TaxTMI 
TaxTMI 
2013 (11) TMI 209
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....e of non deduction of tax. According to the ld.senior counsel, in fact, tax was deducted but it was short deduction. Referring to the chart, the ld.senior counsel submitted that in the case of Achuthan Pillai & Co tax was deducted at 16.90%. However, tax should have been deducted at 18.53%. According to the ld.senior counsel, the surcharge was not considered while deducting tax. In many cases like that surcharge was not considered for the purpose of deduction of tax. Referring to column No.6 in the chart, the ld.senior counsel submitted that in the case of Valappila Communications the tax was deducted at 1.13% whereas the tax ought to have been deducted at 2.24%. Likewise, according to the ld.senior counsel, in respect of payment to contractors, like Delhi Gujarat Fleet Carriers, OM Logistic Ltd, etc. the tax was deducted at 1.22%, 1.12%, respectively, whereas the tax ought to have been deducted at 2.24%. According to the ld.senior counsel, the assessee deducted tax applicable to sub contractors instead of the rate applicable to contractors. The ld.senior counsel further submitted that in some cases, the deductees have filed certificates for deducting the tax at a lesser rate. Ther....
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.... as an assessee in default u/s 201 of the Act and no disallowance can be made by invoking the provisions of section 40(a)(ia) of the Act. The Calcutta High Court confirmed the decision of the Kolkata Bench of this Tribunal. Referring to the decision of the Mumbai Bench of this Tribunal in Dy.CIT vs Chandabhoy and Jassobhoy (2012) 49 SOT 448 (Mum), the ld.senior counsel submitted that the Division Bench of the Mumbai Bench of this Tribunal found that section 40(a)(ia) did not apply in case of short deduction and it is applicable only in the event of non deduction of tax. The ld.senior counsel has placed reliance on the judgment of the Andhra Pradesh High Court in P.V. Rajagopal vs UOI(1998) 99 Taxman 475 (AP) and submitted that in this case the Andhra Pradesh High Court for the assessment years 1989-90 to 1993-94 had an occasion to consider the provisions of section 201 as it was then in existence. After referring to the provisions of section 201 as it was in existence at the relevant point of time, the High Court found that section 201 has two limbs. One is - where the employer does not deduct tax and second is where after deducting tax fails to remit it to the government. The High....
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....ion, has not been paid on or before the due date specified in sub-section (1) of section 139: Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. Explanation.- For the purposes of this sub-clause.- (i) "commission or brokerage" shall have the same meaning as in clause (i) of the Explanation to section 194H; (ii) "fees for technical services" shall have the same meaning as in Explanation 2 to clause (vii) of subsection (1) of section 9; (iii) "professional services" shall have the same meaning as in clause (a) of the Explanation to section 194J; (iv) "work" shall have the same meaning as in Explanation III to section 194C; (v) "rent" shall have the same meaning as in clause (i) to the Explanation to section 194-I; (vi) "royalty" shall have the same meaning as in Explanation 2 to cla....
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....s not deducted whereas the legislature has omitted to do so in section 40(a)(ia) of the Act. In other words, the provisions of section 40(a)(ia) does not enable the assessing officer to disallow any proportionate amount for short deduction or lesser deduction. 11. We have carefully gone through the judgment of the Andhra Pradesh High Court in the case of P.V. Rajagopal (supra). While considering the provisions of section 201 which stood for the assessment years 1989-90 to 1993-94, the Andhra Pradesh High Court found that there is nothing in the section to treat the employer as the defaulter where there is a shortfall in the deduction of tax at source. For the purpose of convenience, we are reproducing below paragraphs 34 and 35 of the judgment of the Andhra Pradesh High Court: "34. ................. We may now read the provisions of section 201. "Consequences of failure to deduct or pay.- (1) If any such person and in the cases referred to in section 194, the principal officer and the company of which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, without prejud....
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....A) after this judgment of Andhra Pradesh High Court by incorporating the words "the whole or any part of tax" by Finance Act, 2001. The Division Bench of the Mumbai Bench of this Tribunal in the case of Chandabhoy and Jassobhoy (supra) had an occasion to consider an identical issue. The Mumbai Bench found that short deduction of TDS, if any, could have been considered as liability under the Income-tax Act as due from the assessee. Therefore, the disallowance of the entire expenditure, whose genuineness was not doubted by the assessing officer is not justified. A similar view was also taken by the Kokatta Bench of this Tribunal in the case of CIT vs M/s S.K. Tekriwal (supra). In this case, on appeal by the revenue, the Calcutta High Court confirmed the order of the Kolkatta Bench of the Tribunal. 13. In view of the above, this Tribunal is of the considered opinion that section 40(a)(ia) does not envisage a situation where there was short deduction / lesser deduction as in case of section 201(1A) of the Act. There is an obvious omission to include short deduction / lesser deduction in section 40(a)(ia) of the Act. Therefore, this Tribunal is of the considered opinion that in case ....
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....uring company which owns two tyre manufacturing plants in South Africa. The Mauritius subsidiary company advanced the loan to Apollo (South Africa) Holding Pvt Ltd and accordingly the entire share capital of Dunlop Tyres was acquired on 21-04-2006. The acquisition of Dunlop Tyres by South African subsidiary company enables the parent company, i.e. the assessee company enhances the productivity, profit and run its business more effectively and efficiently. Apart from that the distribution net work of Dunlop Tyres after acquisition increases the distribution net work and marketing focus of the assessee company. According to the ld.senior counsel, the assessee company acquired lot of advantages and leverages in acquiring Dunlop company in South Africa. According to the ld.senior counsel, the very purpose of advancing loan was to improve the business of the assessee and develop its business in South Africa. The loan advanced by the subsidiary company resulted in loss of Rs.5.09 crores. The loss on cancellation of the forward contract is closely connected with advancing of foreign currency loan. Therefore, according to the ld.senior counsel, it is integral and indivisible component of t....
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.... Mauritius Holding Pvt Ltd". The subsidiary company in Mauritius established another company in South Africa, viz. Apollo (South Africa) Holding Pvt Ltd for acquiring 100% controlling power in Dunlop Tyres International (proprietory) Ltd in South Africa. For acquiring Dunlop Tyres International (proprietory) Ltd the assessee has given the loan in foreign currency. Any expenditure incurred by the assessee for acquisition of capital asset is not an allowable expenditure. Therefore, according to the ld.DR, the loss said to be incurred by the assessee in entering into forward contract with Citi Bank cannot be allowed as business loss. Therefore, according to the ld.DR, the CIT(A) has rightly confirmed the order of the CIT(A) on the ground that the loss said to be suffered by the assessee is a capital loss which cannot be allowed. 18. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the assessee is in the business of manufacture and sale of tyre. In order to expand its business in South Africa, the assessee intended to purchase Dunlop Tyres International (proprietory) Ltd. For that purpose, as an intermediary arran....
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....he capital base of the company, expands considerably and the profit making apparatus also expanded. Though the company was acquired through a subsidiary company this Tribunal of the considered opinion that it is only an arrangement made by the assessee to acquire Dunlop Tyres International (proprietory) Ltd. In effect, the assessee is holding and controlling the subsidiary company as well as Dunlop Tyres International (proprietory) Ltd. This Tribunal is of the considered opinion that the entire arrangements made by the assessee by establishing two intermidiary subsidy companies would come to light once the corporate veil is lifted. Therefore, the loss suffered was in the process of acquisition of Dunlop Tyres International (proprietory) Ltd in South Africa. In other words, the loss was suffered in the process of acquisition of a capital asset which expands the manufacturing facility as well as the profit making apparatus of the company. Therefore, this Tribunal is of the considered opinion that the loss suffered by the assessee by settling the forward contract in the process of acquisition of Dunlop Tyres International (proprietory) Ltd is a capital loss which cannot be allowed as ....
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....the power of the appellate authority to entertain the additional claim cannot be impinged in any way. Therefore, the CIT(A) ought to have considered the issue as an additional ground and adjudicated the same on merit. The ld.senior counsel has also placed reliance on the judgment of the Apex Court in the case of NTPC vs CIT 229 ITR 383 (SC). 23. On the contrary, Shri M Anil Kumar, the ld.DR submitted that the assessing officer cannot entertain any new claim otherwise than by way of a revised return. Admittedly, the assessee has not made any claim with regard to the loss suffered in the fire in the original return; no revised return was also filed. Therefore, the assessing officer cannot travel beyond the deduction claimed in the return. Hence, the CIT(A) has rightly confirmed the order of the assessing officer in view of the judgment of the Apex Court in the case of Goetze (India) Ltd (supra). 24. We have considered the rival submissions on either side and also perused the material available on record. Both the authorities below have not examined the claim of the assessee on merit. Though the assessing officer refers that it is a premature claim, he refused to entertain the s....
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.... 27. Shri PJ Pardiwalla, the ld.senior counsel for the assessee submitted that the CIT(A) rejected the claim of the assessee with regard to deduction u/s 80IA to the extent of Rs.2,06,20,739 being the profit earned from generation of power in steam form in its gas turbine boiler which is utilized for captive consumption. According to the ld.senior counsel it is not an additional ground. In fact, according to the ld.senior counsel, deduction u/s 80IA was originally made with regard to DG & DT and GT power generating unit at Limda to the extent of Rs.10,87,98,092. However, generation of power in the form of steam by gas turbine boiler was omitted to be included in the original claim. This was brought to the notice of the CIT(A) by way of an additional ground. Therefore, the CIT(A) is not correct in saying that it was not raised before the assessing officer. In fact, the deduction u/s 80IA was claimed before the assessing officer in the return of income. What was omitted to be claimed is with regard to generation of power in the form of steam by gas turbine boiler. The ld.senior counsel further submitted that even if it is considered as additional ground as observed by the Apex Court....
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.... apply the provisions of section 80A(5) for the year under consideration. In view of the above, the decision of this Tribunal in The Kadachira Service Co-operative Bank Ltd (supra) may not be applicable for the year under consideration. In view of the judgment of the apex court in the case of Geotze (India) Ltd (supra), the claim has to be made before the assessing officer by way of revised return. However, as observed in the earlier part of the order, the judgment of the Apex Court in the case of Goetze (India) Ltd (supra) does not impinge upon the power of the appellate authority as observed by the Apex Court itself in the very same judgment. Therefore, this Tribunal is of the opinion that the CIT(A) having co-terminus jurisdiction with that of the assessing officer ought to have considered the issue on merit. Since the CIT(A) has not considered the matter on merit, this Tribunal is of the considered opinion that the matter needs to be considered by the assessing officer at the first instance. Therefore, order of CIT(A) is set aside and the issue is restored to the file of the assessing officer with a direction to consider the same on merit in respect of deduction u/s 80IA(4)(iv)....
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....ted 08-02-2013, this Tribunal remitted the matter back to the file of the assessing officer for reconsideration. This Tribunal specifically observed that expenditure incurred towards entrance fee / subscription fee can be termed as business expenditure and the cost of service could be allowed if the commercial expediency in incurring the expenditure is proved. Since the matter was remitted back to the file of the assessing officer for 2005-06 on identical set of facts, this Tribunal is of the considered opinion that the CIT(A) was not justified in deleting the disallowance made by the assessing officer. Accordingly we set aside the order of the lower authority and restore the issue back to the file of the assessing officer. The assessing officer shall decide the issue afresh in the light of observation of this Tribunal for the assessment year 2005-06 in accordance with law after giving reasonable opportunity of hearing to the assessee. 35. The next ground of appeal is with regard to bad debt written off to the extent of Rs.1,31,23,552. 36. Smt. Susan George Varghese, the ld.DR submitted that the CIT(A) allowed the claim of the assessee u/s 37(1) of the Act. According to the l....
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....rd to payment of Rs.10,23,403 towards employees' contribution to provident fund. 40. We heard the ld.DR and the ld.senior counsel for the assessee. The CIT(A) allowed the claim of the assessee after finding that the payments were made before filing of return of income. Second Proviso to section 43B was deleted and all sub clauses under section 43B were brought under the First Proviso to section 43B. Therefore, the payments covered by section 43B needs to be allowed if the same was paid before the due date for filing the return of income. In this case, it is not in dispute that the contribution to provident fund was paid before the due date for filing the return of income. Therefore, this Tribunal is of the considered opinion that the CIT(A) has rightly deleted the disallowance. We confirm his order on this issue. 41. The next ground of appeal is with regard to depreciation on the office premises at Gurgaon. 42. We heard the ld.DR and the ld.senior counsel for the assessee. The depreciation on the very same property was disallowed by this Tribunal for the assessment year 2001-02. Following the order of this Tribunal for the assessment year 2001-02, a similar disallowance wa....