in the instant case, the assessee denied incurring any expenditure for earning income, which did not form part of total income during the course of assessment proceedings even when huge investments were made by the assessee in securities .
Assessing Officer made the addition merely on the ground of low gross profit rate. In our opinion, the low gross profit rate can be a reason for making an enquiry but, it cannot be the sole basis for making the addition. The trading result can be rejected only if the condition prescribed under Section 145 for the rejection of books of account or the method of accounting is fulfilled.
The AO in the said case did not examine whether the share application money can be treated as loan or deposit within the meaning of provisions of sec. 269SS of the Act nor the Addl. CIT. The ld. CIT(A) found as a fact that the shares were subsequently allotted to the applicant-companies as shown by the form filed before the Registrar of Companies.
Thus, as per the decision of Hon’ble Apex Court, for claiming the deduction of bad debts, the assessee need not prove that the debt has actually become bad. Mere writing off in the books of account is enough.
As regards reimbursement of amount in respect of service tax, as pointed out by the ld. AR, the ITAT Delhi Bench in their decision in Technip Offshore Contracting BV(supra) concluded that service tax collected by the assessee being directly in connection with services or facilities or supply specified u/s 44BB of the Act provided by the assessee to ONGC, have to be included in the total receipts for the purpose of determination of presumptive profit u/s 44BB of the Act.
No TDS was required to be made because payment of commission are made to non-resident overseas agent. As such no income is arising to the non-resident agent in India. So, no TDS is deductible u/s 194H of the Act, which is applicable for resident Indians only, even the provisions of section 195 is not applicable as payments are made to non-resident overseas agents for the services rendered outside India.
As is apparent from the aforesaid facts, the AO disallowed the claim of bad debts in the absence of any evidence as to when the amount was offered as income and there was nothing to show as to whether this amount had been actually written off in the books of account. On appeal, the ld. CIT(A) admitted the additional evidence in this regard while observing that though the basic information and requisite details regarding bad debts/advances written off
Therefore, it emerges that MAT payable u/s 115JB is only income tax and does not include surcharge or education cess. Therefore, if only income tax is paid under the provisions of section 115JB it is natural that tax credit u/s 115JAA will only be of income tax and not of surcharge and education cess.
Since the assessee only distributed the income in terms of the agreement and this did not amount to incurring of an expenditure nor the assessee claimed any, there was no infirmity in the findings of the Commissioner (Appeals) in deleting the disallowance under section 40(a)(ia).
It is settled law that suspicion howsoever strong, it cannot take place of actual evidence and, hence, the contention of the revenue that assessee was in possession of cash throughout the period of six assessment years has to be rejected.
