Follow Us:

Case Law Details

Case Name : Sudhanshu Rastogi Vs ACIT (ITAT Lucknow)
Appeal Number : ITA No. 320/LKW/2020
Date of Judgement/Order : 01/12/2022
Related Assessment Year : 2013-14
Become a Premium member to Download. If you are already a Premium member, Login here to access.

Sudhanshu Rastogi Vs ACIT (ITAT Lucknow)

The admitted position is that the assessee is engaged in the business of the retail trade of embroidery clothes in the name and style of Sarat Arts. The assessee is regularly maintaining its books of account and duly got the same audited under section 44AB of the Act. The assessee before us filed complete books of accounts, bills and vouchers for verification and evidences, explaining the entire transaction. The ld. Counsel for the assessee produced the trading account and profit and loss account and balance sheet for the year ended on 31.3.2013. The trading account clearly reflects that there is purchase of Ready (Embroidery) to the extent of Rs.4,68,36,533/- and the corresponding sale also booked at Rs.5,37,06,037/-. It is an admitted position that the assessee has shown Ready (Embroidery) i.e. current liabilities payable to various parties at Rs.1,19,13,161/- i.e. sundry creditors of trade and not expenses. As pointed out by the ld. Counsel for the assessee that the assessee has already deducted TDS on embroidery charges paid to various carigars and for this, the ld. Counsel for the assessee drew our attention to the financial expenses incurred by the assessee at Rs.2,22,27,376/-. The ld. Counsel for the assessee stated that the assessee has deducted TDS on this, which is shown as payable but paid as per the provisions of the Act within the next month, amounting to Rs.2,51,137/-. We noted that these are not at all expenses. These are purchases, rather trade items not liable for disallowance under section 40(a)(ia) of the I.T. Act, as no TDS is to be deducted for purchases of these items. The disallowance under section 40(a)(ia) of the I.T. Act attracts only expenses incurred by the assessee, on which tax is deductible at source under Chapter XVIIB. According to us, once no TDS is liable to be deducted on these purchases, no disallowance under section 40 (a)(ia) of the I.T. Act can be attracted. Hence, we delete this addition and allow this issue of the assessee’s appeal.


This appeal by the assessee is arising out of the order of the ld. CIT(A)-1, Lucknow in appeal No. CIT(A), Lucknow-1/10025/2016-17, dated 4.8.2020. The assessment was framed by the ACIT, Range 1, Lucknow for assessment year 2013-14 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’), vide order dated 31.3.2016.

2. The only issue in this appeal of the assessee is as regards to the order of the ld. CIT(A) confirming the action of the Assessing Officer in making disallowance of purchases of embroider cloth items shown as expenses payable under the head ‘Ready (Embroidery)’ in the balance sheet. For this, the assessee has raised following two grounds:

Please become a Premium member. If you are already a Premium member, login here to access the full content.


Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Post by Date
July 2024