SELPRINT, MUMBAI V. DCIT 22(2), NAVI MUMBAI

ITA 3688/MUM/2012

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2898 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 22-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 24-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILP
• Section: 68; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.3688/M/2012 ASSESSMENT YEAR: 2008-09 M/S. SELPRINT, 23B, JAYA APARTMENT, KIROL ROAD, GHATKOPAR (WEST), MUMBAI 400 086 PAN: AAGFS 7952K VS. CIT(A)-33, MUMBAI, TOWER NO.6, 3 RD FLOOR, VASHI RLY. STATION BLDG. COMPLEX, VASHI, NAVI MUMBAI (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI VIJAY MEHTA, A.R. REVENUE BY : SHRI NEIL PHILP, D.R. DATE OF HEARING : 22.06.2015 DATE OF PRONOUNCEMENT : 21.10.2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 22.03.2012 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2008-09. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF PAYMENTS IN THE NATURE OF PURCHASES FROM M/S M . R . ENTERPRISES OF RS.13 , 51 , 484 U/S 40(A)(IA) ON ACCOUNT OF NON-DEDUCTION OF TDS ON PAYMENTS MADE TO I T I GNORING THE FACT THAT M/S. M.R . ENTERPRISES HAS ALREADY DISCHARGED THE TAX LIABILITY BY DULY FILING THE RETURN OF INCOME THE DUE DATE OF FILING OF THE RETURN OF INCOME BY THE APPEL L ANT . THE DISA L LOWANCE BEING BAD I N LAW THE SAME NEEDS TO BE DELETED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RENT OF RS.2 , 40 , 000/- U/S.4O(A)(IA) WITHOUT APPRECIATING THE FACT THAT THE TDS OF RS.36 , 720 ON THE ABOVE AMOUNT HAD BEEN DEDUCTED AND DEPOSITED ON 15 . 05 . 2008 I.E . WITHIN DUE DATE STIPULATED U/S 200(1) . ITA NO.3688/M/2012 M/S. SELPRINT 2 THE ADDITION BEING BAD IN LAW THE SAME NEEDS TO BE DELETED . 3. A) ON THE FACTS AND C I RCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT ( A) ERRED IN CONFIRM I NG D I SALLOWANCE OF COMMISS I ON OF RS . 2 , 00 , 000/ - U/S 4O(A)(IA) WITHOUT APPREC I AT I NG THE FACT THAT THE TDS WAS DEDUCTED ON 31 . 03 . 2008 AND DEPOS I TED ON 15 . 05 . 2008 I . E . WITH I N THE DUE DATE ST I PU L ATED UNDER SECT I ON 200 ( 1) . B ) ALSO , WITHOUT PREJUD I CE T O THE ABOVE , THE L EARNED CIT ( A ) ERRED I N I GNOR I NG THE FACT THAT THE COMM I SS I ON WAS A L READY PA I D TO MR HARD I K KOTHA RI DUR I NG THE P R EV I OUS YEAR ENDED 31 MARCH 2008 AND THEREFORE , PROV I S I ONS OF SECT I ON 40 ( A )(I A ) WOULD NOT APPLY AS SECTION 40 ( A )(I A ) PROV I DES FOR D I SALLOWANCE I N R ELATION TO THE AMOUNTS PAYABLE AND NOT TO AMOUNTS A LREADY PAID DURING THE PREV I OUS YEAR . THE ADDITION BEING BAD IN LAW THE SAME NEEDS TO BE DELETED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF R S . 1 , 50 , 000/- TOWARDS SALARY PAID TO MR HARDIK KOTHARI HOLDING THAT NO PAYMENT OF SALARY HAS BEEN REFLECTED IN THE LEDGER ACCOUNT OF MR HARDIK KOTHARI WITHOUT APPRECIATING THE FACT THAT THE PAYMENT HAS BEEN ROUTED THROUGH SALARY ACCOUNT . THE ADDITION BEING BAD IN LAW AND ARBITRARY IN NATURE NEEDS TO BE DELETED . 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCE OF RS . 99 , 416/- BEING 1/3RD OF THE PAYMENTS MADE TO MR . VINIT KOTHARI RS.1 , 48 , 250/- TOWARDS PURCHASE OF SOFTWARE UNDER SECTION 37 OF THE ACT HOLDING THAT NO SUFFICIENT DETAILS OR BILLS FOR JOB CHARGES WERE FILED BEFORE THE LEARNED CIT(A). LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACT A LL THE DETAILS AND EXPLANATIONS IN RELATION TO PAYMENT TOWARDS SOFTWARE CHARGES INCLUD ING RETURN OF INCOME OF MR V I NIT KOTHARI WERE FILED BEFORE THE LEARNED CIT(A) . THE ADDITION BEING BAD IN LAW THE SAME NEEDS TO BE DELETED . 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF UNSECURED LOANS OF RS . 1 , 79 , 400/- UNDER SECTION 68 IGNORING THE FACT THAT THE SAID AMOUNT PERTAINS TO THE COMMISSION OF RS . 1 , 79 , 400 (NET OF TD S) THAT IS ALREADY DISALLOWED BY THE LEARNED AO AND CONFIRMED BY THE LEARNED CIT(A) . THE ADDITION LEADING TO TAXING THE AMOUNT TWICE IS BAD IN LAW AND NEEDS TO BE DELETED . 7. THE APPELLANT CRAVES LEAVE TO ADD TO AMEND , ALTER , DELETE AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL ON OR BEFORE THE FINAL DATE OF HEARING OF THIS APPEAL PETITION . ITA NO.3688/M/2012 M/S. SELPRINT 3 3. THE LD. A.R. OF THE ASSESSEE HAS INVITED OUR AT TENTION TO GROUND NO.1 VIDE WHICH THE DISALLOWANCE HAS BEEN MADE BY THE LO WER AUTHORITIES UNDER SECTION 40(A)(IA) ON ACCOUNT OF NON DEDUCTION OF TD S ON PAYMENTS MADE TO M/S. M.R. ENTERPRISES. IT IS THE CONTENTION OF THE LD. A.R. THAT M/S. M.R. ENTERPRISES HAS ALREADY DISCHARGED THE TAX LIABILIT Y BY DULY FILING THE RETURN OF INCOME. HE HAS CONTENDED THAT AS PER THE NEW PROVI SO INSERTED IN SECTION 40(A)(IA) VIDE FINANCE ACT, 2012 W.E.F. 01.04.13 WH EREIN IT HAS BEEN PROVIDED THAT IF THE ASSESSEE FAILS TO DEDUCT TDS IN RESPECT OF ANY PAYMENT TO WHICH THE TDS PROVISIONS APPLY BUT HE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201 OF THE ACT, WHICH PROVIDES THAT IF THE PAYEE OF THE SUCH AMOUNT COMPUTED THE SAME INTO HIS INCOME TAX RETURN AND HA S PAID THE DUE TAXES, THEN SUCH AN ASSESSEE WILL NOT BE DEEMED TO BE AN ASSESS EE IN DEFAULT AND THEN NO DISALLOWANCE IS ATTRACTED UNDER SECTION 40(A)(IA). HE HAS FURTHER SUBMITTED THAT THE SAID NEWLY INSERTED PROVISO TO SECTION 40(A)(IA ) IS IN FACT CLARIFICATORY IN NATURE AND SHOULD BE APPLIED/RETROSPECTIVELY FOR TH E YEAR UNDER CONSIDERATION AND AS SUCH NO DISALLOWANCE IS ATTRACTED ON THIS IS SUE. 4. ON THE OTHER HAND, THE LD. D.R. HAS CONTENDED TH AT IT HAS BEEN SPECIFICALLY PROVIDED IN THE ACT THAT THE SAID PROV ISO COMES INTO OPERATION W.E.F. 01.04.13 AND THAT WHERE THE LANGUAGE OF THE SECTION AS WELL AS THE DATE OF OPERATION OF SUCH PROVISIONS HAS BEEN MENTIONED SPE CIFICALLY THE COURTS CANNOT SUPPLY WORDS TO THE PROVISIONS OR AMEND THE PROVISI ONS TO GIVE IT A DIFFERENT MEANING AND FURTHER THAT THE NEWLY INSERTED PROVIS O UNDER SUCH CIRCUMSTANCES IS PROSPECTIVE IN NATURE I.E. W.E.F. 01.04.13 AND C ANNOT BE APPLIED RETROSPECTIVELY. 5. THE LD. A.R. OF THE ASSESSEE HAS BROUGHT TO OUR NOTICE THAT THE ISSUE RELATING TO OPERATION OF THE NEWLY INSERTED PROVISO WHETHER PROSPECTIVE OR RETROSPECTIVE IN NATURE HAS ALREADY BEEN CONSIDERED AND DECIDED BY THE CO- ITA NO.3688/M/2012 M/S. SELPRINT 4 ORDINATE BANGALORE BENCH OF THE TRIBUNAL IN THE CAS E OF SHRI S.M. ANAND VS. ACIT IN ITA NO.183/BANG./13 FOR A.Y. 2005-06 VIDE ORDER DATED 21.02.14. THE RELEVANT PART OF THE FINDINGS OF THE TRIBUNAL G IVEN IN THE SAID CASE, ARE REPRODUCED AS UNDER: 3.4.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEE HA S NOT DEDUCTED TAX AT SOURCE ON THE PAYMENTS MADE TO SRI G.SHANKAR OF RS.2,69,21,50 0 AND TO SRI RAMESH KOTIAN OF RS.1,54,75,000. AS POINTED OUT BY THE LEARNED AUTH ORISED REPRESENTATIVE AS FAR AS THE PAYMENTS MADE TO THE AFORESAID TWO PERSONS IS C ONCERNED THE FACT THAT THE SAID PAYEES / RECIPIENTS HAVE SHOWN THE SAID AMOUNTS IN THEIR RESPECTIVE BOOKS OF ACCOUNT AND PROFIT AND LOSS ACCOUNTS AND ALSO THAT THE SAME HAS BEEN OFFERED TO TAX IN THEIR RETURNS OF INCOME IS NOT CONTROVERTED BY T HE AUTHORITIES BELOW. IN OUR CONSIDERED OPINION, SINCE THE PAYEES / RECIPIENTS I .E. G. RAMESH AND RAMESH KOTIAN HAVE ALREADY SHOWN THESE AMOUNTS IN THEIR RESPECTIV E BOOKS OF ACCOUNT AUDITED UNDER SECTION 44AB OF THE ACT; DECLARED AND OFFERED THE SAME TO TAX IN THEIR RETURNS OF INCOME FOR THE RELEVANT PERIOD, THUS BY VIRTUE O F THE AMENDMENT TO THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT BY INSER TION OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT W.E.F. ;1.4.2013, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WOULD NOT BE ATTRACTED TO THE PAYMENTS MADE BY THE ASSESSEE I.E. SRI G. SHANKAR OF RS.2,69,21,500 AND TO SRI RAMESH KOTIAN OF RS.1,54,75,000. THIS VIEW OF OURS, IS IN ACCORDANCE WITH THE DECISION OF THE CO- ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ANANDA MARKALA (SUPRA) WHEREIN IT WAS H ELD THAT THE INSERTION OF THE SECOND PROVISO TO SECTION 40(A)(1A) OF THE ACT SHOU LD BE READ RETROSPECTIVELY FROM 1.4.2005 AND NOT PROSPECTIVELY FROM 1.4.2013. IN TH IS VIEW OF THE MATTER, THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IS NOT A TTRACTED TO THE PAYMENTS MADE BY THE ASSESSEE TO SRI G.SHANKAR OF RS.2,69,21,500 AND TO SRI RAMESH KOTIAN OF RS.1,54,75,000 SINCE THE OBJECT OF INTRODUCTION OF SECTION 40(A)(IA) OF THE ACT IS ACHIEVED FOR THE REASON THAT THE PAYEES / RECIPIENT S HAVE DECLARED AND OFFERED TO TAX THE PAYMENTS RECEIVED FROM THE ASSESSEE IN THEI R RESPECTIVE HANDS. 3.4.2 AS REGARDS THE ISSUE OF NON-FURNISHING OF FOR M NO.26A, WE ARE OF THE VIEW THAT SINCE THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IS HELD TO BE RETROSPECTIVE IN OPERATION W.E.F. 1.4.2005, SIMILAR LY, FORM 26A WAS TO BE FILED FOR AN ASSESSEE NOT TO BE HELD AS AN ASSESSEES IN DEFAULT AS PER PROVISO TO SECTION 201 OF THE ACT. IN ALL FAIRNESS, THE ASSESSEE IN THE PERIO D UNDER CONSIDERATION I.E. ASSESSMENT YEAR 205-06 COULD NOT HAVE CONTEMPLATED THAT SUCH A COMPLIANCE WAS TO BE MADE AND THEREFORE IN THE INTEREST OF EQUITY AND JUSTICE WE SET ASIDE THE ORDER OF THE LEARNED CIT (APPEALS) AND REMIT THE MA TTER TO THE FILE OF THE ASSESSING OFFICER DIRECTING THE ASSESSING OFFICER TO CONSIDER THE ALLOWANCE OR OTHERWISE OF THE EXPENDITURE CLAIMED AMOUNTING TO RS.4,23,96,500; BE ING THE PAYMENTS MADE BY THE ASSESSEE TO SRI G. SHANKAR OF RS.2,69,21,500 AN D TO SRI RAMESH KOTIAR, OF RS.1,54,75,000 AFTER AFFORDING THE ASSESSEE ADEQUAT E OPPORTUNITY TO FILE FORM NO.26A AND ONLY AFTER DUE VERIFICATION OF WHETHER T HE AFORESAID TWO PAYEES / RECIPIENTS HAVE REFLECTED THE SAME RECEIPTS IN THEI R BOOKS OF ACCOUNT AND HAVE ITA NO.3688/M/2012 M/S. SELPRINT 5 OFFERED THE SOME TO TAX. IN THESE CIRCUMSTANCES, WE HEREBY SET ASIDE THE ORDER OF THE LEARNED CIT (APPEALS) TO THE FILE OF THE ASSESS ING OFFICER ONLY FOR THE LIMITED PURPOSE AS DIRECTED ABOVE. 6. ALMOST IDENTICAL VIEW HAS BEEN TAKEN BY THE AGRA BENCH OF THE TRIBUNAL IN THE CASE OF RAJEEV KUMAR AGARWAL VS. ACIT (201 4) 149 ITD 363 (AGRA). THE SAID VIEW HAS BEEN FURTHER UPHELD BY THE HONBL E DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP PVT. LTD. IN ITA NO.160 OF 2015 DECIDED ON 26.08.2015 (DEL.-HC). RESPECTFULLY FOLL OWING THE ABOVE CITED DECISIONS, WE HOLD THAT DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT WILL NOT BE ATTRACTED, IF THE RESPECTIVE PAYEE HAS PAID THE REQUIRED TAXES IN ACCORDANCE WITH LAW. FOR VERIFICATION OF THE ACTUAL POSITION, WE RESTORE THIS ISSUE TO THE FILE OF THE AO TO VERIFY WHETHER THE PAYEE HAD PAID THE DUE TAXES AFTER COMPUTATION OF ITS INCOME INCLUDING THE PAYMENTS RECEIVED FROM THE ASSESSEE. THIS ISSUE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. GROUND NOS. 2 & 3 : 7. THE CONTENTIONS RAISED BY THE ASSESSEE IN GROUND NO.2 ARE THAT THE ASSESSEE HAD ALREADY DEDUCTED THE TDS OF RS.36,720/ - ON THE AMOUNT OF RENT PAID OF RS.2,40,000/- AND THE SAME WAS DEPOSITED WI TH THE TREASURY WITHIN DUE DATE STIPULATED UNDER SECTION 200(1) OF THE ACT. I T MAY BE OBSERVED THAT SECTION 40(A)(IA) WAS AMENDED BY THE FINANCE ACT, 2010 AND AS PER THE AMENDED PROVISIONS THE EXPENDITURE HAS TO BE ALLOWED IF THE DEPOSIT IS MADE WITHIN THE DUE DATE OF FILING OF RETURN OF INCOME. THE HONBL E KOLKATA HIGH COURT, IN THE CASE OF VIRGIN CREATIONS IN ITA NO.302 OF 2011 DE CIDED ON 23.11.2011, HAS HELD THAT THE SAID AMENDMENT IS RETROSPECTIVE IN NA TURE. FOLLOWING THE SAID DECISION, THE MUMBAI BENCH OF THE TRIBUNAL, IN THE CASE OF PIYUSH C. MEHTA 52 SOT 27, HAS ALLOWED THE CLAIM OF THE ASSESSEE IF THE DEPOSIT HAS BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. WE DECIDE THIS ISSUE ACCORDINGLY AND RESTORE THE MATTER TO THE FILE OF T HE ASSESSING OFFICER ITA NO.3688/M/2012 M/S. SELPRINT 6 (HEREINAFTER REFERRED TO AS THE AO) TO VERIFY WHETH ER THE TDS WAS DEDUCTED AND DEPOSITED WITHIN THE DUE DATE OF FILING OF RETURN A ND IF FOUND SO, THEN THE AO TO ALLOW THE CLAIM OF THE ASSESSEE ACCORDINGLY. GROUND NO.4 8. VIDE GROUND NO.4, THE ASSESSEE HAS AGITATED THE CONFIRMATION OF DISALLOWANCE OF RS.1,50,000/- TOWARDS SALARY PAID T O MR. HARDIK KOTHARI, SON OF THE PARTNER OF THE ASSESSEE FIRM. THE AO DISALL OWED THE 1/3 RD OF THE AMOUNT OF SALARY PAID TO MR. HARDIK KOTHARI ON THE GROUND THAT THE ABOVE PAYMENT WAS NOTHING BUT METHOD ADOPTED BY THE ASSESSEE FOR DIVE RSION OF TAXABLE PROFITS. THE LD. CIT(A), HOWEVER, OBSERVED THAT THE LEDGER A CCOUNT OF MR. HARDIK KOTHARI SHOWED A COMMISSION OF RS.1,79,400/- ONLY A ND THERE WAS NO FURTHER CREDIT FOR THE SALARY SHOWN IN HIS NAME OF RS.1,50, 000/-. HE, THEREFORE, OBSERVED THAT NO SALARY HAD BEEN PAID TO MR. HARDIK KOTHARI OF AN AMOUNT OF RS.1,50,000/-. HE, THEREFORE, DISALLOWED THE ENTIR E AMOUNT OF RS.1,50,000/- AS THE SAME WAS NOT REFLECTED IN THE LEDGER ACCOUNT. THE LD. A.R. OF THE ASSESSEE, BEFORE US, HAS INVITED OUR ATTENTION TO PAGE 15 OF THE PAPER BOOK WHICH IS A LETTER DATED 18.08.10 ADDRESSED TO COMMISSIONER OF INCOME TAX WHEREIN A JUSTIFICATION HAS BEEN GIVEN REGARDING PAYMENT OF C OMMISSION TO MR. HARDIK KOTHARI AND IT HAS BEEN EXPLAINED THAT MR. HARDIK K OTHARI WAS SON OF THE PARTNER OF THE FIRM NAMELY MR. VIREN KOTHARI THAT T O ENCOURAGE HIM FOR HARD WORK, EFFICIENCY AND SINCERITY THE FIRM DECIDED TO OFFER HIM SALARY OF RS.12,500/- AND COMMISSION ON SALE OF PRODUCTS. IT HAS BEEN EXPLAINED THAT HE HAS BEEN LOOKING AFTER PRODUCTION QUALITY AND CUSTO MER RELATIONSHIP. THE LD. A.R. HAS FURTHER INVITED OUR ATTENTION TO THE WRITT EN SUBMISSIONS DATED 29.08.11 SUBMITTED BY THE ASSESSEE TO THE LD. CIT(A) WHEREIN IT HAS BEEN EXPLAINED THAT THE AMOUNT OF SALARY PAID TO MR. HARDIK KOTHARI WAS REASONABLE. THE LD. A.R. HAS FURTHER EXPLAINED THAT THE PAYMENT OF SALARY WA S ROUTED THROUGH SALARY ACCOUNT. HE HAS FURTHER SUBMITTED THAT THE PAYMENT OF SALARY TO MR. HARDIK ITA NO.3688/M/2012 M/S. SELPRINT 7 KOTHARI HAS BEEN ALLOWED IN THE PAST. CONSIDERING THE ABOVE SUBMISSIONS OF THE LD. A.R., WE DO NOT FIND ANY JUSTIFICATION ON T HE PART OF LOWER AUTHORITIES TO DISALLOW THE AMOUNT OF SALARY PAID TO MR. HARDIK KO THARI, SON OF THE PARTNER. THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. GROUND NO.5 9. VIDE GROUND NO.5, THE ASSESSEE HAS AGITATED THE CONFIRMATION OF DISALLOWANCE OF RS.99,416/- BEING 1/3 RD OF THE PAYMENTS MADE TO MR. VINIT KOTHARI AND RS.1,48,250/- TOWARDS PURCHASE OF SOFTW ARE. THE LD. A.R. OF THE ASSESSEE HAS INVITED OUR ATTENTION TO PAGE 20 OF TH E PAPER BOOK WHICH IS A LETTER DATED 31.08.2010 ADDRESSED TO COMMISSIONER OF INCOM E TAX WHEREIN IT HAS BEEN EXPLAINED THAT MR. VINIT KOTHARI HAD DEVELOPED A SOFTWARE WHICH WAS USEFUL FOR LOOKING AFTER THE DAY TO DAY PRODUCTION, QUALITY AND OTHER REQUIREMENTS. MR. VINIT KOTHARI ALSO GAVE TRAINING REGARDING THE SAID SOFTWARE. THE ASSESSEE PAID THE AMOUNT IN QUESTION TO MR. VIN IT KOTHARI FOR DESIGNING AND DEVELOPING A SOFTWARE AND PROVIDING TRAINING IN THIS RESPECT. THE AO HAD DISALLOWED 1/3 RD OF THE SAID EXPENDITURE WHEREAS THE LD. CIT(A) OBS ERVED THAT THE AMOUNT IN QUESTION WAS ACTUALLY BEING PAID AS L ABOUR PROCESSING CHARGES ON WHICH TDS HAS BEEN DEDUCTED. HE OBSERVED THAT SINC E MR. VINIT KOTHARI WAS NOT HAVING ANY BUSINESS IN INDIVIDUAL CAPACITY OR R UNNING ANY OTHER BUSINESS ENTITY WHERE HE WAS DOING THE LABOUR PROCESSING JOB , HENCE THE PAYMENT WAS NOTHING BUT A TRICK TO REDUCE THE PROFITS TO AVOID TAX. 10. WE FIND THAT THE ASSESSEE IN HIS LETTER DATED 3 1.08.10 HAS EXPLAINED TO THE COMMISSIONER THAT MR. VINIT KOTHARI WAS DOING ENGIN EERING AND THAT THE SOFTWARE WAS DEVELOPED BY HIM. IT IS NOT DISPUTED THAT MR. VINIT KOTHARI IS WORKING FOR THE FIRM. THE LD. CIT(A) HAS OVERLOOKE D THE CONTENTIONS RAISED BY THE ASSESSEE AND HAS DISALLOWED THE CLAIM. IT I S NOT DISPUTED THAT THE SERVICES WERE PROVIDED BY MR. VINIT KOTHARI TO THE FIRM. IT HAS ALSO BEEN ITA NO.3688/M/2012 M/S. SELPRINT 8 EXPLAINED THAT THE SOFTWARE DEVELOPED BY HIM WAS VE RY IMPORTANT TO THE BUSINESS OF THE ASSESSEE FIRM. CONSIDERING THE ABO VE FACTS AND CIRCUMSTANCES, IN OUR VIEW, THE DISALLOWANCE IS NOT JUSTIFIED ON T HIS ISSUE ALSO AND THE SAME IS ACCORDINGLY ORDERED TO BE DELETED. GROUND NO.6 11. THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF UN SECURED LOANS OF RS.1,79,400/- UNDER SECTION 68. AT THE OUTSET, THE LD. A.R. OF THE ASSESSEE HAS EXPLAINED THAT THE SAID AMOUNT PERTAINED TO THE COM MISSION OF RS.1,79,400/- (NET OF TDS) THAT WAS ALREADY DISALLOWED BY THE AO AND CONFIRMED BY THE LD. CIT(A). HE HAS EXPLAINED THAT THIS AMOUNT WAS IN R ESPECT OF COMMISSION PAID AND NOT THE LOAN RECEIVED. CONSIDERING THE ABOVE S UBMISSIONS OF THE ASSESSEE, WE FEEL THAT THE ISSUE REQUIRES REEXAMINATION AT TH E HANDS OF AO. THE AO IS DIRECTED TO EXAMINE THE CONTENTIONS OF THE ASSESSEE IN THIS REGARD AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. 12. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE ASSESSEE IS HEREBY PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.10.2015. SD/- SD/- (R.C. SHARMA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 21.10.2015. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI ITA NO.3688/M/2012 M/S. SELPRINT 9 THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.