ITR : Volume 330 : Part 4 Issue dated 24-01-2011

INCOME TAX REPORTS (ITR) HIGHLIGHTS

 

ISSUE DATED 24-1-2011

Volume 330 Part 4

 

 

 

SUPREME COURT JUDGMENTS

>>> MAT : Interest can be charged on tax calculated on book profits for failure to pay advance tax : Joint CIT v. Rolta India Ltd. p. 470

 

HIGH COURT JUDGMENTS

>>> Brought forward unabsorbed loss and deficiencies of earlier years to be adjusted first before granting special deduction u/ss 80-I and 80HH : Modi Nagar Paper Mills Ltd. v. Deputy CIT (All) p. 405

>>> Requirement of filing audit report along with return only wef 1-7-1995 : Failure for earlier years : Penalty cannot be imposed : S. V. Pathak and Co. v. N. C. Tewari, CIT (Bom) p. 410

>>> Additional Director competent to issue warrant of authorisation : Sunil Dua v. CIT (Delhi) p. 413

>>> Inclusion of jewellery proper where genuineness of Will not proved : Sunil Dua v. CIT (Delhi) p. 413

>>> Deposits not huge amounts : Explanation of assessee to be accepted : Sunil Dua v. CIT (Delhi) p. 413

>>> Concurrent finding by authorities that amount disclosed in audit reports, balance-sheets and regular returns of income : Finding of fact : CIT v. Modern Engineering Works (Delhi) p. 416

>>> Payee showing amount in its return and paying tax : Reassessment proceedings quashed : CIT v. Rainee Singh (Delhi) p. 417

>>> Settlement of cases : Notice u/s 142(1) based on material discovered during search operation not valid : Smt. Neeru Agarwal v. UOI (All) p. 422

>>> Mere change in sub-heading in books of account : Not entitled to make additions u/s 41 : CIT v. Auto Kashyap India P. Ltd. (Delhi) p. 435

>>> NBFC : Interest on intercorporate deposit not received for more than six months : Interest does not accrue : CIT v Vasisth Chay Vyapar Ltd. (Delhi) p. 440

>>> Receipts from freight and insurance packing charges, sales tax set off and gross service income : Ninety per cent. to be excluded from profits of business : CIT v. Dresser Rand India P. Ltd. (Bom) p. 453

>>> Interest on deposits not allowable : CIT v. Dresser Rand India P. Ltd. (Bom) p. 453

>>> Purchase of immovable property by Central Government : Valuation whether as on date of agreement with original allottee or with assignee or as on date of determination : Matter remanded : R. N. Soin and Sons P. Ltd. v. Appropriate Authority (Delhi) p. 455

>>> Interest on loans obtained by assessee to settle liability of its sister concern to retain business premises of assessee allowable : CIT v. Neelkanth Synthetics and Chemicals P. Ltd. (Bom) p. 463

>>> Tribunal finding investments not belonging to assessee but to family members as well : Finding of fact : CIT v. Chandulal Chhugani (Chhattisgarh) p. 467

>>> Assessee trust having imparting education as one of its objects entitled to registration u/s 12A : Director of I. T. v. Garden City Educational Trust (Karn) p. 480

 

STATUTES AND NOTIFICATIONS

>>> Rules :

Special Economic Zones (Sixth Amendment) Rules, 2010 p. 5

>>> C. B. D. T. Circulars :

Circular No. 5 of 2010 : Corrigendum p. 5

Circular No. 8 of 2010, dated 13th December, 2010.-Income-tax deduction from salaries during the financial year 2010-11 under section 192 of the Income-tax Act, 1961 p. 22

>>> Notifications :

Income-tax Act, 1961 : Notifications under section 35(1)(ii)/(iii) : Scientific research associations p. 19

Income-tax Act, 1961 : Notification under section 35AC(1) Expln., clause (b) : Eligible projects or schemes p. 75

Income-tax Act, 1961 : Notification under section 80-IB(10)(a), (b) : Scheme for slum redevelopment p. 19

Income-tax Act, 1961 : Notification under section 90 : Avoidance of double taxation and mutual administrative assistance in tax matters among Governments of SAARC Member States p. 6

 

NEWS-BRIEFS

>>> I. T. Dept. to process more than 40 lakh cases to avoid refund chaos

The Income-tax Department will process more than 40 lakh refund cases before April this year.

The Department has streamlined the process as the statutory time limit to process the return and issue refund in the financial year 2009-10 is March 31 and almost 49 lakh such cases worth crores of rupees are pending with the Department.

However, a number of such refunds have been processed already.

"The Department is hopeful of dispatching all these returns by March this year. Cases where the addresses are recorded incorrect, Permanent Account Number (PAN) is wrong and incorrect particulars of bank accounts result in backlogs," a senior I-T officer said.

Many refunds will be sent back to the taxpayers through the Refund Banker Scheme, which is operational in a number of cities with the help of State Bank of India (SBI), they said.

An I-T officer said the Finance Ministry has asked the Central Board of Direct Taxes (CBDT) to expedite the process and the Board has subsequently instructed the Department to process the refunds on a "prompt" basis. [Source : www.economictimes.com dated January 13, 2011]

>>> Prospects look good to raise the exemption limit on savings

To give some relief to common man battling rising prices, the Finance Minister is expected to raise the exemption limit on annual savings of an individual in the upcoming Budget.

The savings exemptions may be raised in the Union Budget 2011-12 from the present Rs. 1 lakh. In 2010-11, the Finance Ministry allowed an additional exemption of Rs. 20,000 for investment in long-term infrastructure bonds.

The Minister is expected to raise the Rs. 1 lakh exemption limit by another Rs. 20,000 in the Union Budget in February, a Cabinet Minister told. Besides pushing up the savings rate, this would align the current income-tax regime towards the proposed Direct Taxes Code (DTC).

"This year is going to be an year of consolidation towards DTC," a top official in the Finance Ministry had said recently. In the DTC, the Government has proposed tax exemption on annual savings of up to Rs. 1.5 lakh.

The tax exemptions for savings is received under section 80C of the Income-tax Act while the special window of Rs. 20,000 investment in infrastructure bonds is available under section 80CCF. The tax exemption for savings limit of Rs. 1 lakh when increased, will give an additional cushion to the common man who is grappling with price rise already.

"The deduction under section 80CC of Rs. 1 lakh was prescribed long back keeping in view the fact that there are very limited exemptions to deductions available to a common taxpayer. It makes a strong case to increase the level under section 80C to provide some tax relief and also increase potential for long term retiral savings," said a partner from a tax consultancy firm.
The savings of Indian households was Rs. 7,34,653 crore in 2007-08, of which over 55%, or Rs. 4,06,630 crore, is in bank deposits, according to the latest RBI figures. Bank deposits as defined by RBI, includes co-operative and non-credit societies. There has been a consistent shift in household savings away from physical assets towards financial assets. [Source : www.financialexpress.com dated January 14, 2011]

>>> Pre-budget fears over banning fake NGOs

The demand for a ban on fake non-governmental organisations and a tax regime to identify them in the forthcoming Budget have come from none other than the NGOs themselves.

In a pre-budget interactions with Finance Minister, NGOs pleaded for reining in fake organisations, ostensibly floated for the welfare of the vulnerable sections of society.

They said any kind of tax concessions given to NGOs should be conditional on the assessment of their work.

However, for the genuine NGOs they wanted modifications in the proposed Direct Taxes Code, which is scheduled to replace the Income-tax Act from April 1, 2012.

A former SEBI Chairman who represented Jaipur Foot, said organisations asked for restructuring of DTC proposals.

Currently, NGOs registered under certain sections of the Income-tax Act get various kinds of tax concessions.

However, the Direct Taxes Code bill proposes that charitable and not-for-profit organisations (NGOs) will be allowed a basic exemption of Rs. one lakh and any income over it will be liable to 15 per cent. tax.

The Bill also proposes to tax anonymous donations for NGOs at the rate of 30 per cent. as against the rate of 15 per cent. applicable to other donations.

The 30 per cent. tax will fall on the donations above Rs. one lakh or five per cent. of total donations received by the NGO, whichever is higher.

NGOs also called for green budget that will address the issue like climate change, terming nuclear energy as false solution and coal as dirty option.

"If India as a country is serious about giving energy to all, then we need to think beyond false solutions like nuclear energy and dirty options like coal and invest in decentralized renewable energy," NGO Greenpeace said. [Source : www.financialexpress.com dated January 16, 2011]

>>> I-T Dept. searches triggering alarm over food prices

The Income-tax Department surveyed business premises of big onion and vegetable traders in U. P., Maharashtra and few other States to detect hoarding and illegal profiteering.

IT sources said the officials of the Income-tax Department began an early morning operation of checking and obtaining the account books and ledgers of large wholesale onion traders based in Delhi and NCR.

Meanwhile, traders in Maharashtra's Nashik and adjoining onion-growing areas went on two-day strike against I-T raids and disrupted supply to traders from other States who are being forced to sell the vegetable at "below the cost price".

The Finance Minister had earlier said I-T raids in the premises of different traders have also helped in reducing onion prices.

There has been a "dip in onion prices in some States after I-T search," he had said. Food inflation has crossed over 18 per cent. for the week ended December 25 due to high rates of onion and other items.

Due to crop damage in key growing States, the country's total onion production is expected to decline by 12.5 per cent. to 10.5 million tonnes this year against 12 million tonnes in 2009-10, according to research body National Horticultural Research and Development Foundation (NHRDF). [Source : www.economictimes.com dated January 10, 2011]

>>> Trade Union calls for changes to enhance tax exemption

Tax Amid skyrocketing prices, Central trade unions are all set to press the Finance Ministry for raising income-tax exemption limit to Rs. 3 lakh from existing Rs. 1.6 lakh in the 2011-12 Budget, in their meeting scheduled for Wednesday.

Besides this, the unions would ask to universalise and strengthen public distribution system and rationalise tax, duty and cess on petroleum products, with a view to reduce burden on people.

"We have unanimously decided that all nine central trade unions would ask the Finance Minister to enhance income-tax exemption limit to Rs. 3 lakh," All India Trade Union Congress Secretary said.

He said, "The common man is reeling under the price rise situation and would ask the Finance Minister for universalising of PDS and rationalisation of taxes on petroleum products including petrol, diesel and cooking gas."

The central trade unions, he said, would also ask the Ministry to enlarge the ambit of Employees Provident Fund (EPF) scheme by reducing threshold limit of 20 employees to 10.

At present, only those private establishments which have 20 or more employees come under this EPF scheme. Reducing the threshold limit to 10 would help covering 45-50 lakh more workers under this mandatory social security scheme, he added.

The Employees' Provident Fund Organisation's apex body Central Board of Trustees have already approved the reduction in threshold limit to 10 long back. But this move is awaiting Finance Ministry's approval.

The union members would also press for making EPFO's Employee Pension scheme more sustainable, by fixing the minimum pension at Rs. 1,000 per month. Besides this, they will also ask for restoring benefits like pension withdrawal by workers under EPS.

They would express their reservations against allowing foreign direct investment in multi-brand retail and further disinvestment of public companies. They would also ask for not allowing industrial house in banking business. [Source : www.financialexpress.com dated January 11, 2011]

 

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ITR : Volume 330 : Part 34 Issue dated 17-01-2011

INCOME TAX REPORTS (ITR) HIGHLIGHTS

 

ISSUE DATED 17-1-2011 Volume 330 Part 3

 

SUPREME COURT JUDGMENTS

 

-> Computation of book profit : Reduction of net profit by amount withdrawn from revaluation reserve only if amount added back in year of creation of revaluation reserve : Indo Rama Synthetics (I.) Ltd. v. CIT p. 363

 

-> Foreign exchange : Adjudication : Noticee not entitled to copies of documents not relied on by adjudicating authority : Kanwar Natwar Singh v. Directorate of Enforcement p. 374

 

HIGH COURT JUDGMENTS

 

-> Return of company not signed by managing director but by person authorised by board resolution: Defect curable u/s 292B : Hind Samachar Ltd. v. UOI (P & H) p. 266

 

-> AO failing to raise any issue with regard to plea u/s 239 at appropriate stage and CIT (A) ordered refund on appeal : Revenue liable to make refund : Hind Samachar Ltd. v. UOI ( P & H) p. 266

 

-> Rejection of application for continuance of registration without affording opportunity to be heard : Not valid : Bharat Construction Co. v. CIT (All) p. 285

 

-> Disallowance of claim in reassessment proceedings valid : Ramesh Chander Singla v. CIT (A) ( P & H) p. 288

 

-> Income from property owned by assessee on property taken on lease assessable as business income : CIT v. D. S. Promoters and Developers P. Ltd. (Delhi) p. 291

 

-> Findings cannot be set aside unless perverse : CIT v. D. S. Promoters and Developers P. Ltd. (Delhi) p. 291

 

-> Cash credits : Inability to find a few applicants not sufficient to invoke s 68 : CIT v. Dwarkadhish Investment P. Ltd. (Delhi) p. 298

 

-> Most of instalments for flat paid prior to sale of agricultural land and flat not in name of assessee-HUF but in joint names of individual and his mother : Benefit of s 54F not available : Vipin Malik (HUF ) v. CIT (Delhi) p. 309

 

-> Tax effect less than prescribed in CBDT Instruction : Appeal barred : CIT v. Koronmoy Roy Choudhury (Gauhati) p. 316

 

-> Amount received for relinquishment of life membership and secretaryship of society : Assessable under income from other sources : CIT v. H. S. Ramachandra Rao (Karn) p. 322

 

-> Unabsorbed expenditure of closure of one branch to be apportioned equally amongst head office and other branches : Victoria Gold Jewellery v. CIT (Ker) p. 330

 

-> Enhanced compensation received on 28-5-1984 for the land acquired on 4-2-1972 : Not taxable either in year of receipt or in year of acquisition : CIT v. Smt. Parkash Kaur ( P & H) p. 332

 

-> Advance tax : Waiver of interest : Position of tax liability not clear : Interest liability fixed at Rs. 1 lakh : Chief CIT v. Jimmichan M. Varicatt (Ker) p. 338

 

-> Refund : Assessee deducting and depositing TDS on time but filing TDS certificates during assessment proceedings : Interest u/s 244A cannot be denied : CIT v. Larsen and Toubro Ltd. (Bom) p. 340

 

-> Wrong claim treating interest receipt as export incentive : Reassessment proceedings cannot be quashed : Tamil Nadu Petrochemicals Ltd. v. CIT (Mad) p. 342

 

-> Purchase of redemption of units of mutual fund : CIT (A) and Tribunal finding transaction genuine and deleting addition : Finding of fact : CIT v. Hindustan Tin Works Ltd. (Delhi) p. 350

 

-> Book profit arrived at to be the basis for taxation : AVT Natural Products Ltd. v. Deputy CIT (Mad) p. 360

 

-> Sale of entire business, including all assets and liabilities as a going concern : Transfer does not give rise to capital gains : Asst. CIT v. Patel Specific Family Trust (Guj) p. 397

 

 

 

NEWS-BRIEFS

 

-> Supreme Court to waive Rs. 25 crore fee from Vodafone

 

A bench comprising Chief Justice S H Kapadia and Justices K S Radha-krishnan and Swatanter Kumar expressed willingness to waive off the one per cent. court fee on the Income-tax Department on the Rs. 2,500 crore deposited by an international telecom company.

 

The "doctrine of unjust enrichment" has been propounded as an equitable concept created to remedy injustices that occur where one person makes a substantial contribution to the property of another person without compensation.

 

The Attorney General submitted that 1 per cent. court fee must be waived off, otherwise in the event of losing the case, the Government will pay back Rs. 2,475 crore only to the appellant. In December, the Government had moved an application requesting the Supreme Court to waive the fee for letting it withdraw Rs. 2,500 crore, deposited by the company.

 

Instead, it had requested the court to direct the telecom company to submit Rs. 25 crore extra, so that the Government gets the full amount of Rs. 2,500 crore.

 

The tax authorities claim that the deal attracts a tax of over Rs. 11,000 crore, even though the deal was done by two MNCs outside the country.

 

On November 15, the Supreme Court had directed the company which is contesting the tax demand to deposit Rs. 2,500 crore, along with a bank guarantee of Rs. 8,500 crore, before it within 8 weeks for adjudication of its suit.

 

As the Government approached the apex court to withdraw the funds deposited by the appellant, it . . . was asked to deposit one per cent. of Rs. 2,500 crore, totalling Rs. 25 crore, as per legislative commission. [Source : www.financialexpress.com dated January 5, 2011]

 

-> Income-tax offices in 8 nations including US, UK soon

 

Government will operationalise eight overseas Income-tax offices in countries like the US, the UK and the UAE soon to obtain classified financial data and the officers who will man these units will be chosen by this month-end.

 

The I-T overseas units will begin functioning in less than two months in United States of America (USA), United Kingdom (UK), Netherlands, Cyprus, Germany, France, Japan and United Arab Emirates (UAE) as the Finance Minister has approved the posting policy of the officials who will be appointed by January-end, sources familiar with the development said.

 

The overseas units are aimed at obtaining seamless flow of information on tax and financial data of investments made by individuals and institutions in these countries and facilitate any data on investment or routing of money in the country and vice-versa.

 

This information is needed during investigations in cases of tax evasion and ensuring tax compliance under the provisions of the Double Taxation Avoidance Agreement (DTAA) and other tax treaties to facilitate exchange of financial information with these countries, they said.

 

The Finance Ministry has made it an essential criteria that any senior I-T officer who will be posted in these units should have had a stint in the foreign taxation wing of the CBDT, international taxation and transfer pricing unit of the I-T Department and also at the investigation wing.

 

"The experience of actual work (by an aspiring officer to be posted at these units) of exchange of information, Mutual Agreement Procedure, tax treaty negotiation would be given more preference," a Finance Ministry notification said in this regard. [Source : www.economictimes.com dated January 6, 2011]

 

-> Finance Ministry cracks whip on IRS officers overstaying abroad

 

The Finance Ministry has cracked a whip on Indian Revenue Service (IRS) officers, who are "overstaying" in foreign countries even after the courses they went to undertake had come to an end.

 

The Ministry has asked all the Chief Commissioners of Income Tax (CCsIT) across the country to report as to how many such officers have gone on trainings and study programmes at universities and institutions abroad and what action has been taken against those who have not returned without furnishing proper reasons.

 

The action has been taken after the Minister of State for Revenue wrote a letter to the Central Board of Direct Taxes (CBDT)-the administrative authority of the IRS (Income Tax) cadre in the country-stating "some officers who have proceeded on training courses overseas are neither returning on the conclusion of the courses or intimating reasons for their overstay. This may please be verified and a status note in each case reporting action taken against those officers may please be given . . . urgently."

 

The Department is already facing a shortage of officers and is faced with increasing work pressure and deputation of officers to other law enforcement agencies, they said.

 

The CCsIT have been asked to furnish the information to the CBDT at the earliest so that proper action can be taken. [Source : www.businessstandard.com dated January 7, 2011]

 

-> I-T Department devise innovative methods to reduce evasion of tax

 

The Income-tax Department plans to "immediately capture" on receipt the data of returns filed by taxpayers to enhance their investigation and enforcement action to curb tax evasion and reduce tax gap over the next few years.

 

The Department is also mooting developing a "criminal investigation" system within its establishment to combat terror financing, money laundering, offshore tax evasion and other illegal trades which impact national security.

 

The 30-page "Vision 2020" document, which charts out the course of action for the I-T Department over next few years, was unveiled recently by the Finance Minister.

 

To achieve this objective, the I-T Department will "make internal data available almost on real time basis by capturing data from paper returns immediately after receipt," the document said. The Department also aims at making internal data (of I-T) "robust and current" by including information gathered during enforcement action by the investigation wing and the Assessing Officers.

 

The Department, which is currently probing a host of high-profile financial irregularities from and to overseas destinations, considers that the "next decade" will see an increased fund flow.

 

"This will require the Income-tax Department to deploy considerable resource and energy on criminal investigation. Effective criminal investigation will necessarily include a comprehensive international strategy to combat offshore tax evasion, that threaten the security of the country."

 

The document, which will undergo a mid-term review in 2013, aims at taking forward the strategic planning of the Department and its policies from 2011-2015 along with the new Direct Taxes Code (DTC) which is proposed to replace the current Income-tax Act from next fiscal. [Source : www.economictimes.com dated January 7, 2011]

ITR(Trib) Vol 7 Part 3 dated 17-01-2011

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 7 : Part 3 (Issue dated : 17-1-2011)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Appeal --Appeal to Appellate Tribunal--Additional grounds--Legal grounds not requiring fresh material, facts or evidence for adjudication--Permissible--Income-tax Act, 1961-- Nippo Batteries Co. Ltd. v. Asst. CIT (Chennai) . . . 303

Appeal to Appellate Tribunal --Fees--Rate dependent on total income determined --Total income determined at more than Rs. 2 lakhs--Fees of Rs. 10,000 payable--Income-tax Act, 1961, s. 253(6)(c)-- M. M. Bagawan and Brothers v. Asst. CIT (Bangalore) . . . 298

Appeal to Commissioner (Appeals) --Delay in filing appeal--Condonation of delay --No evidence of satisfaction of Commissioner (Appeals) with regard to sufficient cause --No documentary evidence suggesting sufficient cause of delay in filing appeal--Order of Commissioner (Appeals) condoning delay annulled--Income-tax Act, 1961, s. 249(3) -- Deputy CIT v. K. Prabhakar Rao (Bangalore) . . . 209

Bad debts --Balance sale consideration outstanding on balance-sheet date--Receipt of balance amount before filing return--No debt recoverable--Disallowance proper--Income-tax Act, 1961, s. 36(1)(vii)-- Embassy Classic P. Ltd. v. Asst. CIT (Bangalore) . . . 287

Business expenditure --Capital or revenue expenditure--Assessee entering into technical collaboration agreement without acquiring any exclusive right but only licence to manufacture specific product in its patent name for limited period--Royalty cannot be bifurcated without any provision in agreement--Entire payment revenue expenditure and allowable as deduction--Income-tax Act, 1961, s. 37-- Nippo Batteries Co. Ltd. v. Asst. CIT (Chennai) . . . 303

----Commission for services--Payment by account payee cheque in accordance with agreement and receipt independently confirmed by payee--Mere involvement of payee in different line of business not sufficient ground to disallow commission--Failure to summon witnesses--Deduction allowable --Income-tax Act, 1961, s. 37-- Mobile Communication (India) P. Ltd. v. Deputy CIT (Delhi) . . . 219

----Disallowance on ground that no manufacturing activity and sale by assessee--Business existing during year under consideration--Expenses necessary to maintain business and assets of company--To be allowed--Income-tax Act, 1961, s. 37-- Deputy CIT v. Fortune Garments Ltd. (Delhi) . . . 243

Deduction of tax at source --Business expenditure--Disallowance--Labour charges --Payments made to labourers directly--Section 194C not applicable--Income-tax Act, 1961, ss. 40(a)(ia), 194C-- Asst. CIT v. Kalindi Agro Biotech Ltd. (Delhi) . . . 249

----Payments to contractors--Purchase of printed material for manufacturing footwear from suppliers charging value added tax--Transaction of purchase and sale--Purchaser not liable to deduct tax at source--Income-tax Act, 1961, s. 194C-- ITO (TDS) v. Bata India P. Ltd. (Delhi) . . . 246

----Payments to farmers for cultivation--Operations carried out by farmers purely agricultural operations and not in nature of works contract--Section 194C not applicable--Income-tax Act, 1961, ss. 40(a)(ia), 194C-- Asst. CIT v. Kalindi Agro Biotech Ltd. (Delhi) . . . 249

Penalty --Concealment of income--Penalty not automatic--Assessing Officer--Judicial discretion to levy penalty--Assessee surrendering income to buy peace--Whether penalty leviable--Income-tax Act, 1961, s. 271(1)(c)-- Asst. CIT v. Malu Electrodes P. Ltd. (Nagpur) . . . 256

----Concealment of income--Share application money--Statement of director of assessee that transactions bogus--Documentary evidence showing amount given by respective shareholders--No enquiry conducted by Assessing Officer directly from such shareholders--Addition on basis of such statement and levy of penalty--Not proper--Income-tax Act, 1961, s. 271(1)(c)-- Asst. CIT v. Malu Electrodes P. Ltd. (Nagpur) . . . 256

Reassessment --Reassessment beyond four years--Condition precedent--Assessee disclosing fully and truly all material facts at time of original assessment--Records not revealing existence of any new information or material that income escaped assessment--Assessment barred by limitation--Income-tax Act, 1961, ss. 143(3), 147, prov., 148-- Nippo Batteries Co. Ltd. v. Asst. CIT (Chennai) . . . 303

----Rectification of mistakes--Capital gains--Rectification order determining long-term capital gains applying section 50C--Commissioner (Appeals) holding rectification order cannot be passed on debatable issue and section 50C not applicable to sale transaction prior to introduction of section in statute--Tribunal confirming order in toto--Reassessment proceedings cannot be initiated on same issue--Reassessment invalid--Income-tax Act, 1961, ss. 147, 154--Letter No. 153/91/2002/TPL, dated August 27, 2002 -- Ashutosh Bhargava v. Deputy CIT (Jaipur) . . . 268

Rectification of mistake --Mistake apparent from record--Assessing Officer while giving effect to Tribunal's order finding minimum alternate tax liability more than tax liability determined under normal provisions--Mistake apparent from record requiring rectification--Revised claim of nil tax liability under section 115JB categorically rejected by Assessing Officer due to expiry of time under section 139(5)--Revised calculation by assessee under section 115JB not adjudicated by Commissioner (Appeals) or Tribunal--Rectification justified--Income-tax Act, 1961, ss. 115JB, 154-- Deputy CIT v. Wintac Ltd. (Bangalore) . . . 318

Search and seizure --Special procedure for assessment--Entry in seized material not supported by corroborative evidence--Material contradictions in statements of purchaser of property--Deletion of addition in hands of company justified--No different approaches in relation to on-money payments to assessee-company and its director--Addition to be deleted--Income-tax Act, 1961, ss. 132, 153A-- Embassy Classic P. Ltd. v. Asst. CIT (Bangalore) . . . 287

----Warrant of authorisation--Validity--Common search warrant specifying names and addresses of persons residing at different places--Assessment valid--Income-tax Act, 1961, ss. 132, 153A-- Embassy Classic P. Ltd. v. Asst. CIT (Bangalore) . . . 287

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 36(1)(vii) --Bad debts--Balance sale consideration outstanding on balance-sheet date--Receipt of balance amount before filing return--No debt recoverable--Disallowance proper-- Embassy Classic P. Ltd. v. Asst. CIT (Bangalore) . . . 287

S. 37 --Business expenditure--Capital or revenue expenditure--Assessee entering into technical collaboration agreement without acquiring any exclusive right but only licence to manufacture specific product in its patent name for limited period--Royalty cannot be bifurcated without any provision in agreement--Entire payment revenue expenditure and allowable as deduction-- Nippo Batteries Co. Ltd. v. Asst. CIT (Chennai) . . . 303

----Business expenditure--Commission for services--Payment by account payee cheque in accordance with agreement and receipt independently confirmed by payee--Mere involvement of payee in different line of business not sufficient ground to disallow commission--Failure to summon witnesses--Deduction allowable-- Mobile Communication (India) P. Ltd. v. Deputy CIT (Delhi) . . . 219

----Business expenditure--Disallowance on ground that no manufacturing activity and sale by assessee--Business existing during year under consideration--Expenses necessary to maintain business and assets of company--To be allowed-- Deputy CIT v. Fortune Garments Ltd. (Delhi) . . . 243

S. 40(a)(ia) --Deduction of tax at source--Business expenditure--Disallowance--Labour charges--Payments made to labourers directly--Section 194C not applicable-- Asst. CIT v. Kalindi Agro Biotech Ltd. (Delhi) . . . 249

----Deduction of tax at source--Payments to farmers for cultivation--Operations carried out by farmers purely agricultural operations and not in nature of works contract --Section 194C not applicable-- Asst. CIT v. Kalindi Agro Biotech Ltd. (Delhi) . . . 249

S. 115JB --Rectification of mistake--Mistake apparent from record--Assessing Officer while giving effect to Tribunal's order finding minimum alternate tax liability more than tax liability determined under normal provisions--Mistake apparent from record requiring rectification--Revised claim of nil tax liability under section 115JB categorically rejected by Assessing Officer due to expiry of time under section 139(5)--Revised calculation by assessee under section 115JB not adjudicated by Commissioner (Appeals) or Tribunal--Rectification justified-- Deputy CIT v. Wintac Ltd. (Bangalore) . . . 318

S. 132 --Search and seizure--Special procedure for assessment--Entry in seized material not supported by corroborative evidence--Material contradictions in statements of purchaser of property--Deletion of addition in hands of company justified--No different approaches in relation to on-money payments to assessee-company and its director--Addition to be deleted-- Embassy Classic P. Ltd. v. Asst. CIT (Bangalore) . . . 287

----Search and seizure--Warrant of authorisation--Validity--Common search warrant specifying names and addresses of persons residing at different places--Assessment valid-- Embassy Classic P. Ltd. v. Asst. CIT (Bangalore) . . . 287

S. 143(3) --Reassessment--Reassessment beyond four years--Condition precedent--Assessee disclosing fully and truly all material facts at time of original assessment--Records not revealing existence of any new information or material that income escaped assessment--Assessment barred by limitation-- Nippo Batteries Co. Ltd. v. Asst. CIT (Chennai) . . . 303

S. 147 --Reassessment--Rectification of mistakes--Capital gains--Rectification order determining long-term capital gains applying section 50C--Commissioner (Appeals) holding rectification order cannot be passed on debatable issue and section 50C not applicable to sale transaction prior to introduction of section in statute--Tribunal confirming order in toto--Reassessment proceedings cannot be initiated on same issue--Reassessment invalid--Letter No. 153/91/2002/TPL, dated August 27, 2002-- Ashutosh Bhargava v. Deputy CIT (Jaipur) . . . 268

S. 147, prov. --Reassessment--Reassessment beyond four years--Condition precedent--Assessee disclosing fully and truly all material facts at time of original assessment--Records not revealing existence of any new information or material that income escaped assessment--Assessment barred by limitation-- Nippo Batteries Co. Ltd. v. Asst. CIT (Chennai) . . . 303

S. 148 --Reassessment--Reassessment beyond four years--Condition precedent--Assessee disclosing fully and truly all material facts at time of original assessment--Records not revealing existence of any new information or material that income escaped assessment--Assessment barred by limitation-- Nippo Batteries Co. Ltd. v. Asst. CIT (Chennai) . . . 303

S. 153A --Search and seizure--Special procedure for assessment--Entry in seized material not supported by corroborative evidence--Material contradictions in statements of purchaser of property--Deletion of addition in hands of company justified--No different approaches in relation to on-money payments to assessee-company and its director--Addition to be deleted-- Embassy Classic P. Ltd. v. Asst. CIT (Bangalore) . . . 287

----Search and seizure--Warrant of authorisation--Validity--Common search warrant specifying names and addresses of persons residing at different places--Assessment valid-- Embassy Classic P. Ltd. v. Asst. CIT (Bangalore) . . . 287

S. 154 --Reassessment--Rectification of mistakes--Capital gains--Rectification order determining long-term capital gains applying section 50C--Commissioner (Appeals) holding rectification order cannot be passed on debatable issue and section 50C not applicable to sale transaction prior to introduction of section in statute--Tribunal confirming order in toto--Reassessment proceedings cannot be initiated on same issue--Reassessment invalid--Letter No. 153/91/2002/TPL, dated August 27, 2002 -- Ashutosh Bhargava v. Deputy CIT (Jaipur) . . . 268

----Rectification of mistake--Mistake apparent from record--Assessing Officer while giving effect to Tribunal's order finding minimum alternate tax liability more than tax liability determined under normal provisions--Mistake apparent from record requiring rectification--Revised claim of nil tax liability under section 115JB categorically rejected by Assessing Officer due to expiry of time under section 139(5)--Revised calculation by assessee under section 115JB not adjudicated by Commissioner (Appeals) or Tribunal--Rectification justified-- Deputy CIT v. Wintac Ltd. (Bangalore) . . . 318

S. 194C --Deduction of tax at source--Business expenditure--Disallowance--Labour charges --Payments made to labourers directly--Section 194C not applicable-- Asst. CIT v. Kalindi Agro Biotech Ltd. (Delhi) . . . 249

----Deduction of tax at source--Payments to contractors--Purchase of printed material for manufacturing footwear from suppliers charging value added tax--Transaction of purchase and sale--Purchaser not liable to deduct tax at source-- ITO (TDS) v. Bata India P. Ltd. (Delhi) . . . 246

----Deduction of tax at source--Payments to farmers for cultivation--Operations carried out by farmers purely agricultural operations and not in nature of works contract--Section 194C not applicable-- Asst. CIT v. Kalindi Agro Biotech Ltd. (Delhi) . . . 249

S. 249(3) --Appeal to Commissioner (Appeals)--Delay in filing appeal--Condonation of delay--No evidence of satisfaction of Commissioner (Appeals) with regard to sufficient cause--No documentary evidence suggesting sufficient cause of delay in filing appeal--Order of Commissioner (Appeals) condoning delay annulled-- Deputy CIT v. K. Prabhakar Rao (Bangalore) . . . 209

S. 253(6)(c) --Appeal to Appellate Tribunal--Fees--Rate dependent on total income determined--Total income determined at more than Rs. 2 lakhs--Fees of Rs. 10,000 payable-- M. M. Bagawan and Brothers v. Asst. CIT (Bangalore) . . . 298

S. 271(1)(c) --Penalty--Concealment of income--Penalty not automatic--Assessing Officer--Judicial discretion to levy penalty--Assessee surrendering income to buy peace--Whether penalty leviable-- Asst. CIT v. Malu Electrodes P. Ltd. (Nagpur) . . . 256

----Penalty--Concealment of income--Share application money--Statement of director of assessee that transactions bogus--Documentary evidence showing amount given by respective shareholders--No enquiry conducted by Assessing Officer directly from such shareholders--Addition on basis of such statement and levy of penalty--Not proper-- Asst. CIT v. Malu Electrodes P. Ltd. (Nagpur) . . . 256

ITR(Trib) Val 7 part 2 dated 10-01-2011

ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS

ISSUE DATED 10-1-2011
Volume 7 Part 2

APPELLATE TRIBUNAL ORDERS

    -> Payments in cash to producers of milk exceeding specified limit ; section 40A(3) not attracted : Gamdiwala Dairy v. Asst. CIT (Ahmedabad) p. 114

    -> Where no defects found in books of assessee, book results to be accepted : Gamdiwala Dairy v. Asst. CIT (Ahmedabad) p. 114

    -> Appeal : Tribunal's order cannot be reviewed u/s. 254(2) : Asst. CIT v. Bank of Madura Ltd. (Chennai) p. 139

    -> Dividend income eligible for deduction under chapter VI-A not liable to disallowance u/s. 14A : Asst. CIT v. Bank of Madura Ltd. (Chennai) p. 139

    -> Assessee depositing STT entitled to rebate u/s. 88E : Asst. CIT v. Parveen Jain (Delhi) p. 142

    -> No evidence disclosing receipt of sale consideration over and above amount mentioned in registered sale deed, addition deleted : Kaushik Sureshbhai Reshamwala v. ITO (Ahmedabad) p. 146

    -> Direction to AO to adopt value of land adopted by assessee on basis of technical report of registered valuer : Kaushik Sureshbhai Reshamwala v. ITO (Ahmedabad) p. 146

    -> Provision for pension based on actuarial valuation to be allowed : Asst. CIT v. Ranbaxy Laboratories Ltd. (Delhi) p. 161

    -> Contribution by assessee to health care society to bring goodwill or to promote its business ; deduction allowable u/s. 37 : Asst. CIT v. Ranbaxy Laboratories Ltd. (Delhi) p. 161

    -> Contribution to ESI paid before due date of filing return ; deduction allowable : Asst. CIT v. Ranbaxy Laboratories Ltd. (Delhi) p. 161

    -> Payments received against sale of copyrighted software not royalty either under ITA or DTAA : Velankani Mauritius Ltd. v. Dy. DIT (Bangalore) p. 171

    -> Payment of wages without signature of workers on vouchers ; books of account liable to be rejected : Reliable Surface Coatings v. Asst. CIT (Ahmedabad) p. 183

    -> Remuneration to non working partner to be disallowed u/s. 40(b) : Reliable Surface Coatings v. Asst. CIT (Ahmedabad) p. 183

    -> Assessee, 80 per cent. owner of windmill, entitled to depreciation : Asst. CIT v. Baghmar Finance Ltd. (Chennai) p. 196

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Despite lack of direct evidence, tax evasion can be assessed

Hersh Win Chadha vs. DDIT (ITAT Delhi)

Despite lack of direct evidence, tax evasion can be assessed

The assessee, an agent of Bofors, was alleged to have received, through his alleged front company Svenska, Panama, commission of Rs. 52.60 crores for securing a defense deal for Bofors from the Government of India. The inference that the commission was paid was drawn on the basis of a report of the Swedish National Audit Bureau, certain correspondence and other documents that suggested that the assessee, in his capacity as a long-standing representative of Bofors was the beneficiary of the income. No direct evidence to link the assessee with the alleged commission was found. The AO assessed the said sum of Rs. 52.60 crores. For the subsequent years, the AO assessed notional interest at 5% p.a. on the said amount. The CIT (A) confirmed the addition. The assessee appealed to the Tribunal on the ground that there was no evidence to show that he had earned the alleged commission and the assessment was based on conjecture. HELD confirming the addition of Rs. 52.60 crores while deleting the addition of notional interest:

(i) Unlike criminal proceedings where the charge has to be proved beyond doubt, income-tax proceedings are quasi-judicial. Tax liability in cases of suspicious transactions has to be assessed on the basis of the material available on record, surrounding circumstances, human conduct and preponderance of probabilities;

(ii) Rules of evidence do not govern income tax proceedings and the AO is not fettered or bound by technical rules contained in the Indian Evidence Act and is entitled to act on material which may not be accepted as evidence in a court of law;

(iii) In clandestine transactions, it is impossible to have direct evidence or demonstrative proof of every move and when the assessee is not forthcoming with proper facts and chooses to be elusive and evasive, the AO has no choice but to take recourse to estimate. The only caveat is that it should be reasonable and based on material available on record. It should not be perverse or based merely on conjectures.

(iv) The Swedish Govt stated that commission was paid to the Indian agent of Bofors (though the assessee was not named). If the statement of a sovereign Govt is not acceptable as reliable evidence in Indian tax proceedings, no case of cross-border tax evasion can ever be detected or proved. No burden can be cast on the AO in impossible terms. Mere non-mentioning of names of recipients cannot be capitalized by Bofors or assessee to derail the tax liability;

(v) Though SNAB did not disclose the names of the beneficiaries due to some strategic consideration, the import of disclosure cannot be ignored or underestimated. It is the duty of the Revenue Authorities to be mindful of clues and coincidences and bring them to logical conclusions, otherwise clandestine tax evasion through shady economic deals, will go undetected, as appears to be the order of the day. India is neither a tax haven, nor a banana republic;

(vi) The I.T. Dept was carrying out investigations in difficult circumstances ascribable to the sensitive nature of inquiries, their ramification on national politics and public perception. It was very difficult to get information and documents and to examine concerned links due to the premeditated surreptitious cover up of transactions and smokescreen corporate jugglery;

(vii) There is no presumption in law that the AO is supposed to discharge an impossible burden to assess the tax liability by direct evidence only and to establish the evasion beyond doubt as in criminal proceedings. He can assessee on consideration of material available on record, surrounding circumstances, human conduct, preponderance of probabilities and nature of incriminating information/ evidence available on record;

(viii) Though the original documents were not given to the assessee (despite demand), no inference can be raised that the contents are fabricated or incorrect because the evidence was obtained by lawful means. Questioning their contents or veracity in income tax proceedings will amount to disbelieving the whole system. The assessee has not claimed that the documents are false or fabricated;

(ix) As regards the burden of proof, if the AO comes across material indicating accrual or receipt of income in the hands of the assessee, he is empowered to investigate the matter and ask relevant questions. The AO's burden is initial in nature. Thereafter, the assessee has to give a proper explanation and disclose facts which are in his exclusive knowledge. The assessee has no option to remain selective, elusive, evasive or restrained in disclosure. After such explanation, the AO has to ascertain the correctness of the assessee's submissions on the basis of material available on record, the surrounding circumstances, the conduct of the assessee, the preponderance of probabilities and the nature of incriminating information/ evidence available with him.

(x) Surprise expressed on why the department has taken no proceedings against the other parties including Bofors, the alleged payer, for failure to deduct TDS on payments to the assessee. Pointed out that inaction to take action against the others "may lead to a non-existent undesirable and detrimental notion that India is a soft state and one can meddle with its tax laws with impunity".

Full copy of the order of the Tribunal may be downloaded from itatonline.org.

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Whether deduction of tax at source at higher rate than the one prescribed as per the provisions will suffice short deduction of tax at source

2011-TIOL-06-ITAT-KOL

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH 'B' KOLKATA

ITA Nos.991/Kol/2010
Assessment Year: 2006-2007

INCOME TAX OFFICER WARD-29(1), KOLKATA Vs NISHA SARAF
PAN NO:ACJPA0430Q
B R Mittal, JM and C D Rao, AM
Dated: December 10, 2010
Appellant Rep by: Shri P C Nayak, Sr.DR
Respondent Rep by: Shri Manish Tiwari

Income Tax - Section 194C(2) - Whether deduction of tax at source at higher rate than the one prescribed as per the provisions will suffice short deduction of tax at source - Whether payment-wise reconciliation of TDS is necessary for proving that the provisions of TDS has been
properly complied with.

Appellant was contractor and made payments to subcontractors. Assessee deducted TDS at the rate of 2.24 percent in relation to job charges paid to the subcontractors - During the course of proceedings the AO observed that the assessee had not deducted any TDS on balance job charges and accordingly, disallowed the same - CIT(A) while observing that the assessee has deducted TDS @2.24% instead of 1% as prescribed under section 194C(2) took the view that extra deduction is sufficient to cover the balance job charges - On appeal of the revenue the DR
pointed out that the CIT(A) has allowed the appeal without matching the payments of balance job charges.

After hearing the parties the ITAT held that,

++ keeping in view of the specific observations made by the AO that the assessee has not recovered any TDS in respect of balance amount of Rs.13,78,542/- and the assessee's submission that the assessee has recovered more amount than the required amount under section 194C of the Act on Rs.1,49,69,028/-, it will not compensate the short recoveryof TDS from the balance amount. As regarding the submissions of the Counsel for the Assessee that the balance amount is below the TDS limits i.e. Rs.50,000/- for the impugned assessment year, in respect of only two parties i.e. Sk. Bagbul Islam and Vipra Beriwal which isamounting to Rs.30,625/- and Rs.48,600/- respectively is below Rs.50,000/-, out of the 22 parties mentioned by the AO. In the absence ofthe details of the balance job charges of Rs.13,78,542/-, the CIT(A)is not justified to delete the entire disallowance by observing thatthe assessee has recovered excess TDS on Rs.1,49,69,028/-;

++ therefore, the issue is restored to the file of the AO with a direction to verify whether the balance job charges of Rs.13,78,542/- was really subjected to TDS as per law or not, after giving reasonable opportunity of being heard to the assessee. The assessee is also directed to furnish the details of Rs.13,78,542/- to substantiatewhether the TDS is required to be deducted or not, before the AO.

Case remanded

ORDER

Per: C D Rao:

This appeal is preferred by the Revenue against the order of the C.I.T. (A)-XVI, Kolkata dated 18.11.2009 for the assessment year 2006-07.

2. The only issue taken by the Revenue in this appeal, is relating to deletion of Rs.13,38,542/- disallowed by the AO by applying provision of section 40(a)(ia) read with section 194C of the Income Tax Act.

3. Brief facts of this issue are that, while doing the scrutiny assessment, the AO has observed that the assessee debited job charges to the tune of Rs.1,63,47,570/- in the P&L a/c. and perusal of the details of job charges submitted revealed that the same was paid to 22 parties. The AO also observed that the assessee deducted TDS on job charges of Rs.1,49,69,028/- only @2.24% which is Rs.3,35,905/- and deposited the same to the govt. a/c. The assessee was asked to explain vide a show cause letter dated 11.11.2008 as to why the balance job charge expenses of Rs.13,78,542/- was not subjected to TDS and why the said amount should not be disallowed under section 40(a)(ia) of the Act for failure to deduct TDS, as per law. After considering the
submission of the assessee, the AO disallowed the same by observing as under:

"It appeared that the assessee is a job contractor within the purview of compulsory tax audit during AY 2005-06 and AY 2006-07, and thus falls within the purview of section 194C(2) of the Income Tax Act.
Hence, the assessee is liable to deduct tax at source from the payments/ credits made to parties in respect of job working expenses.

Hence, the explanation given by the A/R of the assessee is not tenable. Since the assessee has made default in deducting TDS on Rs. 1338542/-, the same is disallowed u/s 40(a)(ia) of the Act, and added back as income of the assessee."

Though the AO has pointed out that the assessee has not deducted TDS amounting to Rs.13,78,542/-, but he disallowed only Rs.13,38,542/-.

4. On appeal, the Ld. CIT(A) has disallowed the same by observing as under:

"6. During the course of appellate proceedings, it was submitted by the appellant that as per tax audit report appellant has deducted tax of Rs.3,35,905/- u/s. 194C of the I. T. Act which consist of T.D.S. of Rs.3,33,366/- on the payment of Rs.1,63,47,570/- as labour charges to 22 different parties. The tax of Rs.2,542/- was deducted on the payment of Rs.1,24,550/- to one party for Saree Dying Charges. It is an admitted fact that the appellant was a contractor and made payment to subcontractors amounting to Rs.1,63,47,570/- on account of job charges. Therefore, the appellant was required to deduct the tax @ 1% u/s. 194C(2) of the I. T. Act. Out of the total payment of Rs. 1,63,47,570/- the payment of Rs.1,37,59,392/- was paid to four parties exceeding Rs.1O,00,000/- and hence as per the provisions of section 194C(2) the tax @ 1.12% on this payment comes to Rs.1,54,380/-. The balance amount of Rs.25,88,178/- was paid to 18 different parties and u/s. 194C(2) the tax © 1.02% on this amount comes to Rs.26,399/-. Therefore, as per the provisions of section 194C(2) of the Act the appellant was required to deduct total tax u/s 194C(2) at Rs. 1,80,779/- (Rs.1,54,380 + Rs.26,399) on total payment of Rs. 1,63,47,570/- on account of labour charges. In fact, the appellant has deducted and paid much more amount than required as per the provisions u/s.194C(2) of 'the Act i.e. the appellant has deducted and paid T.D.S. of Rs.3,33,366/- in place of T.D.S. of Rs.1,80,779/- required to be deducted and payable to the Govt. Treasury. It was contended by the appellant that the A.O. was not justified to invoke the provisions of section 40(a)(ia) on the payment of Rs.13,38,542/- without appreciating the facts of the case. On careful consideration of facts of the case, I am of the opinion that though A.O. has correctly held that in the case of appellant provisions of section 194C(2) were attracted on the payment of labour charges, however, he was not justified in making the disallowance of Rs.13,38,542/- u/s. 40(a)(ia) by calculating the tax u/s. 194C(2) @ 2.24%. I find force in the submission of the appellant that she has deducted and paid more amount of tax than as required under the law. Under the circumstances, no

disallowance could be made by invoking the provisions of section 40(a) (ia). The A.O. is directed to delete the disallowance of Rs. 13,38,542/-. The ground nos. 1 & 2 are allowed."

5. Aggrieved by this, the Revenue is in appeal before us.

6. At the time of hearing, the Ld. D.R., appearing on behalf of the Revenue, has pointed out that the AO has mentioned in the assessment order categorically that the assessee was asked to explain as to why the balance job charge expenses of Rs.13,78,542/- was not subjected to TDS, the assessee has not mentioned anything against that. The contention of the assessee is only that she has deducted the TDS on an amount of Rs.1,49,69,028/- at 2.24% i.e. Rs.3,35,905/- and deposited the same to the government a/c. However, the Ld. CIT(A), without contradicting this finding, has given relief, simply by accepting the submissions of the assessee that the assessee deducted and paid more amount to the tax authorities, than as required under the law. Therefore, he requested to reverse the order of the Ld. CIT(A)1 and restore that of the AO.

7. On the other hand, the Ld. Counsel, appearing on behalf of the Assessee, has reiterated the submissions made before the revenue authorities and further contended that since the assessee has already recovered more amount than required under section 194C, therefore, he requested to uphold the order of the Ld. CIT(A). On query from the Bench, whether the TDS has been recovered on the balance amount of Rs. 13,78,542/-, the Ld. Counsel for the Assessee has submitted that this

amount is not subjected to TDS. However, he has not furnished details in support of this submission.

8. After hearing the rival submissions and on careful perusal of the materials available on record, keeping in view of the specific observations made by the AO that the assessee has not recovered any TDS in respect of balance amount of Rs.13,78,542/- and the assessee's submission that the assessee has recovered more amount than the required amount under section 194C of the Act on Rs.1,49,69,028/-, it will not compensate the short recovery of TDS from the balance amount. As regarding the submissions of the Ld. Counsel for the Assessee that the balance amount is below the TDS limits i.e. Rs.50,000/- for the impugned assessment year, we observe that in respect of only two parties i.e. Sk. Bagbul Islam and Vipra Beriwal which is amounting to Rs.30,625/- and Rs.48,600/- respectively is below Rs.50,000/-, out of the 22 parties mentioned by the AO. In the absence of the details of the balance job charges of Rs.13,78,542/-, we are of the view that the Ld. CIT(A) is not justified to delete the entire disallowance by observing that the assessee has recovered excess TDS on Rs. 1,49,69,028/-. Therefore, we set aside the same and restore this issue to the file of the AO with a direction to verify whether the balance job charges of Rs.13,78,542/- was really subjected to TDS as per law or not, after giving reasonable opportunity of being heard to the assessee. The assessee is also directed to furnish the details of Rs. 13,78,542/- to substantiate whether the TDS is required to be deducted or not, before the AO.

9. In the result, the appeal of the Revenue is allowed for statistical purposes.

(Order pronounced in the court on 10.12.2010.)