TaxTMI 
TaxTMI 
2022 (2) TMI 379
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....me. 3. The learned CIT(A) has erred both in law and on the facts of the case fn confirming the disallowance of Rs. 1,44,500/- u/s. 40(a)(ia) r.w.s. 94C of the Act. 4. The learned CIT(A) has erred both in law and on the facts of the case in confirming the disallowance of interest expense of Rs. 44,18,949/- u/s. 36(1)(iii) of the Act. 5. Both the lower authorities have passed the orders without properly appreciating the facts and they further erred in grossly ignoring various submissions, explanations and information submitted by the appellant from time to time which ought to have been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 6. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in levying interest u/s. 234A/B/C of the Act. 7. The learned CIT(A) has erred in law and on facts of the case in confirming action of the Id. AO in initiating penalty u/s. 271(1)(c) of the Act. 8. The appellant craves leave to add, amend, alter, edit, delete, modify or chang....
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....ant did not make any submission on this issue as can be seen from para 5.2 above. During hearing of the appeal, the authored representative of that appellant submitted that' he is not pressing this ground. Accordingly, addition of Rs. 4,72,860/- is confirmed. This ground of appeal is dismissed. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX In fact, the firm has paid and debited interest expenses instead of interest income receivable from that firm" but no further submission were made on this account. The A.R. of the appellant during hearing of appeal submitted that he is not; pressing this ground. In any case, the appellant has not contested with' corroborative evidence finding of the AO that instead of paying interest to Anjani Enterprises, the appellant has received interest of Rs. 4,72,643/-. Accordingly, addition of Rs. 4,72,643/- is upheld. This ground of appeal is rejected. It is seen that during assessment proceedings, the AO noted that the appellant had made payment of Rs. 72,000/- and Rs. 72,500/- to Ishwarbhai and Parmeshwarbhai respectively for colour work. The AO further noted that no TDS was deducted on these amounts....
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....iation of facts/law. All the facts relating to the issue are arising from the order of the AO and there is no need to refer to any fresh document to decide the issue on hand. Therefore in the interest of justice and fair play, we have no hesitation in admitting the ground raised by the assessee as discussed above though the same was not pressed before the learned CIT(A) by the assessee. 9.1. As there is no finding by the learned CIT(A) qua the dispute on hand, therefore we are inclined to set aside the same to the file of the learned CIT(A) for fresh adjudication as per the provisions of law. Hence, the ground raised by the assessee is allowed for statistical purposes. 10. The 2nd issue raised by the assessee in ground No. 3 is that the learned CIT(A) erred in confirming the disallowance made by the AO for Rs. 1,44,500 on account of non-deduction of TDS under the provisions of section 194C read with section 40(a)(ia) of the Act. 11. The assessee in the year under consideration has incurred an expense of Rs. 1,44,500/- towards the colouring work but no TDS was deducted thereon under the provisions of section 194C of the Act. Therefore the same was disallowed by the AO and a....
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.... Tribunal, have held the amendment made by Finance (No. 2) Act to be curative in nature. We further finds the coordinate bench of the Tribunal in the case of R.H. International (supra) has held that disallowance u/s. 40(a)(ia) of the Act be restricted to 30% of the expenses paid as against 100% because amended provision is curative in nature and the provisions should be applied retrospectively. 16.1. Likewise, the Ahmedabad tribunal in the case of Electronic Instrumentation & Control Pvt. Ltd. vs. ITO in ITA No. 3055 and 3056/AHD/2013 has held that the proviso added to the provisions of section 40(a)(ia) of the Act by the Finance Act (No. 2) 2014 is applicable retrospectively. Thus, in view of the above provisions, the 100% of the expenses incurred by the assessee without incurring the TDS cannot be disallowed. Rather disallowance shall be restricted to the tune of 30% only. Accordingly, we direct the AO to restrict the disallowance to the tune of 30% of the total expenses incurred by the assessee. 16.2. In the alternate contention, the learned AR at the time of hearing before us has submitted that the payees have already included the amount received from the assessee in the ....
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.... (B) Payer produces a certificate in prescribed form from a CA to the effect that the payee has included the income in return and paid taxes thereof. 16.6. The CBDT has prescribed Form No. 26A for CA certificate to be obtained and furnished by payer evidencing compliance by payee. From the above discussion, it is transpired that the assessee can be granted immunity from disallowances of expenses on account of non/short deduction of Taxes provided that the assessee furnishes the certificate in the prescribed form. Thus the onus is upon the assessee. However, we find that assessee has not furnished the necessary certificate in form 26A prescribed by the CBDT. Now at the time of hearing before us, the learned AR has also not furnished any certificate in form 26A prescribed by CBDT. Now the issue arises, can the matter be set aside to the file of the AO for collecting the necessary evidences from the respective payees to ensure that such payees have paid the taxes on the amount received from the assessee? 16.7. In this regard we note it is the duty of assessee to deduct appropriate tax from the amount paid/payable to any party i.e. payee if such amount falls under the preview o....
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....unt of borrowed fund approximately 5 crores was not utilized for the project namely 'Shivdhara Site'. Accordingly, it was not possible to claim such huge amount of interest expenses of Rs. 48,91,809.00 towards such project namely 'Shivdhara Site'. Likewise, the contention of the assessee that no interest expense has been debited in the profit and loss account was not correct. It is for the reason that indeed the assessee has increased the closing WIP by the amount of interest expense but the same will become the opening WIP for the subsequent year and the assessee will claim the deduction of the same in the succeeding years. 18.2. The AO further found that the assessee has carried out financial transactions approximately for Rs. 5.70 crores with its sister concern namely M/s. Anajni Enterprise, having no commercial dealings. Thus, he was of the view that the borrowed fund has been diverted to extend the benefit to the sister concern. Accordingly, the AO concluded that the interest expense has not been incurred for the purpose of business as provided under section 36(1)(iii) of the Act and disallowed the interest expenses of Rs. 44,18,949.00 (48,91,809 minus 4,72,....
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....l before us. 22. The learned AR for us submitted that the entire interest bearing loan was utilized exclusively for the purpose of its construction activities without diverting the same to the sister concern. There was opening debit balance of Rs. 33,29,438.00 in the books of the assessee. Likewise, the assessee has received a sum of Rs. 5,82,71,860.00 and repaid a sum of Rs. 5,40,69,286.00 during the year under consideration leaving a credit balance of Rs. 8,73,136.00 at the end of the financial year. Thus, as such the assessee has received more fund from the sister concern than advancing the same to the sister concern. Thus the question of diversion of fund does not arise. 23. Alternatively, the assessee submitted that maximum amount outstanding from the sister concern as on 11 May 2013 was of Rs. 1,47,78,435.00 against the capital of the assessee at Rs. 1,49,56,320.00. Accordingly it can be said that the amount of loan has been given to the sister concern out of its own fund. 23.1. Without prejudice to the above, the assessee also contended that amount of interest expenses of Rs. 37,99,950.00 has already been included in the closing WIP. Thus to this extent, the amount ....