M/s Dhruvdesh Metasteel Pvt Ltd , Bangalore V. Deputy Commissioner of Income Tax Circle-2(1)(2), Bangalore

ITA 219/BANG/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2449 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 05-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GANESH R GHALE TO D EPT
• Keywords: TDS; Set aside
• Section: 37(1)

Judgement Text

I N THE INCOME TAX APPELLATE TRIBUNAL SMC, B BENCH : BANGALORE BEFORE SHRI B.R BASKARAN , ACCOUNTANT MEMBER ITA NO.219/BANG/2019 ASSESSMENT YEAR : 2013-14 M/S DHRUVDESH METASTEEL PVT. LTD., NO.372, NILAY, R.T NAGAR MAIN ROAD, BENGALURU-560 032. PAN AACCD 4590 P VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-2(1)(2), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI RAVISHANKAR, ADVOCATE RESPONDENT BY : SHRI GANESH R GHALE, ADVOCATE STANDING COUNSEL TO D EPT. DATE OF HEARING : 06.11.2019 DATE OF PRONOUNCEMENT : 03.12.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING TH E ORDER DATED 28-11-20018 PASSED BY LD CIT(A)-2, BENGALURU AND IT RELATES TO THE ASSESSMENT YEAR 2013-14. THE GROUNDS OF APP EAL URGED BY THE ASSESSEE GIVE RISE TO THE FOLLOWING ISSUES:- (A) DISALLOWANCE OF DONATION RS.4.00 LAKHS (B) DISALLOWANCE OF ENTRANCE FEE TO CLUB RS.47,0 42/- (C) ADDITION TOWARDS CESSATION OF LIABILITY RS.2 1,33,670/- (D) NON-GRANTING OF TDS AND TCS CREDIT. ITA NO.219 /BANG/2019 PAGE 2 OF 5 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF M ANUFACTURE OF SPONGE IRON AND GENERATION OF POWER. 3. THE FIRST ISSUE RELATES TO THE DISALLOWANCE O F DONATION OF RS.4.00 LAKHS. THE AO DISALLOWED THE SAME BY OBSER VING THAT THE SAME IS NOW ALLOWABLE AS DEDUCTION U/S 37(1) OF THE ACT. BEFORE LD CIT(A), THE ASSESSEE SUBMITTED THAT THE ABOVE SAID DONATION WAS PAID TO M/S SRI V.R DESHPANDE TRUST IN RESPECT OF U TTAR KANNADA INTEGRATED RURAL DEVELOPMENT PROJECT, WHICH IS NOTI FIED U/S 35AC OF THE ACT. ACCORDINGLY THE ASSESSEE CLAIMED THAT THE ABOVE SAID DONATION IS ALLOWABLE U/S 35AC OF THE ACT. SINCE T HE ASSESSEE DID NOT CLAIM DEDUCTION U/S 35AC OF THE ACT IN THE RETU RN OF INCOME, THE LD CIT(A) CONFIRMED THE DISALLOWANCE. 4. I HEARD THE PARTIES ON THIS ISSUE AND PERUS ED THE RECORD. IN MY VIEW, IF THE CLAIM IS ALLOWABLE U/S 35AC OF THE ACT, IN THE INTEREST OF JUSTICE, THE SAME SHOULD BE ALLOWED, EV EN IF IT IS NOT CLAIMED SPECIFICALLY UNDER THAT SECTION WHILE COMPU TING TOTAL INCOME. HOWEVER, THE CLAIM OF THE ASSESSEE REQUIRE S VERIFICATION. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT( A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAM INING THE CLAIM OF THE ASSESSEE. 5. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF CLUB FEE OF RS.47,042/-. THE ASSESSEE HAD CLAIMED CLUB EXPENSE S OF RS.3,45,224/-. THE AO DISALLOWED THE SAME TREATING IT AS PERSONAL EXPENSES. BEFORE LD CIT(A), THE ASSESSEE COULD PRO DUCE INVOICES TO THE TUNE OF RS.2,98,182/- ONLY. HENCE THE DIFFEREN CE OF RS.47,042/- ITA NO.219 /BANG/2019 PAGE 3 OF 5 WAS DISALLOWED BY LD CIT(A). SINCE THE ASSESSEE HA S NOT FURNISHED EVIDENCES TO PROVE THE CLAIM OF RS.47,042/-, I AM O F THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN CONFIRMING THIS ADDI TION. 6. THE NEXT ISSUE RELATES TO THE ADDITION MADE U/S 41(1) OF THE ACT TOWARDS CESSATION OF LIABILITY. THE AO CALLED FOR AGEING ANALYSIS OF TRADE PAYABLES AND ACCORDINGLY ADDED ALL PAYABLE S WHICH ARE THREE YEARS OLD. THE ADDITION SO MADE WAS RS.21,33 ,670/-. BEFORE LD CIT(A), THE ASSESSEE SUBMITTED THAT THE BALANCE OUTSTANDING IN THE ACCOUNT OF CREDITORS ACTUALLY REPRESENT VAT POR TION OF PURCHASE INVOICES, WHICH THE ASSESSEE USED TO PAY THE CREDIT ORS ONLY WHEN THE CREDITOR PROVES THAT THE VAT COLLECTED FROM THE ASSESSEE HAS ACTUALLY BEEN PAID TO THE CREDIT OF THE GOVERNMENT BY THE CREDITOR. SINCE THE ASSESSEE COULD NOT PROVE THE SAID CLAIM, THE LD CIT(A) CONFIRMED THE ADDITION. 7. BEFORE ME, THE LD A.R SUBMITTED THAT THE ASS ESSEE ITSELF HAS WRITTEN OFF SOME OF THE CREDITORS IN THE SUBSEQUENT YEARS AND OFFERED THE SAME TO TAX. HE SUBMITTED THAT THE ASS ESSEE HAS REPAID THE AMOUNTS IN SOME OF THE CASES. THE LD D.R SUBMI TTED THAT THE ASSESSEES CLAIM REQUIRE VERIFICATION. 8. I HEARD RIVAL CONTENTIONS ON THIS ISSUE. IF THE ASSESSEE COULD SHOW THAT THE IT HAS HAD TRANSACTIONS WITH THE IMPU GNED CREDITORS IN SUBSEQUENT YEARS, THEN, IN MY VIEW, THERE IS NO NECESSITY TO INVOKE THE PROVISIONS OF SEC.41(1) OF THE ACT DURIN G THE CURRENT YEAR. ACCORDINGLY I RESTORE THIS ISSUE FOR THE LIMITED PU RPOSE OF VERIFICATION OF THE ABOVE SAID CLAIM OF THE ASSESSE E. ACCORDINGLY, I ITA NO.219 /BANG/2019 PAGE 4 OF 5 DIRECT THE AO TO EXCLUDE THOSE CREDITORS BALANCES FROM THE ADDITION, WITH WHOM THE ASSESSEE HAS HAD TRANSACTIONS IN THE SUBSEQUENT PERIOD. IF THE ASSESSEE ITSELF HAS WRITTEN OFF BAL ANCES IN THE SUBSEQUENT PERIOD AND OFFERED THE SAME FOR TAXATION , IT MAY BE EXCLUDED IN THE RELEVANT YEAR, SINCE THE SAME IS BE ING TAXED DURING THE YEAR UNDER CONSIDERATION. 9. NEXT ISSUE RELATES TO SHORT CREDIT OF TDS AN D TCS AMOUNTS. I RESTORE THIS ISSUE TO THE FILE OF THE AO FOR VERIFI CATION OF CLAIM OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DECEMBER, 2019. SD/- (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, THE 3 RD DECEMBER, 2019. /VMS/ COPY TO: 1. APPELLANT (S) / CROSS OBJECTOR(S) 2. RESPONDENT(S) 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE ITA NO.219 /BANG/2019 PAGE 5 OF 5 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DICTATION NOTE ENCLOSED DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. .. 14. DICTATION NOTE ENCLOSED