It is an established way of computation of income where ever there is recycling of cash in a financial business to work out the peak credit. Particularly in a situation, when no regular or proper books of account are maintained by the assessee then a cash flow statement is generally prepared.
The fact that there is a short deduction of tax in the present case where it was linked with the performance incentive paid to the employee on the basis of achievement of fixed percentage, the estimated TDS deducted in a bona fide manner as per the settled legal position cannot be faulted with.
The brief facts of the case are that the assessee claimed credit for TDS of Rs.1,73,52,062/- for the AY 2006-07 and Rs.2,25,09,037/- in AY 2007- 08 which was not allowed by the AO on the ground that the income in respect of the said TDS was not shown by the assessee in view of the provisions
Sadbhav Engineering Ltd. vs. Dy. CIT (ITAT Ahemdabad)- In the instant case, the assessee claimed deduction u/s.80IA(4) of the Act for all the years which were disallowed by the AO on the ground that as per provisions of section 80IA(5) of the Act the computation of deduction has to be done by setting off of brought forward losses and depreciation of eligible business against their respective eligible incomes.
It was held that loan taken from the relatives cannot be compared with bank loan because loan from the relatives are without security, while loan from the bank is secured. Tribunal has held in the case of Omkarmal Gaurishanker –Vs- ITO reported in 92 TTJ (Ahd.) 223 that interest paid to relatives @24% is reasonable.
Payments were made to truck drivers, who insisted for payment in cash was not exceptional case, because the assessee has not made payments to individual truck owners but to various brokers through whom the trucks were engaged, and therefore, the case of the assessee was not covered by the exceptions mentioned in Rule 6DD.
CIT(A) found force in the submission of the assessee that the interest at the rate of 12% was also taken as reasonable in the Income Tax Act under the provisions of section 40A(b)(iv) for the purpose of calculating interest to the partners. The CIT(A) also followed the decision of the Tribunal in the case of ACIT Vs. M/s.Raj Steel Industries and Vipul Y. Mehta Vs. ACIT (supra) where the rate of interest at 18% to 24% was considered to be reasonable.
We have heard both the parties and perused the material placed before us. We find that during the year under consideration, the assessee claimed travelling expenses amounting to Rs.4,29,01 1/-. The AO disallowed 50% of the claim because the expenses included the expenses of assessee’ s wife also.
It was held had held that Disallowance u/s 14A for the period before AY 2008-09 i.e pre-Rule 8D period, should be restricted to 2% of the dividend income. Shakuntaladevi Trade & Investments Pvt. Ltd. Vs. ITO (ITAT Mumbai)
As regards assessee’s submission that the provisions of section 9(1)(vii) will not come into play in this case because the entire testing process is automated, it is well settled that when no human intervention is involved in any services, such services cannot be treated to be of the nature which can be covered by the scope of section 9(1)(vii).
