TaxTMI 
TaxTMI 
2018 (7) TMI 2276
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....gainst the intent and purpose of the statute. 3. Whether the Ld. CIT(A) is right in allowing the appeal of the assessee, wherein the learned appellate authority himself is stating that the assessee is a chronic defaulter of TDS." 3. The assessee is a company engaged in the business of manufacture of readymade garments. The assessee has its own manufacturing facility. In case of the need, the assessee also outsources the work of manufacturing to others. In respect of work of manufacturing outsourced to others, the assessee paid a sum of Rs.39,60,85,470 to M/s. L.T. Karle & Co. Out of the above payment, on a sum of Rs.29,72,63,800 the Assessee did not deduct tax at source as was required by the provisions of Sec.194C of the Act. The AO therefore added a sum of Rs.29,72,63,800 to the total income of the assessee for non-deduction of tax at source by invoking the provisions of section 40(a)(ia) of the Income- Tax Act, 1961 ["the Act"], which lays down that where tax is deductible on a payment and tax is not so deducted, then the sum in respect of which tax is not deducted at source, if it is claimed as expenditure in computing income from business, the same will not be allo....
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....rescribed:" 6. The gist of the first proviso to Sec.201(1) of the Act is that taxes due on the payment on which tax has not been deducted at source should have been paid by the payee by inclusion of such payment as part of his income and the return of income including the payment from the payer as part of payee's income. The further requirement is a certificate of a Chartered Accountant regarding compliance of the above conditions. 7. The assessee further submitted that the second proviso to section 40(a)(ia) was inserted in the Act by Finance Act, 2012 w.e.f. 1.4.2013 whereas the first proviso to section 201(1) was inserted by the Finance Act, 2012 w.e.f. 1.7.2012. The provisions of section 201(1) and section 40(a)(ia) as referred to above only implement the law which has been elucidated by the various High Courts, much earlier. As per these provisions, if ultimately the tax due to the exchequer is received then no disallowance u/s.40(a)(ia) of the Act should be made. These provisions are clarificatory and therefore will apply to all the proceedings pending on the date when they were brought into statute book. The assessee placed reliance on certain judicial pronouncements i....
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....to 3 before the Tribunal. Before us the ld. counsel for the assessee placed reliance upon the decision of the Hon'ble Delhi High Court in the case of CIT v. Ansal Land Mark Township (P) Ltd. (377 ITR 635)(Del) wherein the Hon'ble Delhi High Court held that amendment to the provisions of section 201(1) and section 40(a)(ia) of the Act by Finance Act, 2012 w.e.f. 1.7.2012 and 1.4.2013 by insertion of first proviso and third proviso respectively were applicable right from the beginning when section 40(a)(ia) of the Act was enacted. 10. The ld. DR relied on the order of the AO and remand report of the AO which was filed before the CIT(Appeals). 11. We have given a very careful consideration to the rival submissions. The Hon'ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (I) Pvt.Ltd., in ITA No.160/2015 judgment dated 26.8.2015 has taken the view that the insertion of the second proviso to Sec.40(a)(ia) of the Act is retrospective and will apply from 1.4.2005. Similar view has also been taken by the Hon'ble Calcutta High Court in the case of M/s.Tirupati Construction (supra). Therefore the Assessee is entitled to the benefit of 2nd proviso to Sec.40(a)(ia) of....
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.... A Total amount of direct interest/other expenses pertaining to tax- exempt investment NA B Total amount of indirect interest pertaining to tax-exempt investments 13,73,16,995 As at 31/03/14 As at 31/03/13 Average C Average amount of tax exempt investments 2,00,000 2,00,000 2,00,000 D Average amount of total assets 251,71,14,117 248,65,22,583 250,18,18,350 E Proportionate indirect interest to be disallowed B X C i.e. D 13,73,16,995 x 2,00,000 250,18,18,350 10,977 F 0.5% of average amount of tax exempt investments 2,00,000*0.5% 1,000 G Total disallowance attracted u/s. 14A r.w.r 8D A+E+F 11,977 3.5 An amount of 11,977/- is disallowed u/s. 14A of the Income Tax Act, 1961 r.w.r 8D(2)(ii) of 10,977/- and r.w.r 8D(iii) of 1,000/- respectively. Addition: 11,977/-" 14. On appeal by the assessee, the CIT(Appeals) deleted the addition made by the AO for the reason that there could be no disallowance of expenses u/s. 14A of the Act when there is no exempt income earned during the relevant previous year. 15. Aggrieved by t....