TaxTMI 
TaxTMI 
2018 (10) TMI 180
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....o. 1, the assessee has challenged the sustenance of addition of Rs. 62,069.00/- being interest paid u/s 201(1A) on late deposit of TDS. During the course of hearing, the ld. AR has submitted that the TDS was collected by the assessee on behalf of the Government and since the funds were utilized for business purposes, the interest paid is business expense. It was further submitted that it is not an interest on tax levied on profit or gains of any business of professions and therefore, it is clearly allowable as business expenditure. Further the provisions of section 40(a)(ii) are not applicable on such interest. 4. Per contra, the ld. DR relied on the finding of the lower authorities and submitted that the ld. CIT(A) has already allowed relief in respect of interest and service tax, being charge on indirect taxes and as far as the interest on TDS, being charge on direct tax is concerned, the same has rightly not been allowed by him. 5. We have heard the rival contentions and purused the material available on record. Recently, in case of M/s Sand Plast India Limited vs. DCIT (in ITA No. 310/JP/2018 dated 24/07/2018), we had an occasion to examine a similar issue and our finding....
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....come-tax would augment the capital of the assessee and the expenditure incurred, namely, interest paid for the period of such retention, would assume the character of business expenditure. It held that an assessee could not possibly claim that it was borrowing from the State the amounts payable by it as income-tax, and utilising the same as capitalization in its business, to contend that the interest paid for the period of delay in payment of tax amounted to a business expenditure. Therefore, the interest paid under section 201(1A) could not be allowed as business deduction." 12. The contention regarding section 40(a)(ii) is also not tenable as the same is in context of taxes levied on the profits or gains of business and not in context of taxes by way of TDS on payments made by the assessee and in any case, the interest will partake the character of the principal which is not otherwise allowable. Respectfully following the decisions referred supra, interest on late deposit of TDS u/s 201(1A) cannot be allowed to the assessee and the same has rightly been disallowed by the AO. In the result, ground No. 7 is partly allowed." 6. Following our aforesaid decision, the disal....
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....her two financial institutions namely Fullerton India Limited and Religare Finvest Limited, we are unable to accede to the various contentions raised by the ld AR. Firstly, there cannot be any presumption regarding inclusion of income and payment of taxes just because the payees are large companies. The assessee has to demonstrate through verifiable evidence that the payees have reported the amount paid in their return and paid taxes thereon. Secondly, the issue regarding no amount outstanding at the end of the year and the same been fully paid during the year and provisions of section 40(a)(ia), the issue is no more res integra in light of Hon'ble Supreme Court decision in case of Palam Gas service. Thirdly, the contention regarding the amendment to Section 40(a)(ia) made by FA, 2014 w.e.f. 01.04.2015 which provides that 30% of any payable to a resident shall be disallowed if tax is not deducted at source under Ch. XVIIB as against the 100% presently made, should be read retrospective and apply in the instant case. We have gone through the said provisions and there is nothing in the legislature which suggest the said amendment has to be read retrospectively. The decision of th....
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.... case, given the fact that the assessee has made a specific claim of appointment of an agent for purchase of goods who happens to be his son and also his employee, the assessee carries an onerous duty which he has to discharge by bringing on record necessary verifiable evidence in support of such an arrangement which he claims to have put in place in interest of his business. 27. As we have discussed in Para 17 above in context of payment of sales commission, applying the similar analogy in the instant case, the assessee has to demonstrate through verifiable evidence that such expenditure has been incurred wholly and exclusively for his business purposes and secondly, the same is commensurate with the services so availed. In other words, the assessee has to demonstrate that such commission payment has been made for availing services of his son in effecting the purchases and such services have actually been rendered and availed during the year. The question is how would the assessee demonstrate that such services have been rendered and availed by him and have been adequately compensated for. It can be demonstrated through producing for necessary verification before the AO a....
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....the payment has been effected during the year or the fact that the latter has offered the same in his return of income doesn't by itself is sufficient to hold that the services have been rendered and the expenditure is allowable. What is of relevance is the actual rendering of services and facilitation of purchase through the efforts of Arpit Khandelwal and the evidence so produced doesn't inspire any confidence in us in accepting the same in support of assessee's contention. In the entirety of facts and circumstances, we are unable to accede to the contentions so raised by the ld. AR. In the result, we set-aside the findings of the ld. CIT(A) and confirmed the order of the AO whereby he has disallowed the commission expenditure of Rs. 7,78,597/-." 13. Undisputedly, there are no changes in the facts and circumstances of the case and following the above decision so taken by us in respect of payment of commission to Mr Arpit Khandelwal, the disallowance so made by the AO is hereby confirmed. In the result, the appeal of the assessee is dismissed. ITA No. 735/JP/2016 14. In ITA No. 735/JP/2016 for AY 2011-12, the assessee has taken the following two grounds of appeal:- ....
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....s to the sale made to them during the year under consideration itself. All these facts indicate that the appellant is claiming the amount of bad debts at its own convenience without examining whether these debts have become irrecoverable or not. Further, the appellant has not brought on record any material which support the contention of the appellant that there was dispute with these parties regarding rate and quality. It appears that through writing off bad debts and writing back bad debts claimed in earlier years, the appellant is postponing its tax liabilities, which cannot be permitted. It may be mentioned that in the case of CIT vs. Kohli Bros. Color Lab (P.) Ltd., [2011] 186 Taxman 62 (ALL.), it has been held by the Hon'ble Allahabad High Court that qua the entries of bad debts written off, semblance of genuineness has to be there and the same should not be mere paper work. Further, the Hon'ble Apex Court in the case of Travancore Tea Estates Co. Ltd. vs. CIT [1998] 233 ITR 203, has taken the view that though standard proof of proving the same as bad debt is not required to be adopted and is to be decided on the wisdom of the assessee and not on the wisdom of the Assessing o....
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....id debt was arising out of trading activity, there was relationship of debtor or creditor and the same was irrecoverable. 24. Further, useful reference can also be drawn to the decision of the Hon'ble Bombay High Court in case of Director of Income-tax (International Taxation) vs Oman International Bank SAOG reported in 184 Taxman 314 wherein it was held as under: "10. Let us refer to some dictionary meanings of the word "bad debt". Chambers 20th Century Dictionary refers to bad debt as "a debt that cannot be recovered". Mitra's Legal & Commercial Dictionary refers to bad debt as a debt becomes bad debt when the creditor has no reasonable chance of recovering it from the debtor as held in Deoniti Prasad Singh v. CIT AIR 1953 Pat. 360. The Law Lexicon refers to bad debt as "debt which cannot reasonably be collected. A debt about which there is no reasonable expectation of recovery; a debt believed to be unrecoverable." Reference may also be made to p. 878 of the Law and Practice of Income-tax by Kanga, Palkhiwala & Vyas, 9th Edn. where the learned Jurist opined as under :- "Under the amended clause, the requirement of 'establishing' that the de....
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....ion. The assessee must honestly feel convinced that the financial position of the debtor was so precarious and shaky that it would be impossible to collect any money from him. The question is really one of fact depending upon the various facts and diverse circumstances bearing on the debtor's pecuniary position, his commitments and obligations. Further, that the judgment of the assessee in regard of the debt as a bad debt must be a honest judgment and not a convenient judgment. Reference was also made to the judgment of the Delhi High Court in CIT v. Global Capital Ltd. [2008] 306 ITR 332. The Delhi High Court has taken the view that post the amendment the assessee is not required to establish that the concerned debt has actually become bad in the relevant year for the purpose of claiming deduction under this section and the only requirement for claiming deduction is that the assessee has to write off the relevant debt in his book treating it as bad. This Court in CIT v. Star Chemicals (Bombay) (P.) Ltd. [2008] 220 CTR (Bom.) 319 had also taken a view that post-amendment on a reading of the section and the circular, what was required was to write off the debt ....