TaxTMI 
TaxTMI 
TaxTMI 
2015 (12) TMI 1553
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....x Act, 1961 (in short 'the Act') on the ground that the assessee has not made any TDS at the time of payment and the recipient of the amount has submitted Form 15H on 10.04.2011. According to the Ld. counsel, the recipient of the amount informed the assessee in advance that she would provide Form 15H, therefore, the amount was credited to the account of Ms. M. Krishnaveni on 31.03.2011. According to the Ld. counsel, even in earlier assessment years, the said Ms. M. Krishnaveni used to file Form 15H and the assessee has paid the amount without deducting the tax. During the year consideration, Form 15H in fact was filed on 10.04.2011, before the due date for deposit of the TDS amount. Since the assessee was informed in advance, accord....
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....d before the due date for filing the return of income, then the expenditure, which is otherwise allowable under the provisions of Income-tax Act, has to be disallowed. In the case before us, admittedly, the interest payment of Rs. 71,016/- is claimed as expenditure. The question arises for consideration is when the assessee has not deducted tax under Section 194A of the Act in respect of the payment of interest income, whether such expenditure otherwise allowable can be allowed in view of Section 40(a)(ia) of the Act. Section 40(a)(ia) clearly says that the tax is deductible at source. The fact remains that the assessee is making similar payment to the very recipient in the earlier assessment year and tax was not deducted as required under ....
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....s. Therefore, according to the Ld. counsel, it was an expansion of business and not extension of business. Therefore, proviso to Section 36(1)(iii) of the Act is not applicable. However, the Assessing Officer found that the assessee has to capitalize the interest on the borrowed funds till the machinery is put to use. Referring to Section 36(1)(iii) of the Act, the Ld. counsel submitted that the interest payment till the machinery was put to use has to be capitalized when the business of the assessee was extended. In this case, it is not an extension of business but expansion of business. When the business was expanded by adding one more windmill, according to the Ld. counsel, the proviso to Section 36(1)(iii) of the Act is not applicable. ....
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....hat the capital asset shall be utilised for extending the existing business. In this case, admittedly, the existing business was extended. Therefore, there is no question of any expansion as claimed by the assessee. Hence, the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. 8. We have considered the rival submissions on either side and perused the relevant material available on record. We have carefully gone through the provisions of Section 36(1)(iii) of the Act which reads as follows:- "36(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28- (iii) the amount of the interest paid in respec....
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....erest on the borrowed capital, which was used for acquisition of asset for extension of the existing business of generation of electricity through windmill, this Tribunal is of the considered opinion that the interest cannot be allowed as deduction till the capital asset acquired by the assessee is put to use. In this case, admittedly, the capital asset purchased is not put to use. Therefore, the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer. 9. We have also carefully gone through the decision of the Ahmedabad Bench in Gujarat Mineral Development Corpn. Ltd. (supra). In the case before Ahmedabad Bench, the assessee is engaged in the business of manufacturing lignite. The Ahmedabad Bench of this Tribunal foun....
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....o not of any assistance to the assessee. 11. In view of the above discussion, we do not find any reason to interfere with the order of the CIT(Appeals) and accordingly, the same is confirmed. 12. The next ground of appeal is with regard to disallowance of Rs. 46,71,233/- being the amount paid to Life Insurance Corporation of India, towards Narasu's Spinning Mills Employees Group Gratuity Fund. 13. Shri G. Baskar, the Ld.counsel for the assessee, submitted that the assessee has admittedly paid Rs. 46,71,233/- towards Employees Group Gratuity Fund to LIC. The assessee has also produced a copy of the receipt for payment of money before the Assessing Officer. According to the Ld. counsel, the payment of money is not disputed. Once the mo....