer. However, the Assessing Officer found that the assessee never produced vouchers or invoices, therefore, the Assessing Officer disallowed the expenses claimed by the assessee to the tune of Rs.53,40,091/- out of total expenses on account of truck running expenses. The Assessing Officer worked out the ratio of these expenses to the total turnover in the preceding assessment years 2012- 2013 at 2.13% vis-à-vis to the current year of 6.36% and restricted the allowance on account of truck expenses at Rs.53,40,091/- and added the same to the total income of the assessee.
In appellate proceedings, the ld. CIT(A) by giving cryptic finding upheld the order of the Assessing Officer.
After considering the rival submissions of the parties and perusing the material available on record, we note that the Assessing Officer has not made any objective examination of the expenses when the assessee has not produced the bills and vouchers as claimed by the Assessing Officer. We find merit in the contention of the assessee that the increase in toll tax and other road expenses which have enhanced these expenses during the year considerably whereas the disallowance by the AO was totally on incorrect basis by merely comparing with the current year’s expenses with the preceding year expenses. Under these circumstances, we are inclined to set aside the order of the ld. CIT(A) and direct the Assessing Officer to delete the addition. Ground No.2 is allowed.
The facts qua the ground NO.3 are that the Assessing Officer disallowed Rs.3,71,736/- on account of finance charges paid for acquisition of self-occupied property. The Assessing Officer found that the assessee has debited an amount of Rs.94,63,812/-towards finance charges which included interest of Rs. 3,71,736/- raised from HDFC for purchase of flat at Paransree Green. The said flat was registered in the name of assessee on 25.04.2014 for Rs.69,24,100/- against the collectorate value of Rs.83,40,000/-. The Assessing Officer noted that the interest on home loan is an allowable deduction u/s 24(b) and the possession of the flat is with the assessee and it is wholly for the purpose of self-occupation. The Assessing Officer also noticed that the assessee has tried to claim the full interest expenses by accounting same under the head finance charges. Thereafter the Assessing Officer referred to the reply of the assessee 17.3.2016 wherein the assessee stated that the interest on house loan is allowable u/s.24(b) of the Act and the observation about non-possession of the flat or not for self use by the assessee or given on rent is not at all correct. The possession of the flat is rightly with the assessee and is wholly for self-occupation. The Assessing Officer by disbelieving the possession letter dated 29.03.2013 disallowed the claim of Rs.3,71,736/-. The CIT(A) in the appellate proceedings, given a cryptic finding and upheld the order of the Assessing Officer.
After considering the rival submissions of the parties and perusing the material available on record, we find that the interest incurred in the acquisition of flat which is under self-occupation has to be dealt with in accordance with the provisions of Section 24(b) of the Act. Undisputedly, the assessee has paid interest on house loan to HDFC bank to the tune of Rs.3,71,736/-. Therefore, we set aside the order of the ld. CIT(A) and direct the Assessing Officer to allow the interest paid to HDFC Bank on house loan u/s.24(b) of the Act, subject to ceiling as has been prescribed under the Act. Accordingly, ground NO.3 is allowed.
The issue raised in ground NO.4 is qua the confirmation of disallowance of 3,52,603/- on account of non-deduction of tax u/s.40(a)(ia) of the Act.
The AO disallowed Interest paid to STF Co. Ltd u/s 40(a)(ia) of the Act for non-deduction of tax whereas the assessee on their hand claimed that interest on truck loan was paid after deduction of tax at source @ 10% u/s 194A of the Act. Ld. CIT(A) has passed a cryptic order and confirmed the order of Assessing Officer.
13. After considering the rival submissions of the parties and perusing the material available on record, we find merit in the contention of the assessee that the amount was paid on account of interest charges to the listed companies who offered to tax by them and, therefore, no disallowance is called for u/s.40(a)(ia) of the Act. In our opinion, this issue needs to be verified at the end of the Assessing Officer as to whether these companies have offered the tax in their income tax returns. Accordingly, the issue is restored to the file of the AO. The assessee shall be provided sufficient opportunity of hearing by the AO while deciding the issue. This ground of appeal of the assessee is allowed for statistical purposes.
14. The facts qua the ground NO.5 are that the Assessing Officer made the disallowance on the basis of list of secured loan takens from various banks on the ground that there was a difference in the statement of unsecured loan taken from Kotak Mahindra Bank of Rs.10,20,499/- which the assessee could not explain and accordingly the same was added by the Assessing Officer to the income of the assessee and also confirmed by the ld. CIT(A).
15. After considering the rival submissions of the parties and perusing the material available on record, we find that the assessee has filed a letter dated 28.03.2016 along with supporting evidences reconciling the said amount. In our opinion, the same requires verification at the end of the Assessing Officer and accordingly we restore this issue also to the file of the AO with direction to decide the same after providing sufficient opportunity of hearing to the assessee. The is also directed to consider the reconciliation statement, letter from the bank and other details which the assessee may file in the set aside proceedings and decide the issue accordingly. This ground of appeal of the assessee is allowed for statistical purposes.
16. Ground No.6 is general in nature. The same does not require any adjudication.
17. In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 25/04/2025.