TaxTMI 
TaxTMI 
2014 (5) TMI 1140
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....eals) grossly erred in allowing the above claim of Rs. 18,00,000/- without appreciating that the assessee was under no obligation as per the development agreement to make any such payment. 4. The learned Commissioner of Income-tax (Appeals) grossly erred in failing to appreciate that the assessee could not substantiate that the land owners had claimed any such additional consideration to be compensated for the delay in payment. 5. Without prejudice to the above, the learned Commissioner of Income-tax (Appeals) grossly erred in failing to appreciate that no justification was offered by the assessee as to on what basis the additional cost of Rs. 18,00,000/- was determined. 6. For these and such other grounds as may be urged at the time of the hearing, the order of the learned Commissioner of Incometax (Appeals) may be vacated and that of the Assessing Officer be restored." 2.1 Facts of the case, in brief, are that the assessee is a partnership firm engaged in the business of Promoters and Developers of land and execution of construction contract. During the course of assessment proceedings the Assessing Officer observed that as per the development agreement dated 17-5-2005, th....
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....al land cost Rs. 18,00,000 Development expenses incurred during the year Rs. 33,36,454 Total Rs.1,37,58,806 3.1 It was argued that since the payment made was as per the understanding between the assessee firm and the landlord towards compensation for delay in payment as per the original understanding, therefore, the said expenditure was an allowable business expenses. The assessee furnished the copies of the agreement, receipt of payment of Rs. 18,00,000/- made by cheque and the copy of bank statements in support of the claim. 4. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the addition by observing as under : "5.2 An assessee in business may be liable for compensation either for breach of law or breach of contract. If it were breach of law, it is not allowable as a deduction u/s.37(1) which has such deduction. But where the assessee is obliged to pay compensation in the course of business because of breach of contract on its part, such payment will not partake the character of penalty, so that it cannot be disallowed. The law on this point is well settled as decided in CIT Vs Amalgamated Development Ltd (1967) 65 ITR (SC). It was held to be a cas....
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..../- u/s. 40(a)(ia) without appreciating the contention of the appellant". 7.1 Facts of the case, in brief, are that the Assessing Officer during the course of assessment proceedings observed from the Audit report filed in Form No.3CD (.17(f)) that an amount of Rs. 1,80,440/- has been paid to one "Akruti" for printing and no TDS was made on this account. The Assessing Officer, therefore, disallowed the same u/s.40(a)(ia) of the I.T.Act. 7.2 In appeal the Ld.CIT(A) upheld the addition made by the Assessing Officer for which the assessee is in appeal before us. 7.3 The Ld. Counsel for the assessee referring to the decision of the Chennai Bench of the Tribunal in the case of ITO Vs. M/s. Theekathir Press vide ITA No.2076/Mds/2012 and CO No.155/Mds/2013 order dated 18-09-2013 for A.Y. 2009-10 submitted that the Tribunal in the said decision, following the decision of Hon'ble Supreme Court in the case of CIT Vs. Vegetable Products Ltd. reported in 88 ITR 192 has held that disallowance u/s.40(a)(ia) applies only to those amounts which are payable and not to those amounts already paid. While passing this order, the Tribunal has considered the decisions of different High Courts both for a....
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....the order of the CIT(A) be upheld. 8.1 The Ld. Departmental Representative strongly opposed the new arguments being advanced by the Ld. Counsel for the assessee regarding no disallowance u/s40(a)(ia) where the assessee is not in default in view of amendment to first proviso to section 201(1). He, however, submitted that it is upto the discretion of the Bench to take a view as to whether the matter should be restored to the file of the Assessing Officer. 9. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions brought to our notice by both the sides. There is no dispute to the fact that the assessee has not deducted TDS on an amount of Rs. 1,80,440/- for which the Assessing Officer applying the provisions of section 40(a)(ia) made addition of the above amount which has been upheld by Ld.CIT(A). The Coordinate Bench of the Tribunal in the case of Vinay Ashwinikumar Joneja (Supra) has already taken a view that provisions of section 40(a)(ia) are applicable even if no amount is payable at the end of the year. Therefore, ....
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.... conditions of the work would be clearly understood by both the parties. Accordingly, we reject this contention of the assessee and hold that the provisions of sec. 194C shall apply to the polishing works given by the assessee. 7.1 According to Ld A.R, the assessee has acted as a conduit pipe in connection with the polishing works between the customers and the person doing polishing job. Accordingly, it was submitted that there is no profit element in the said transactions. The Ld A.R further submitted that the assessee has included the cost of polishing works in the sale value of aluminium extrusions, without knowing tax implications. However, we notice that the assessee did not furnish any proof to substantiate the above said claims. The assessee, being a dealer in aluminium extrusions, has only supplied the products after carrying out the polishing works according to the taste and requirement of customers. It is only one of the many business techniques normally adopted by a business man to improve his sales, since it will be very difficult for customers to identify the polishing people and get the work done by themselves. Hence, we are of the view that it may not be correct to....