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Income Tax Appellate Tribunal, BENCH ‘SMC’ KOLKATA
Before: Hon’ble Shri N.S.Saini, AM ]
PER N.S.SAINI, AM This is an appeal filed by the assessee against the order dated 21.09.2017 of C.I.T-(A)-10, Kolkata for A.Y. 2014-15.. 2. In ground no.1 of this appeal the grievance of the assessee is that the CIT(A) has erred in confirming the disallowance of Rs.3,06,405/- u/s 40(a)(ia) of the Act made by the Assessing Officer on the ground that the TDS deducted at source u/s 194C instead of section 194J of the Act., 3. The brief facts of the case are that during the course of assessment proceedings the Assessing Officer observed that the assessee had paid testing charges of Rs.1,00,000/-, Rs.1,62,611/- and Rs.43,794/- to M/s Cotton Association of India, M/s Geo-Chem Laboratories Pvt. Ltd and M/s Inspectorate Griffith India Pvt. Ltd respectively and deducted TDS u/s 194C of the Act. According to the Assessing Officer testing charges are in the nature of fees for technical services. Hence TDS was to be made u/s 194J @ 10% from the payment. He also observed that the assessee failed to furnish any documentary evidence in terms of first proviso to section 201(1) of the Act during the course of assessment proceedings. Hence the second proviso to section 40(a)(ia) could not be pressed in favour of the assessee for ITA No.2461/Kol/2017 M/s Banarsi Das & Sons A.Y.2014-15
the above non compliance to the provisions of Chapter-XVIIB of the Act. On appeal the CIT(A) confirmed the action of the Assessing Officer. 4. Before me the only submission of the Authorised Representative of the assesse is that the issue is covered in favour of the assessee by the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs S.K.Tekriwal [2014] 361 ITR 432 (Cal) and following the same the disallowance should be deleted. 5. The Learned Departmental Representative relied on the orders of the lower authorities. 6. I have heard the rival submissions and perused the materials available on record. The undisputed facts of the case are that the assessee made payment of testing charges of Rs.3,06,405/- from which it deducted tax at source u/s 194C of the Act. According to the Assessing Officer this was fees for technical services and therefore tax should have been deducted at source u/s 194J of the Act. Therefore by invoking the provisions of section 40(a)(ia) of the Act he disallowed deduction of Rs.3,06,405/- 7. On appeal the same was confirmed by the CIT(A). The contention of the assessee is that the issue is covered in favour of the assessee by the decision of the Jurisdictional Calcutta High Court in the case of CIT vs S.K.Tekriwal (supra) wherein the Hon’ble High Court held as follows :- “Where tax was deducted by the assessee, though under a bona fide wrong impression under wrong provisions, the provisions of section 40(a)(ia) could not be invoked and that if there was any shortfall due to any difference of opinion as to the taxability of any item or the nature of payments falling under various tax deduction at source provisions, the assessee could be declared to be an assessee in default under section 201 but no disallowance could be made invoking the provisions of section 40(a)(ia).”
Therefore respectfully following the decision of the Hon’ble High Court we set aside the orders of the lower authorities and delete the addition of Rs.3,06,405/- and allow this ground of appeal of the assessee. 9. In ground no.2 the CIT(A) has erred in confirming the disallowance of Rs.39,309/- out of Rs.3,93,088/- being aggregate of Rs.2,32,782/- of Motor car expenses and Rs.1,60,306/- of depreciation made by the Assessing Officer. ITA No.2461/Kol/2017 M/s Banarsi Das & Sons A.Y.2014-15
The brief facts of the case are that the Assessing Officer observed that the assessee was required to produce documentary evidence viz. Bills and vouchers of the expenses and to show that these expenses are incurred wholly and exclusively for the business activity of the assessee. Since the assessee failed to produce the same he considered 10% of the expenses for personal use of the motor car and made disallowance of Rs.39,309/-. 11. On appeal the CIT(A) confirmed the same on the ground that the assessee has neither said anything countering the findings of the Assessing Officer nor submitted any documents in the matter. 12. Before me also the Authorised Representative of the assessee did not make any serious argument on the above ground. Therefore, I confirm the order of CIT(A) and dismiss this ground of appeal of the assessee. 13. In ground no.3 the grievance of the assessee is that the CIT(A) has erred in confirming the disallowance of Rs.22,469/- being 20% of Rs.1,12,343/- out of general expenses made by the Assessing Officer. 14. The brief facts of the case are that the Assessing Officer observed that the assessee has claimed Rs.1,12,343/- under the head ‘General Expenses ‘ in the profit and loss account. The Authorised Representative of the assessee was asked to produce documentary evidence viz. Bills and vouchers of the said expenses and to show that they were incurred in connection with the business activity of the assessee. The Authorised Representative of the assessee could not produce any such reliable evidences and could not offer any plausible explanation. Therefore he made disallowance of 20% of the expenses on the ground of personal use. 15. On appeal the CIT(A) confirmed the action of the Assessing Officer by observing that the assessee has neither said anything countering the findings of the Assessing Officer nor submitted any documents in the matter. 16. Before me the only submission of the Authorised Representative of the assessee was that the disallowance @20% is excessive. 17. The Learned Departmental Representative supported the order of the CIT(A).
ITA No.2461/Kol/2017 M/s Banarsi Das & Sons A.Y.2014-15
After hearing the rival submissions and perusing the materials available on record. I am of the considered view that the disallowance of 20% out of the general expenses of Rs.1,12,343/- is excessive. In my considered view it would meet the ends of justice if the disallowance is restricted to 10% of the expenses claimed under the head ‘General Expenses ‘. I therefore modify the order of CIT(A) and accordingly partly allow this ground of appeal of the assessee . 19. In the result the appeal of the assessee is partly allowed. Order pronounced in the open Court on 11.07.2018.
Sd/- [ N.S.Saini ] Accountant Member Dated : 11.07.2018. [RG Sr.PS] Copy of the order forwarded to: 1.M/s Banarsi Das & Sons, C/o Sri Jitendra Kaushik, Advocate, 19-D, Muktaram Babu Street, Kolokata-700007.
I.T.O., Ward-34(1), Kolkata.
C.I.T.(A)-10, Kolkata 4. C.I.T.-12, Kolkata..
CIT(DR), Kolkata Benches, Kolkata. True Copy By order,
Senior Private Secretary Head of Office/D.D.O., ITAT, Kolkata Benches
ITA No.2461/Kol/2017 M/s Banarsi Das & Sons A.Y.2014-15
ITA No.2461/Kol/2017 M/s Banarsi Das & Sons A.Y.2014-15