TaxTMI 
TaxTMI 
2022 (3) TMI 519
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....making / sustaining disallowance of Rs. 1,34,832 paid to M/s. V J Shroff and Co., Chartered Accountants, as professional consultancy expenses under the facts and circumstances of the case. Hence the disallowance made / sustained requires to be deleted. 4. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and justice rendered." 2. The assessee has filed petition for admission of additional evidence under Rule 29 of the ITAT Rules stating that the reliance on the aspect of TDS made and remitted during the AY 2013-14 was not taken by the assessee before the lower authorities as the need to place the same was not felt at that stage. However, in view of the new argument now advanced by the assessee before this Tribunal, it is incumbent for the assessee to bring these documents as additional evidence. The failure to produce these documents before the lower authorities was neither wilful nor deliberate and that these evidence are very essential for proper appreciation of the facts of the case. 3. We have heard both the parties on the admission of additional evidence. In our opinion, the as....
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....s [ITA No. 848/2010) to state that the date of crystallization of the liability is relevant. 8. The CIT(Appeals) examined the invoice raised by VJ Shraff and Company which revealed that the same is dated 29.04.2009. When questioned in this regard, the ld. AR explained that the payment was made in FY 2012-13 though the bills dates are of earlier period and that the payment was made based on an agreement with VJ Shraff and Company that the payment will be released after VAT orders are received. However, he admitted that he does not have this agreement. (This admission was recorded in the notesheet entry dated 06.02.2018, which has been duly signed by the ld. AR). In accordance with the decision of the Hon'ble Delhi High court in the case of Jagatjit Industries (Supra), the CIT(A) was of the view that the date of crystallization of the liability is 29.04.2009 and the expenditure is therefore not allowable in the year under consideration. 9. The contention of the ld. AR before us is that these two expenditure were actually incurred by the assessee in the assessment year under consideration as this expenditure crystallised in the year under consideration and the same has to be all....
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....ed to extend the provisions of section 40(a)(i) to payments of interest, commission or brokerage, fees for professional services or fees for technical services to residents and payments to a resident contractor or sub-contractor for carrying out any work (including supply of labour for carrying out any work), on which tax has not been deducted or after deduction, has not been paid before the expiry of the time prescribed under sub-section (1) of section 200 and in accordance with the other provisions of Chapter XVII-B. It is also proposed to provide that where in respect of payment of any sum, tax has been deducted under Chapter XVII-B or paid in any subsequent year, the sum of payment shall be allowed in computing the income of the previous year in which such tax has been paid. The proposed amendment will take effect from 1st day of April, 2005 and will, accordingly, apply in relation to the assessment year 2005-06 and subsequent years." [Emphasis supplied] 13. Section 40(a)(ia) thus was introduced in the statute with a view to augment the compliance of TDS provisions and a provision therefore was made therein to disallow the expenses for which tax was not deducted at source a....
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....wance under section 40(a)(ia) shall be made in respect of the expenditure incurred in the month of March if the tax deducted at source on such expenditure has been paid before the due date of filing of the return. While proposing this amendment, it was explained by the Finance Minister that the taxpayer will now get a time period of six months for depositing the tax deducted at source in respect of expenditure incurred in the month of March so as to escape the disallowance of the said expenditure under section 40(a)(ia). The Finance Minister also made it clear that this proposed amendment has to be given retrospective effect from assessment year 2005-06. The assessees thus were classified in two categories, namely; one those who have deducted the tax during the last month of the previous year and two; those who have deducted tax in the remaining eleven months of the previous year. It was provided that in case of assessees falling under the first category, no disallowance under section 40(a)(ia) shall be made if the tax deducted by him during the last month of the previous year has been paid on or before the due date of filing the return as specified in section 139(1). In the cases ....
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....of the Legislature to disallow the whole of the expenditure which in turn will lead to levy of tax @ 33.99 per cent plus interest and penalty is unheard of in the world. The provision is a confiscatory inasmuch as that at times when the amount of TDS involved is only 1 per cent of the expense the additional tax liability comes to 33.99 per cent of the sum which is further increased by levy of interest under sections 234B and 234C. In most of the cases the total tax and interest liability comes to somewhere between 44 per cent to 46 per cent of the amount in question. It will be appreciated that such disproportionate burden on the assessees is for not collecting the tax from a third party (which is essentially a job of the Government) is undoubtedly unreasonable. It is more so in almost all such cases payments are through banking channels and are fully amenable to verification and there are hardly any reason to doubt that those receipts are not disclosed by the recipients. The argument is also no consolation to the businessman whose business in subsequent year is not good enough to absorb the deduction of expenses disallowed in earlier year under section 40(a)(ia). True the ded....
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.... (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid]." 19. While proposing the aforesaid amendments to section 40(a)(ia), Hon'ble Finance Minister stated in para 137 of his Budget Speech delivered in the Parliament on 26th February, 2010 as reported in [321 ITR (St.) 1 at 24, page 34] as under:- "Relaxing the current provisions on disallowance of expenditure, I propose to allow deduction of such expenditure, if tax has been deducted at any time during the financial year and paid before the due date of filing the return. This will allow most deductors additional time up to September of the next financial year. At the same time, I propose to increase the interest charged on tax deducted but not deposited by the specified date from 12 per cent to 18 per cent per annum." 20. The Memorandum explaining the provisions in the Finance Bill, 2010 as reported in 321 ITR (St.) 119 also gave the following justification for the amendments proposed in section 40(a)(ia) :- "It is proposed to amend the said section to provide that no disallowance will be made if after deduction of tax during the previous ye....