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DATE: June 18, 2019 (Date of pronouncement)
DATE: June 24, 2019 (Date of publication)
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S. 40A(9): The provision is not meant to hit genuine expenditure by an employer for the welfare and the benefit of the employees. Even contributions to unapproved and unrecognized funds have to be allowed as a deduction if they are genuine in nature

The very purpose of insertion of sub-section (9) of section 40A thus was to restrict the claim of expenditure by the employers towards contribution to funds, trust, association of persons etc. which was wholly discretionary and did not impose any restriction or condition for expanding such funds which had possibility of misdirecting or misuse of such funds after the employer claimed benefit of deduction thereof. In plain terms, this provision was not meant to hit genuine expenditure by an employer for the welfare and the benefit of the employees

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DATE: February 28, 2018 (Date of pronouncement)
DATE: May 24, 2018 (Date of publication)
AY: 2009-10
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CITATION:
The fact that the parties to whom payments were made did not appear before the AO does not justify a disallowance if the assessee has discharged the initial onus and produced documentary proof. The assessee cannot compel the appearance of the parties before the AO. The onus is on the AO to carry out enquiries based on the PAN Nos to find out the genuineness of the parties

The respondent – assessee had done everything to produce necessary evidence, which would indicate that the payments have been made to the parties concerned. The details furnished by the respondent assessee were sufficient for the Assessing Officer to take further steps if he still doubted the genuineness of the payments to examine whether or not the payment was genuine. The Assessing Officer on receipt of further information did not carry out the necessary enquiries on the basis of the PAN numbers, which were available with him to find out the genuineness of the parties. The CIT(A) as well as the Tribunal have correctly held that it is not possible for the assessee to compel the appearance of the parties before the Assessing Officer

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DATE: May 15, 2018 (Date of pronouncement)
DATE: May 24, 2018 (Date of publication)
AY: 2013-14
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CITATION:
S. 40A(3) Rule 6DD: No disallowance can be made for cash payments if the transaction is genuine and the identity of the payee is known. Rule 6DD is not exhaustive. The fact that the transaction does not fall with Rule 6DD does not mean that a disallowance has to be per force made (all judgements considered)

The legal proposition that arises from the above decision of the Hon’ble Rajasthan High Court is that the consequences, which were to befall on account of non-observation of sub-section (3) of section 40A must have nexus to the failure of such object. Therefore the genuineness of the transactions and it being free from vice of any device of evasion of tax is relevant consideration and which should be examined before invoking the rigours of section 40A(3) of the Act

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DATE: August 16, 2016 (Date of pronouncement)
DATE: August 30, 2016 (Date of publication)
AY: 2007-08, 2008-09
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S. 145A(a)(ii) applies only to goods and not services. Service-tax billed on rendering of services is not includible as trading receipts. No disallowance u/s 43B can be made for the unpaid service-tax liability which is not claimed as a deduction

It is very clear from the reading of Section 145A(a)(ii) of the Act that it only covers cases where the amount of tax, duty, cess or fee is actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation

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DATE: October 30, 2015 (Date of pronouncement)
DATE: November 27, 2015 (Date of publication)
AY: 2009-10
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S. 43B/ 145A: Taxes collected by the assessee, which remain unpaid, have to be added to the income even if the same are not debited to the P&L A/c and claimed as a deduction

In view of the provisions of the Act i.e. section 145A of the Act, we find no merit in the plea of the assessee in not recognizing the VAT attributable to its sales as part of the sale consideration of the goods while computing its Profit & Loss Account. The mandatory provisions of Central Act i.e. section 145A of the Act supersedes the provisions of any State Act i.e. Maharashtra Value Added Tax Act, 2002. Once the assessee recognized the VAT amount as part of the sale consideration, it tantamount to the said entry being routed through the Profit & Loss Account, especially in the cases where the assessee is following mercantile system of accounting

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DATE: July 31, 2015 (Date of pronouncement)
DATE: November 16, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S. 36(1)(iii): In a case where advances for non-business purposes are made from mixed funds, neither the AO nor the assessee can claim that the funds have come from a particular source and so the disallowance should be worked out on the basis of the average interest rate

The judgment of this Court in Commissioner of Income Tax-I, Ludhiana vs. M/s Abhishek Industries, Ludhiana [2006] 286 ITR 1 (P&H) does not deal with the question of the rate of interest to be applied in cases where the assessee has mixed funds available with it. We also agree with the Tribunal’s view that where mixed funds are diverted towards interest free advances the disallowance should be made up to the level of the average cost of debt to the assessee. There is no justification in taking into consideration the rate of interest in respect of any particular transaction where under an assessee avails advances on interest. An assessee may avail several advances from the same lender or from different lenders and at varying rates of interest. In the absence of anything to indicate that the interest free advance was made only from a particular corresponding advance received by the assessee, the advance made by the assessee would obviously be from the common pool of money. Money lying in a common pool has no identity. The various amounts advanced to the assessee get merged into a common pool. There is no justification then either for the assessee or for the department to take into consideration the rate of interest in respect of a particular advance or advances to the assessee. The only logical approach is to take into consideration the average interest rate at which the assessee has availed of the advances

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DATE: October 31, 2014 (Date of pronouncement)
DATE: November 19, 2014 (Date of publication)
AY: 2005-06
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CITATION:
Disallowance u/s 184(5) of interest, salary etc paid by a firm to partners cannot be made if the Best Judgement assessment u/s 144 is due to incompleteness of accounts & not due to failures referred to in s. 144

The Tribunal had to consider whether disallowances for payments in respect of remuneration and interest on capital paid to the partners, in computation of taxable income of the firm, can be made under section 184(5) when even though assessment is …

M/s Vijay Veer Singh vs. ITO (ITAT Agra) Read More »