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The Tax Publishers Surovi Mansion Jewellers (P) Ltd. v. ITAT [ITA No. 1754 (Kol) of 2013, dt. 13-4-2016] : 2016 TaxPub(DT) 2170 (Kol-Trib) Section 40A (3) on net payments and TDS on melting of gold difference *Facts:* Assessee in jewellery business had bought old gold and sold new gold. The net settlement was done in cash where it was less than Rs. 20,000 and by account payee cheques for more than Rs. 20,000. Assessing officer after going over the books where assessee had accounted the buying as a separate activity and the selling as a separate transaction held that section 40A (3) was violated which was upheld by the Commissioner (Appeals). Another issue was that the assessee availed services of Karigars who melted old gold and returned back to the assessee. In the melting process where losses were found more than a designated percentage recovery was made from the Karigars and nothing became payable for their charges. This was read as though expenditure without TDS by the assessing officer and upheld by the Commissioner (Appeals). On further appeal: Held in favour of the assessee on facts that the net settlement did not hit section 40A(3) and assessee plea that the Karigars were settled by gold for the shortages as this was the value how the deduction was arrived at as the difference was accepted by the ITAT thus was not hit by section 40a(ia).

The Tax Publishers

Surovi Mansion Jewellers (P) Ltd. v. ITAT [ITA No. 1754 (Kol) of 2013, dt. 13-4-2016] : 2016 TaxPub(DT) 2170 (Kol-Trib)

Section 40A (3) on net payments and TDS on melting of gold difference

Facts:

Assessee in jewellery business had bought old gold and sold new gold. The net settlement was done in cash where it was less than Rs. 20,000 and by account payee cheques for more than Rs. 20,000. Assessing officer after going over the books where assessee had accounted the buying as a separate activity and the selling as a separate transaction held that section 40A (3) was violated which was upheld by the Commissioner (Appeals). Another issue was that the assessee availed services of Karigars who melted old gold and returned back to the assessee. In the melting process where losses were found more than a designated percentage recovery was made from the Karigars and nothing became payable for their charges. This was read as though expenditure without TDS by the assessing officer and upheld by the Commissioner (Appeals). On further appeal:

Held in favour of the assessee on facts that the net settlement did not hit section 40A(3) and assessee plea that the Karigars were settled by gold for the shortages as this was the value how the deduction was arrived at as the difference was accepted by the ITAT thus was not hit by section 40a(ia).