2015 (9) TMI 328

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....Y 2009-10. 2. The Respondent Assessee is a company engaged in the business of manufacturing and trading of ceramics glazed and unglazed tiles and financing. As regards AY 2008-09, the Assessee filed its return of income on 29th September 2008 declaring nil income. The income was assessed under Section 143 (3) of the Act. The Assessing Officer ('AO') noted that the Assessee had taken a premises on rent from group company Dua Engineering Works Pvt. Ltd. (DEWPL) in terms of an agreement executed on 28th December 2006, whereby the annual rent was fixed at Rs. 48,00,000. The rent agreement also provided that the Assessee would pay an interest free security deposit of Rs. 5.35 crores. 3. The AO was of the view that the interest free dep....

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....s return on 30th September 2009 declaring the income of Rs. 5,69,92,660. While assessing the said return under Section 143 (3) of the Act, the AO made an addition of Rs. 11,25,000 being the expenses claimed on account of the foreign travel of dealers. The AO viewed these expenses to be in the nature of incentive/commission, which would be liable to TDS under Section 194H of the Act. Accordingly, the said amount was disallowed under Section 40(a) (ia) of the Act. The AO also disallowed the interest calculated on the excess security deposit made with DEWPL and accordingly made an addition of Rs. 81 lakhs. 7. In both the appeals one common question is common regarding the excess security deposit purportedly made by the Assessee in respect of ....