2014 (1) TMI 1328 - AT - Income Tax

Disallowance made on account on interest expenses Held that - The undisputed fact remains that the assessee was awarded the contract-work and the work was further subletted to the sub-contractor and the money given to the sub-contractor was for execution of work - Nothing has been brought on record that money was given for any other purpose - In the absence of same, CIT(A) was justified in holding that the money was advanced for business purpose thus, there was no infirmity in the order of the CIT(A), the same is upheld Decided against Revenue. Allowance in respect of TDS Held that - The CIT(A) has given direction to the AO to verify the claim of assessee in respect of TDS from hard-copies of certificates and also confirmation of the deductor - Since the CIT(1A) as such has not given any relief, there was no infirmity in the order of the CIT(A), the same is upheld Decided against Revenue.

Summary

Issues involved:
- Disallowance of interest expenses for Assessment Years 2008-09 & 2009-10
- Allowance of TDS claim for the years under consideration

Analysis:

Issue 1: Disallowance of interest expenses
In the case for AY 2008-09, the AO disallowed the interest expenses claimed by the assessee. The CIT(A) allowed the appeal directing the AO to allow the returned loss and the TDS claim. The Revenue appealed against this decision. The Revenue argued that the assessee failed to establish business expediency for the expenses incurred. The assessee contended that the interest paid was in accordance with the agreement with NHAI for subcontracted work. The Tribunal found that the money was advanced to the subcontractor for work execution, establishing business expediency. The Tribunal upheld the CIT(A)'s decision, stating that the money was advanced for a business purpose, rejecting the Revenue's grounds.

Issue 2: Allowance of TDS claim
Regarding the allowance of the TDS claim, the CIT(A) directed the AO to verify the claim from hard-copies of certificates and deductor confirmation. As the CIT(A) did not grant any relief, the Tribunal found no fault in the decision and upheld it. Consequently, the Tribunal dismissed the Revenue's appeal for AY 2008-09.

Issue 3: Disallowance of interest expenses for AY 2009-10
In the appeal for AY 2009-10, the Revenue challenged the disallowance of interest expenses. Following the reasoning from the AY 2008-09 case, where similar facts and circumstances were present, the Tribunal dismissed the Revenue's appeal for AY 2009-10 as well.

In conclusion, both appeals by the Revenue were dismissed based on the findings related to the disallowance of interest expenses and the allowance of TDS claims for the respective assessment years.

This comprehensive analysis covers the issues of disallowance of interest expenses and allowance of TDS claims for the Assessment Years 2008-09 and 2009-10, providing a detailed understanding of the Tribunal's decision and the arguments presented by the parties involved.