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TaxTMI 
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TaxTMI 
2017 (5) TMI 634
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....(A) has erred in deleting the addition of Rs. 33,35,974/- made by the AO on account of disallowance of interest paid to NBFCs and finance charges as per provision of section 40(a)(ia) of the I.T. Act?" 2. Whether in law and on facts & circumstances of the case, the CIT(A) has erred in deleting the disallowance of Rs. 1,44,666/- made by the A.O. out of Car running & maintenance expenses, Office telephone and traveling expenses respectively as personal use cannot be ruled out ? 3. Whether in law and on facts & circumstances of the case, the CIT (A) has erred in deleting the disallowance amounting to Rs. 50,000/- made by the A.O. out of mess expenses which were not supported by proper vouchers ?" 3. We shall adjudicate the issues groun....
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....espect of failure to deduct tax at source, if the payee : i) Has furnished his return of income u/s 139. ii) Has taken into account such sum for computing income in such return of income. iii) Has paid tax due on the income declared by him in such return and the person furnishes a certificate to this effect from a Chartered Accountant in Form no. 26A. 4.3.1 Simultaneously, second proviso was inserted in sec. 40(a)(ia) by Finance Act 2012 w.e.f. 01.04.2012 to the effect that where an assessee fails to deduct tax but he is not deemed to be an assessee in default under the first proviso to sec. 201 (1) then, it shall be deemed that the assessee has deducted and paid the tax on the date of furnishing return of income by the resident p....
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.... vide para no. 6 to 8: as under: 6. Learned counsel's vehement reliance is on Hon'ble Allahabad High Court's judgment in the case of Jagran Prakashan Ltd Vs DC IT [ (2012) 21 taxmann.com 489 All] wherein Their Lordships have, inter alia, observed as follows; it is clear that deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly. In the present case, the Income tax authorities had not adverted to the Explanation to Section 191 nor had applied their mind as to whether the assessee has also failed to pay such tax directly. Thus, to declare a deductor, who failed to deduct the tax at source as an assessee in default, condition precedent is that assessee has als....
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....ery provisions under section 201(1) can be invoked. As observed by Their Lordships, the provisions of Section 201(1) cannot be invoked and the "tax deductor cannot be treated an assessee in default till it is found that assessee has also failed to pay such tax directly". Once this finding about the non payment of taxes by the recipient is held to a condition precedent to invoking Section 201(1), the onus is on the Assessing Officer to demonstrate that the condition is satisfied. No doubt the assessee has to submit all such information about the recipient as he is obliged to maintain under the law, once this information is submitted, it is for the Assessing Officer to ascertain whether or not the taxes have been paid by the recipient of inco....
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....neness of some of the expenses are not established. Personal use of telephone also cannot be ruled out in absence of log book and necessary details in this regard. In view of these facts, expenses are not completely verifiable and therefore, 1/10th of these expenses totaling to Rs. 14,46,656/- which comes to Rs. 1,44,666/- and is being disallowed and added back to the total income of the assessee to cover up all possible leakages of Revenue." 5.1 The Assessing Officer while making the adhoc disallowance of Rs. 50,000/- being mess expenses had given the following findings: "Further, on perusal of Trading and Profit & Loss Account, it was found that the assessee has debited expenses on account of Rs. 21,49,054/-. On verification of the....