TaxTMI 
TaxTMI 
2017 (12) TMI 1266
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The assessee filed return of income declaring total income of Rs. 2,03,750/-. The assessment was completed u/s 143(3) on total income of Rs. 58,15,640/-. During the assessment proceedings, the assessing officer(AO) made the following additions : (i) Disallowance of partners' remuneration Rs. 4,94,000 (ii) Disallowance of Finance charges u/s 40(a)(ia) Rs. 50,46,643 (iii) Disallowance of payments u/s 40A(2)(b) Rs. 71,250 3. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition in respect of partners' remuneration of Rs. 4,94,000/- and the Finance charges of Rs. 13,23.025/- and deleted the sum of Rs. 71,250/- with respect to the disallowance of payments made u/s 40A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ltd. (377 ITR 635 Del.), the CIT(A) has deleted the addition of Rs. 37,23,628/- and confirmed the balance amount of Rs. 13,23,025/-. 6. Aggrieved by the order of the Ld.CIT(A), the Revenue is in appeal before us. We have heard both the parties and perused the material placed on record. During the previous year relevant to the assessment year 2012- 13, the assessee has made the payments of Rs. 50,46,653/- towards the interest as per details given above to M/s Sundaram Finance Ltd. and M/s Shriram Transport Finance Co.Ltd. without deduction of tax at source. The above payments attracts the TDS u/s 194A of I.T.Act, and non deduction of tax at source attracts the disallowance u/s 40(a)(ia) of I.T.Act. Accordingly, the AO made the disallowance....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ribed under proviso to section 201(1) read with rule 31ACB of the I.T. Rules no disallowance u/s 40(a)(ia) can be made." 6.2. As per the proviso, if the deductee admits the income and pays taxes on such income, the assessee is not deemed to be assessee in default and the disallowance u/s 40(a)(ia) does not attract. Though the amendment has come into effect w.e.f. 01.04.2013, the Hon'ble Delhi High Court in the case of CIT Vs. Ansal Landmark (Supra) held that the second proviso to section 40(a)(ia) is declaratory and curative in nature and has retrospective effect from 01.04.2005. The Ld.CIT(A) has allowed the assessee's appeal following the order of the Hon'ble Delhi High Court. During the appeal hearing, the Ld.DR did not place any other....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd permitted under partnership deed. 9. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the addition holding that the assessee failed to furnish any written agreement for increasing the remuneration. In the absence of written document, the CIT(A) was of the view that it is not justified to make such claim and accordingly confirmed the addition made by the AO. 10. Aggrieved by the order of the CIT(A), the assessee has filed the cross objections before this Tribunal. During the appeal hearing, the Ld.AR argued that the partnership deed permits the payment of remuneration of Rs. 3,000/- which is subject to increase or decrease by mutual agreement from time to time and subject to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the CIT(A). 12. We have heard both the parties and material placed on record. The assessee firm has paid a sum of Rs. 5,30,000/- to managing partner as remuneration. According to the AO, the partnership deed permits the payment of remuneration of Rs. 36,000/- only. Though the Ld.CIT(A) agreed that partnership deed permits for payment of remuneration, there was no separate document in writing for increase in remuneration. Since there is no document placed before the CIT(A), the Ld.CIT(A) confirmed the addition. However, we have gone through the partnership deed and in the partnership deed with regard to payment of remuneration,there was a clause for increase/decrease of remuneration as per mutual consent before the end of the financial ....