2012 (7) TMI 942 - AT - Income Tax

Summary

Issues involved: Appeal against order of Ld. CIT(A) XV, Ahmedabad dated 22.02.2012 for the assessment year 2008-09. Grounds include ex-parte decision by Ld. C.I.T. (Appeals), disallowance of interest expenses u/s 40(a)(ia), disallowance of freight and truck hire charges u/s 40(a)(ia), and disallowance of conveyance and salary expenses.

Ex-parte Decision Issue: The Ld. A.R. argued that no TDS was deducted on the amount paid by the assessee, and as per a Special bench decision, no disallowance u/s 40(a)(ia) is justified if the amount was paid by the year end. Requested restoration to A.O. for fresh decision. Ld. D.R. supported lower authorities. Tribunal found lack of evidence supporting full payment by year end, thus remanded the matter to A.O. for fresh decision, emphasizing burden of proof on assessee.

Disallowance of Interest Expenses Issue: Ld. C.I.T. (Appeals) upheld disallowance u/s 40(a)(ia) of a portion of interest expenses. Assessee argued for full allowance based on non-deduction of TDS. Tribunal referred to Special bench decision, remanding the issue to A.O. for fresh decision on whether the entire expenditure was paid by year end.

Disallowance of Freight and Truck Hire Charges Issue: Ld. C.I.T. (Appeals) upheld disallowance u/s 40(a)(ia) of a portion of freight and truck hire charges. Assessee sought restoration to A.O. for fresh decision based on Special bench decision. Tribunal remanded the issue to A.O. for verifying full payment by year end, emphasizing the burden of proof on the assessee.

Disallowance of Conveyance and Salary Expenses Issue: A.O. disallowed a percentage of conveyance and salary expenses, which Ld. CIT(A) reduced further. Assessee argued for complete allowance, but Tribunal upheld Ld. CIT(A)'s decision due to lack of verifiable accounts. Tribunal rejected the appeal on this issue.

In conclusion, the Tribunal partially allowed the appeal for statistical purposes, remanding the issues of interest expenses and freight/truck hire charges disallowance back to the A.O. for fresh decisions based on the burden of proof on the assessee regarding full payment by the year end. The disallowance of conveyance and salary expenses was upheld by the Tribunal.