TaxTMI 
TaxTMI 
TaxTMI 
2013 (4) TMI 394
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....sallowance of Rs.63,54,156 under section 40(a)(ia) of the I.T. Act rejecting the contention of the Appellant that the provisions of the said section were not applicable to the amounts in question. Without prejudice to the above, on the facts and in the circumstances of the case and in law, the learned CIT erred in holding that even otherwise the said expenditure was not allowable as a business expenditure for the reaon that the liability had not crystallized. In any event the concerned payees would have personally paid the tax due on the said sums hence not warranting the aforesaid disallowance. The appellant further contends that the learned DCIT has erred in not allowing an amount of Rs.32.96,445 disallowed under section 40(a)(ia) in assessment order for earlier year overlooking the fact that the said amount has already been paid after deducting and paying appropriate tax thereon/reversed during the year under reference. 4. The appellant contends that the learned CIT has erred in confirming add-back of Rs.89,230 on account of discrepancy in AIR Report when no such sum/income was assessable in its hand". 2. We have heard the learned Couns....
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....n that TDS was not made on these amounts as they are covered under section 194C, 194J etc., AO disallowed the amounts under section 40(a)(ia). Assessee made detailed submissions which are extracted by the learned CIT in Para No.12. However, following the orders of his predecessor in AY 2006- 07, he decided against assessee vide Para 13 of the order. 5.1 It was submitted that the issue was covered in favour of assessee by the ITAT order in AY 2006-07 following the decision of the Coordinate Bench in the case of Mahindra and Mahindra Ltd (ITA No.8597/M/2010 dated 06.06.2012). "4.2. After hearing the rival submissions we are of the opinion that ground of appeal no.3 should be decided in favour of the appellant company. In the order of Mahindra & Mahindra (supra) the issue has been discussed and it has been held that provisions of Sec.40(a)(ia) were not applicable to year end payments. One of us was party to that order. Following the said order, Ground No.3 is decided in favour of assessee". 5.3 The detailed order in Mahindra & Mahindra(supra) is as under: "19.Next ground of appeal is about addition made under section 40a(ia) in respect of year-end provisi....
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....uct tax at source from the account of a specific party arose only at the time the bill was passed not before that. Citing the example of audit fees the AR submitted that obligation to pay the fees to the statutory auditors arises only after they complete the statutory audit. He relied upon the decisions of GE India Technology Centre Private Ltd. (327 ITR 456) and Industrial Development Bank of India (107 ITD 45) in this regard. DR submitted that work was already carried out for the assessee, that appellant should have deducted tax source. He further submitted that once the amount was debited to profit and loss account provisions of section 40(a)(ia) were applicable. 19.3.We find that the AO has not examined the issue about year-end payments. There is a difference between the payments that are made during the year and the payments made at the fag-end of the year. In our humble opinion in 2nd category of payments tax has been detected in the subsequent year when Bills are booked. In this regard we have also considered the amendment made to Sec.40(a)(ia) by the finance act,2008, with retrospective effect from 1.4.2005.We have also perused the case laws relied upon by the....
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.... denied. The appellant has failed to make any reconciliation of the entries vis-à-vis those recorded in its books of account. The addition made is, therefore, upheld". 6.4 It was submitted by the learned Counsel that on similar facts of addition on AIR basis the ITAT in the case of Shri S. Ganesh vs. ACIT (ITA No.527/Mum/2010) has deleted the same. He further submitted that AO did not verify from the parties whether the payments are indeed pertain to assessee. He filed a letter from "Lubrizol" dated 26.02.2013 wherein that Company reported PAN of assessee company in their TDS return, confirming that the transaction does not pertain to assessee. It was the submissions that for the mistake in their statement, assessee should not be punished. It was further submitted that assessee has reconciled many other transactions except the above two for which no details are forthcoming in AIR. 6.5 The learned DR however relied on the order of AO and the learned CIT (A). It was further submitted that the matter can be reexamined by AO. 6.6 We have examined the rival contentions, the AIR information received by AO and the order of authorities. There is no dispute with the fact that asse....