TaxTMI 
TaxTMI 
2023 (8) TMI 514
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.... 2. In its appeal, the assessee has raised the following grounds:- "1. The Ld CIT(A) erred in not appreciating that the assessee had written off the amount of Rs. 58,104/- as bad debt in the books of account and it was allowable as deduction. 2. Without prejudice to Ground No. 1, the Ld CIT(A) erred in not appreciating the amount of Rs. 58,014/- was incurred wholly and exclusively for the purpose of business and was allowable as deduction under section 37(1) of the IT Act. 3. The CIT(A) erred in upholding the disallowance of Rs. 8.48.605/- being LC Discounting Charges without appreciating that this amount was credited to the suppliers account against purchases and was a business liability. 4. The CIT(A)....
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....erefore the same was claimed as bad debt. The Assessing Officer ("AO") vide order dated 28/03/2014, passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that the amount in question is not in the nature of revenue receipt in any earlier year nor it was offered to tax at any point of time since it does not represent any revenue receipt. The AO further held that the TDS is the tax liability of the deductee and hence the same cannot be said to partake the character of income in the hands of the assessee at the time of deduction. The AO also held that the payment towards TDS cannot now be claimed as expenditure by simply reversing the entries and by crediting the deductee's account. Accordingly, the ....
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....mount is in the nature of revenue receipt in any earlier year. Rather the amount in question is excess payment made by the assessee. Further, as rightly been held by the learned CIT(A), this amount cannot also be claimed as business expenditure since the liability of the assessee to make payment of interest on late payment of purchase cost was only limited to Rs. 2,90,070. The assessee being the payer was required to deduct tax as per law. Thus any excess payment made by the assessee over the amount net of TDS cannot be said to be an expenditure incurred wholly and exclusively for the purpose of the business under section 37(1) of the Act. Accordingly, the impugned order passed by the learned CIT(A) on this issue is upheld and grounds no.1 ....
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....e assessee. 10. The learned CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue by observing as under:- "6.2 I have considered the facts of the case and submissions of the appellant. The appellant had to make the payment of Rs. 3,75,06,653/- on account of purchases made from Delta Iron & Steel Co. Pvt. Ltd. The Letter of Credit (LC) was opened for 90 days. Since the supplier wanted immediate payment, it got its invoices discounted from its bank which charged the interest of Rs. 8,48,605/- for a period of 90 days. This amount of Rs. 8,48,605/- was paid by the appellant (by way of book entry) to the other party and business expense has been claimed. 6.3 I am not in agreement with the app....
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....erused the material available on record. The assessee made the purchases from Delta Iron and Steel Company Private Limited, which insisted on early payment. As per the assessee, it agreed to the terms of the seller that the bill discounting charges would be borne by the assessee if the seller gets its invoices discounted by the assessee's banker. At the end of March 2011, when the supplier insisted on payment, the total value of purchases made by the assessee was Rs. 3,75,06,653. The assessee opened the letter of credit account in Standard Chartered Bank on 28/03/2011, for a period of 90 days. Since the supplier, i.e Delta Iron and Steel Company Private Limited, got their invoices discounted, the bank charged interest of Rs. 8,40,605, being....