TaxTMI 
TaxTMI 
2016 (9) TMI 445
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....ried the matter before ld.CIT(A) who vide order dated 03/12/2015 (in Appeal No.CIT(A)-VIII/49/SK Wd.1 HMT/2013-14 and now CIT(A)-2/20/SK Wd.1, HMT/2013-14) dismissed the appeal of the assessee. Aggrieved by the order of ld.CIT(A), assessee is now in appeal before us and has raised following effective grounds:- 1. That the CIT(A)-2 Ahmedabad has erred both in law and on the facts of the case in confirming an addition of Disallowance of Expenses u/s.40(A)(3) of Rs. 2,49,497/-. 2. That the learned CIT(A)-2 has further erred and confirming of an addition of Rs. 4,45,625/- made by learned A.O. u/s.40(a)(ia) of the Income Tax Act, 1961. Even though Amendment was made by Finance Act, 2012 under Second proviso to section 40(a)(ia) is retrospective and considering the same this ground. Please be decide on merits. 2.2. First ground is with respect to disallowance of expenses u/s.40A(3) of the Act. 2.3. During the course of assessment proceedings, on the basis of details furnished by the assessee, AO noticed that the assessee had made several cash payments to Gujarat Electricity Board (GEB) in respect of electricity expenses. (the details of which are listed at page Nos.7 & 8 of the a....
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....ideration of entire facts related to the issue, it is noted that though the UGVCL is a Government company, it does not mandatorily asks its customers to make payment by cash. The rule 6DD provides an exception in cases where the payment has been made to a government organization and the Rules prescribed in this behalf requires payment in cash compulsorily. The appellant has failed to establish such circumstance. It has not given any reasonable cause as to why the payment was made in cash in spite of the fact that appellant has a bank account from which all other expenses have been incurred. The Provisions of section 40A(3) are very clear and it provides specific exception to the Provisions under Rule 6DD. The case of the appellant is not covered under any of the exceptions provided in Rule 6DD. The appellant is running a big business establishment and it also has bank account at the place nearby. It could have obtained demand draft for payment of electricity dues and accordingly made the payment in compliance of the Provisions of Income tax Act. In the case of the appellant, it has not furnished any documentary evidence in support of its claim that it could not make the payment by ....
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....nce u/s.40A(3) can be made. He further placed reliance on the judgement of Hon'ble Gujarat High Court in the case of Anupam Tele Services vs. ITO reported at (2014) 366 ITR 122 (Guj.). He also placed reliance on the decision of Hon'ble Allahabad High Court in the case of CIT vs. Choudhary and Co. reported at (1996) 216 ITR (All). Ld.Sr.DR, on the other hand, supported the orders of the AO and ld.CIT(A). 4. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. The issue in the present ground is with respect to disallowance u/s.40A(3) of the Act. It is an undisputed fact that assessee has made cash payments for expenses and these payments have been made to Electricity Company for the supply of Electricity. The payment of Electricity was the purpose of business, the payee to whom the assessee has made the payment has not been doubted by the AO; meaning thereby that the genuineness of payment and identity of the payee are not in doubt. In such a situation, we find that the Hon'ble Jurisdictional High Court in the case of Anupam Tele Services vs. ITO reported at (2014) 366 ITR 122 (Guj.) has held that the par....
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....o make the TDS in respect of the liability u/s. 194A of the I. T. Act, 1961 on the interest payment to NBFC and hence the disallowance was made. 3.7. On the other side, the appellant submitted that it has paid the cheques in advance of the amounts included of principal and interest thereupon, hence it was difficult for him to make the TDS. Further, the interest to the finance companies were actually paid and there was no outstanding amount payable at the end of the year. Thus provisions of section 40a)(ia) were not applicable. It was also submitted that these companies were having the PAN Numbers and addresses were available. The payees have already shown the interest income as their income in their Income Tax Return filed for the year under consideration. It also relied upon certain judgments including the decision of Hon'ble ITAT, Agra in the case of Rajeev Kumar Agrawal in ITA No. 337/Agra/2013 & others. 3.8. Having considered the facts and submission, there is no doubt about the statutory liability cast upon the appellant to make the TDS on the interest payment to the NBFCs for the finance taken by the appellant. In view of the provisions of section 194A of the I. T. ....
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....lant is not entitled to get the benefit granted under second proviso to section 40(a)(ia) r.w. first proviso to section 201 (1) of the I. T. Act. In view of this, the case laws relied upon by the appellant are not applicable and hence, they are not relevant. 3.10. In view of the aforesaid discussion, the appellant has committed the default for not making the TDS upon the interest payment to NBFCs, and therefore, disallowance made by the AO is found correct and justified and hence the same is confirmed. This view is further supported by the judgment in the case of CIT Vs. Sikander Khan N. Tunwar [(2013) 357 ITR 312 (Guj.)]. Relevant portion of the judgment is reproduced hereunder:- "37. In our opinion, the Tribunal committed an error in applying the principle of conscious omission in the present case. Firstly, as already observed, we have serious doubt whether such principle can be applied by comparing the draft presented in Parliament and ultimate legislation which may be passed. Secondly, the statutory provision is amply clear. 38. In the result, we are of the opinion that Section 40(a)(ia) would cover not only to the amounts which are payable as on 31st March of a partic....
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....trate that the recipients of the amounts have considered the amounts received from the assessee as their income. We find that there is no finding of the lower authorities to the effect that the payment made by the assessee have been considered by the respective payees as their income. We further find that the Coordinate Bench of Tribunal in the case of Agra Tribunal in the case of Rajeev Kumar Agarwal vs. Addl.CIT[supra] has held at para-4 as under:- "The unambiguous underlying principle seems to be that in the situations in which the assessee's tax withholding lapse have not resulted in any loss to the exchequer, and this fact can be reasonably demonstrated, the assessee cannot be treated as an assessee in default. The net effect of these amendments is that the disallowance under section 40(a)(ia) shall not be attracted in the situations in which even if the assessee has not deducted tax at source from the related payments for expenditure but the recipient of the monies has taken into account these receipts in computation of his income, paid due taxes, if any, on the income so computed and has filed his income tax return under section 139(1)." After considering various dec....