TaxTMI 
TaxTMI 
2012 (9) TMI 249
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....(A) is against law and probabilities of case. 2. The learned CIT(A) erred in assuming that amount of Rs. 3,12,600 paid by the appellant was in the nature of interest to attract the provisions of section 40(a)(ia) of the I.T. Act whereas the same is paid on delayed payment of purchases amount. 3. The learned CIT(A) erred in confirming the order of the Assessing Officer, wherein a notional interest was charged basing on the assessment proceedings for the A.Y. 2001-02 which was reverted back to the Assessing Officer by the Hon'ble ITAT and the Assessing Officer accepted the contention of the appellant, for that year. Therefore, the learned CIT(A) ought to have deleted the addition of Rs. 1,85,982. 4. ....
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....aggrieved of such addition, filed an appeal before the CIT(A). 6. Before the CIT(A) it was contended on behalf of the assessee that the amount of Rs. 3,12,600 pertains to the payment made on account of overdue bills and, therefore, was not in the nature of interest envisaged under the TDS provisions of the Act. In this context, the assessee relied upon a decision of the ITAT Delhi Bench in the case of Delhi Development Authority v. ITO [1995] 52 TTJ 107/53 ITD 19 wherein the ITAT while considering the case of compensation paid to the allottees on account of delay in construction of dwelling units held that it is not within the nature of interest as defined u/s. 2(28A) of the Act. The CIT(A), however, came to held that the definition of t....
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....onnected with the delayed purchase payment, hence, did not fall within the category of "Interest" as defined in Sec. 2(28A) of the I.T. Act for the purpose of deduction of Tax at Source as prescribed u/s. 194A of the Act. Resultantly, this assessee cannot be held a defaulter of non-deduction of tax at source u/s. 194A of the Act. The Learned CIT(Appeals) has rightly reversed the findings of the Assessing Officer. Ground raised of the Revenue is, therefore, dismissed." 8. In the alternative, the learned AR contended that even if the amount paid is to be held as interest coming within the definition of section 2(28A), then also no disallowance could be made u/s. 40(a)(ia) in view of the ITAT Special Bench decision in the case of Merilyn Sh....
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....ance could be made u/s. 40(a)(ia) in view of the ITAT Special Bench decision in the case of Merilyn Shipping & Transports (supra). In the aforesaid view of the matter, the disallowance of an amount of Rs. 3,12,600 made u/s. 40(a)(ia) cannot be sustained. We, therefore, direct the Assessing Officer to delete the same. The ground raised by the assessee is allowed. 11. Ground No. 3 relates to an addition of Rs. 1,85,982. Brief facts of the case are that in course of scrutiny assessment proceedings, the Assessing Officer found that the assessee had given an interest free advance to M/s. Sri Sant Kripa Textiles Pvt. Ltd. Out of the said advance, an amount of Rs. 10,33,234 remained due from the said party. The assessee contended before the Ass....
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....ment order consequent to the order of the ITAT accepted the assessee's contentions and no addition of proportionate interest was made in respect of interest free advances made to M/s. Sri Sant Kripa Textiles Pvt. Ltd. Again for the A.Y. 2000-01 and 2001-02, the ITAT in ITA No. 921/Hyd/208 and ITA No. 955/Hyd/2008 dated 20.6.2009 restored the matter back to the Assessing Officer for re-examining the issue of addition of proportionate interest in respect of interest free advance to M/s. Sri Sant Kripa Textiles Pvt. Ltd. In the consequential order passed by the Assessing Officer, no addition of proportionate interest was made with regard to interest free loan of Rs. 10,39,328 on the interest free advance to M/s. Sri Sant Kripa Textiles Pvt. Lt....