TaxTMI 
TaxTMI 
2022 (4) TMI 671
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....copy of ITR. 3. Before advancing the matter on facts for adjudication, we reproduce grounds challenged by the appellant as under; "1.That under the facts and the law, the learned commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs. 8,30,975/- made by the learned Assessing Officer u/s 40(a)(ia) for non-deduction of tax u/s 194A from NBFC, namely M/s Magma Leasing Finance Limited and M/s SREI Infrastructure Limited, rejecting the explanations" "Prayed that the deductees are national repute NBFCs and are paying taxes and no amount is outstanding at the end of the year" "Prayed to delete the disallowance of Rs. 8,30,975/-" "2.That under facts and the laws, the learned CIT(Appeals) further erred in maintaining the adhoc disallowance of Rs. 2,00,000/- on lumpsum basis made by the learned Assessing Officer, out of various expenses claimed by the assessee" "Prayed to delete the disallowance of Rs. 2,00,000/-" (Emphasis supplied) 4. Pithily the facts of the case are; 4.1 The appellant assessee is an individual and proprietor two concerns in the name & style viz; Shri Balaji Road Carrier, engaged in transport & logis....
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....ges were debited without TDS u/s 194A and was subjected to 40(a)(ia) disallowances by the Ld AO, against which no certificates in "Annexure-A to form 26A", from a Chartered Accountant as contemplated in first proviso to section 201(1) of the Act r.w.s. 31ACB; were placed neither before the Ld AO during the course assessment proceeding nor before the Ld CIT(A); Sr NBFC Payee (Interest/Finance Charges Paid ) Amt of Interest /Finance Charge Debited Claimed as Exps & Disallowed Ca Certified Details Date Certified Amount 1 Magma Leasing Finance Ltd 3,46,000 No Certificate Placed On Record 2 SREI Infrastructure Finance Ltd 4,84,975 No Certificate Placed On Record 6.3. As regards to allowability of interest/finance charges, it is imperative to make note of insertion of first proviso to Section 201 (1) by the Finance Act 2012, operative with effect from 1st July 2012 which reads as under: "Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account o....
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....ource (TDS) on the sum paid or credited to a resident payee under certain contingencies, such person; a. Shall first be excluded from holding as the assessee in default, subject to placing on records the certificate from a chartered accountant and b. Shall then be deemed that, such person has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee. 6.6. In the aforesaid position of statute and the law laid down by the Hon'ble Delhi High Court in CIT Vs Ansel Landmark Township reported at 377 ITR 635 and Hon'ble Apex Court in judgment in M/s Hindustan Coca Cola Beverages Pvt Ltd Vs CIT reported at 293 ITR 22 and in the context of circular number e Circular No. 275/201/95-IT(B) dt 29/1/1997 issued by the Central Board of Direct Taxes [for shot "CBDT"], the Hon'ble Lordships have observed that, once it is proved on record that, the payee has accounted the amount in question as income and discharged the due taxes thereon then, no recovery of tax demand be enforced against the assessee. 6.7. In the case at hand, firstly, so far as payment of interest / finance charges to M/s Magma Leasing Finance Ltd is concern, a....
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....the records of appellate proceedings it transpired that, neither of the lower tax authorities had pointed any such voucher, the genuineness of the expenditure therein claimed to have been incurred by the assessee wholly and exclusively for the purpose of its business did not inspire any confidence, nor it was the case of the revenue that any part of the expenditure in question was either found to be bogus or fictitious, nor was found to have not been incurred by the assessee wholly and exclusively for the purpose of his business. Indeed, it showcased an exercise of running around the circle by both the lower tax authorities while dealing with the present case. 7.4. We neither could come across any provision in the present Income Tax Statute nor it has been brought to our notice by either parties to dispute, which subscribes vis-à-vis authorises the tax authorities to arrive at this logic of subscribing ad-hoc disallowances. Evidently, there has been no clear findings as to number of vouchers requiring denial of allowances with the amount of expenditure and nature of defects therein or therewith, moreover department could not bring out any deprecative material on record to....