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Income Tax Appellate Tribunal, F Bench, Mumbai
Before: Shri Jason P. Boaz & Shri Sandeep Gosain
This appeal by the assessee is directed against the order of the CIT(A)- 9, Mumbai dated 16.01.2015 for A.Y. 2011-12.
The facts of the case, briefly, are as under: - 2.1 The assessee, a company engaged in the business of manufacturing and dealing in textile goods, filed its return of income for A.Y. 2011-12 on 30.09.2011 declaring income of Rs.1,39,79,566/-. The case was taken up for scrutiny and the assessment was completed under section 143(3) of the Income Tax Act, 1961 (in short, 'the Act') vide order dated 03.02.2014, wherein the income of the assessee was determined at Rs.1,62,01,223/- in view of the following additions/disallowances: - `11,71,849/- (i) Disallowance of depreciation on motor vehicle `9,36,128/- (ii) Disallowance under section 40(a)(ia) of the Act `1,13,678/- (iii) Addition of bogus purchases M/s. V-Tex WVG & MFG Mills Ltd. 2.2 Aggrieved by the order of assessment for A.Y. 2011-12 dated 03.02.2014 the assessee preferred an appeal before the CIT(A)-9, Mumbai, who dismissed the assessee’s appeal vide the impugned order dated 16.01.2015. 3. The assessee, being aggrieved by the order of the CIT(A)-9, Mumbai dated 16.01.2015 for A.Y. 2011-12, has preferred this appeal raising the following grounds: - “
1.1 That the learned Hon'ble Commissioner of Income-tax (Appeals) erred in confirming the disallowance of depreciation claimed on motor car of Rs.11,71,849/- stating that vehicles are not registered in the name of the company; 1.2 That the Hon'ble Commissioner of Income-tax (Appeals) ought to have appreciated that assessee is owner of the vehicles for the purpose of section 32 of the Income tax Act, 1961; 2.1 The Hon'ble Commissioner of Income Tax (Appeals) erred in confirming the disallowance of Interest paid on Car loans of Rs.9,36,1281 -to Non-banking Financial Institutions under section 40(a)(ia) of the Income Tax Act, 1961 on account of non- deduction of TDS; 2.2 The Hon'ble Commissioner of Income Tax (Appeals) failed to appreciate that the appellant is not deemed to be an assessee in default for not deducting tax on interest paid to Non-banking Financial Institutions as the tax on the said interest has already been paid by the said financial institutions; 3.1 The Hon'ble Commissioner of Income Tax (Appeals) erred in confirming the purchases made from M/s. Shree Amaaya Enterprises of Rs.1,13,678/- as bogus purchase merely because delivery challans/lorry receipt of respective purchases are not available; 3.2 The Hon'ble Commissioner of Income Tax (Appeals) failed to appreciate the fact that the party is genuine and merely because delivery challans of certain bills are not available, the said purchases ought not to be treated as bogus purchase;
4. The Hon'ble Commissioner of Income Tax (Appeals) erred in not considering the ground that credit for self assessment tax paid on 27.09.2011 of Rs.9,96,790/- is not allowed;”
4. Ground No. 4: At the outset, the learned counsel for the assessee submitted that this ground is not pressed since the grievance raised therein has since been addressed by the Assessing Officer (AO); by giving M/s. V-Tex WVG & MFG Mills Ltd. the assessee for self assessment tax of `9,96,790/- paid on 27.09.2011. As this ground is not pressed, the same is dismissed as infructous.
5. Ground No. 1 (1.1 & 1.2): Depreciation on Motor Car 5.1 In these grounds, the assessee contends that the learned CIT(A) erred in confirming the disallowance of the assessee’s claim for depreciation on motor car amounting to `11,71,849/- as the assessee is the owner of the car for the purposes of section 32 of the Act. It is contended that this issue is covered in favour of the assessee in view of the decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2010-11 in dated 01.12.2015. 5.2 On his point, the learned D.R. supported the impugned order of the learned CIT(A) on this issue. 5.2.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. We find that the identical issue of the assessee’s claim for depreciation on motor car which was not registered in the name of the assessee company but in the name of the Director was considered by the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2010-11 and held in favour of the assessee. In its order in ITA No. 6572/Mum/2013 dated 01.12.2015, the Coordinate Bench at paras 2 and 3 thereof has held as under: - “2. Ground No. 1 relates to the disallowance of depreciation claimed on motor vehicle which was not registered in the name of the company but was purchased in the name of the Director.
3. An identical issue has been considered by us in ITA No. 6571/M/2013 wherein we have followed the decision of the Co- ordinate Bench in the case of M/s. Padmshree Weaving & Mfg. Mills Pvt. Ltd. in ITA No. 6570/M/2013 wherein the Tribunal has followed the decision of the Hon’ble Supreme Court in the case of ICDS Ltd Vs CIT 350 ITR 527. Respectfully following our own decision, we direct the AO to allow the claim of depreciation. Ground No. 1 is accordingly allowed. 5.2.2 Following the aforesaid decision of the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2010-11 (supra), which followed the decision of the Hon'ble Apex Court in the case of ICDS Ltd. vs.
M/s. V-Tex WVG & MFG Mills Ltd. CIT (350 ITR 527); we direct the AO to allow the assessee’s claim for depreciation on motor car. Consequently, ground No. 1 of the assessee’s appeal is allowed.
6. Ground No. 2 (2.1 & 2.2): Disallowance under section 40(a)(ia) 6.1 In this ground, the assessee contends that the learned CIT(A) erred in confirming the disallowance of interest paid on car loans amounting to `9,36,128/- under section 40(a)(ia) of the Act for non deduction of tax at source, as the tax on the said interest has already been paid by the said non-banking financial institution. The learned counsel for the assessee submitted that the identical issue was considered and adjudicated by a Coordinate Bench of this Tribunal in assessee’s own case for A.Y. 2010-11 in dated 01.12.2015 and therefore the same decision would apply in this year also. 6.2.1 We have heard both parties and perused and carefully considered the material on record; including the judicial pronouncements cited. We find that the identical issue was considered and adjudicated by the Coordinate Bench of this Tribunal in the assessee’s own case for A.Y. 2010-11 in ITA No. 6572/Mum/2013 dated 01.12.2015. In this order (supra), at paras 5 and 6 thereof the Coordinate Bench considered and held as under: - “5. Before us, the Ld. Counsel for the assessee vehemently submitted that proviso to Sec. 40(a)(ia) has been held to be declaratory and curative in nature and therefore have retrospective effect by the Tribunal Delhi Bench in the case of ITO Vs Dr. Jaideep Kumar Sharma 34 ITR 0565 wherein the Tribunal has followed the decision of the Hon’ble High Court of Delhi in the case of CIT Vs Ansal Land Mark Township (P) Ltd in ITA No. 160 & 161 of 2015. The Ld. Counsel submitted that thus if the payees have offered the income in the respective return and have paid the taxes, no adverse inference can be drawn against the payer i.e. the assessee.
We find force in the contention of the Ld. Counsel. We have given a thoughtful consideration to the decision of the Tribunal and the Hon’ble High Court of Delhi (supra). Respectfully following the same, we restore this issue to the file of the AO. The assessee is directed to furnish necessary details in support of its claim that the interest has been shown by the payees in the respective returns and have paid taxes thereon. The AO is directed to decide the issue afresh in the light M/s. V-Tex WVG & MFG Mills Ltd. of the second proviso to Sec. 40(a)(ia) of the Act after giving fair opportunity of being heard to the assessee.” 6.2.2 Following the aforesaid order of the Coordinate Bench of this Tribunal in assessee's own case for A.Y. 2010-11 in 2013 dated 01.12.2015; wherein it followed the decision of the Hon'ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township (P) Ltd. in ITA No. 160 & 161 of 2015, we restore this issue to the file of the AO for him/her to decide the issue afresh in the light of the second proviso to section 40(a)(ia) of the Act after affording the assessee adequate opportunity of being heard and to furnish details in support of its claim that the interest paid by it has been declared by the payers in their respective returns of income and have paid taxes thereon. It is accordingly ordered. Consequently, ground No. 2 of the assessee’s appeal is treated as allowed for statistical purposes.
Ground No. 3: Addition on Bogus Purchases 7.1 In this ground, the assessee contends that the learned CIT(A) erred in confirming the purchases made from M/s. Shree Amaaya Enterprises of `1,13,678/- as bogus purchases merely because the delivery challans/ lorry receipts of these purchases were not available. The learned counsel for the assessee reiterated and placed strong reliance on the submissions put forth before the AO dated 14.01.2014 at para 6.1 of the order of assessment and before the learned CIT(A) which are extracted at para 4.1 of the impugned order. 7.2 Per contra, the learned D.R. placed strong reliance on the finding of the learned CIT(A) in the impugned order on this issue. We have heard the rival contentions and perused and carefully considered the material on record. The learned CIT(A) has considered and dealt with the issue of bogus purchases as under in the impugned order: - “4.1 During the courses of appellate proceedings, the AR of the appellant has made the following submissions :- "Appellant submits that, they are manufacturer and dealers in textiles. Purchases are mainly from local parties. Fabric is cut in pieces, each pieces being of either 75 centimeter. 80 centimeter, M/s. V-Tex WVG & MFG Mills Ltd. one meter depending on the requirements of the customer. Each piece is packed in gelatin paper bag. As per the requirement of the buyer these pieces are packed in bundle of say 25 Pieces, 50 Pieces, 75 Pieces ,100 Pieces, etc. in bigger bag of either Sonata bag, kadiwala bag, millennium bag, netwali bag, ladies bag, etc and are dispatched to the buyer/agent. Purchases of bags are required by the appellant in regular course of business. Appellant have made purchases of these bags from Shree Amaaya Enterprises. The payments for all purchases are made by account payee cheques. Ledger account of Shree Amaaya Enterprises reflecting entries and payment made were submitted during the assessment proceedings by the appellant. The purchases made from Shree Amaaya Enterprises are recorded in the books, payments to them are also made by account payee cheques. During the previous year 2010-11, appellant have made purchases of packing materials from Shree Amaaya Enterprises of Rs.4,75,129/-. Photocopies of the invoices along with delivery challans (wherever readily available)/transport receipt issued by the above party for the purchases made from them were submitted during the assessment proceedings. Bill wise details of purchases made from abovementioned party alongwith the dates, quantity (in Nos.), rate and amount as mentioned in the purchase bills were submitted during the assessment proceedings. Appellant had submitted photocopies of relevant bank statements wherein the payments made by appellant to the said party were reflected. The appellant submitted the proof of delivery of goods received by way of delivery challans/ transport receipts in all the cases except in two cases of purchases. The learned assessing officer partly disallowed purchases made from Shree Amaaya Enterprises. Since the party is genuine and the purchases made from Shree Amaaya Enterprises is genuine, merely because the delivery challans are not readily available in case of two purchases the same cannot be treated as bogus purchase." 4.2 I have considered the facts of the case, assessment order passed by the AO and the submission of the appellant carefully. It is seen that the appellant made purchases from M/s. Dev Enterprises and Shree Amaaya Enterprises for Rs.1,96,687/- and Rs.4,75,129/- respectively. Certain details of these purchases were called for by the AO. It is seen from the order passed by the AO that the appellant could not provide proof regarding delivery of goods and delivery challan and lorry receipts were not furnished in some of the cases. Total purchases in respect of which complete evidence could not be furnished by the appellant amounted to Rs.1,13,678/-. As the appellant failed to furnish complete evidence in respect of purchases amounting to Rs.1,13,678/- either before the AO or before me. I am of the opinion that the AO was right in making the addition on account of said purchases. In view of