2014 (2) TMI 192 - AT - Income Tax

Deletion of various expeses made - Freight recoverable, repacking charges, excess freight charges, dead freight, reimbursement of salary Held that -The penal freight charges was actually paid to the Railways for over-loading of railway wagon and it was in the nature of excess freight for compensation of over-loading - the excess freight is not penal in natue and there is no violation of any statutory provisions - Even the dead freight of was deducted by Bokaro Steel Plant due to under weighment of railway wagons, which means that quantity of goods dispatched was lower than the optimum permissible limit - It means that CIT(A) has rightly deleted the addition The reimbursement of salary, bonus etc. of the staff employed by an associate concern and for the services utilised for the purpose of its business - Revenue even now before us has not contented that there was no services rendered Decided against Revenue. Disallowance u/s 40(a)(ia) of the Act deposit of TDS after the due date but before filing of return u/s 139(1) Held that - The decision inRB Jodha Mal Kuthiala Versus Commissioner of Income-Tax, Punjab, Jammu And Kashmir And Himachal Pradesh 1971 (9) TMI 2 - SUPREME Court followed - The provision which has inserted the remedy to make the provision workable, requires to be treated with retrospective operation so that reasonable deduction can be given to the section as well - In view of the authoritative pronouncement of the Supreme Court, the court cannot decide otherwise - the amendment in the provisions of section 40(a)(ia) of the Act by Finance Act, 2010 is remedial and curative in nature and TDS paid on or before the due date of filing of return u/s. 139(1) of the Act, deduction in respect to the amount on which TDS is so paid, is allowable - the TDS was paid before due date of filing of return u/s. 139(1) of the Act by the assessee Decided in favour of Assessee.

Summary

Issues:
1. Delayed appeal by revenue due to condonation petition.
2. Disallowance of additions made by AO on various accounts.
3. Disallowance of reimbursement of salary.
4. Disallowance of deduction for non-payment of TDS.

Analysis:

Issue 1: Delayed appeal by revenue due to condonation petition
The appeal by revenue was delayed by 2 days, and a condonation petition was filed. The Tribunal found reasonable cause for the delay and admitted the appeal for hearing, as no one was present on behalf of the assessee during the hearing.

Issue 2: Disallowance of additions made by AO on various accounts
The appeal by revenue challenged the CIT(A)'s deletion of additions made by the Assessing Officer (AO) on account of freight recoverable, repacking charges, excess freight charges, dead freight, and reimbursement of salary. The CIT(A) deleted these additions after considering the ledger copies and submissions of the appellant. The Tribunal agreed with the CIT(A) that the additions were unjustified, as the amounts were duly accounted for in the books of account or were allowable as business expenditures.

Issue 3: Disallowance of reimbursement of salary
The AO disallowed the claim of reimbursement of salary, bonus, etc., of staff employed by an associate concern, as business expenditure. However, the CIT(A) allowed this claim, noting that the services were utilized for the appellant's business purposes, and no adverse material was presented by the AO to refute this. The Tribunal confirmed the CIT(A)'s decision, stating that the disallowance was not justified.

Issue 4: Disallowance of deduction for non-payment of TDS
The Cross Objection by the assessee challenged the disallowance of a deduction for non-payment of TDS under section 40(a)(ia) of the Income Tax Act. The Tribunal noted that the TDS was paid by the assessee after the end of the financial year but before the due date of filing the return. Referring to a decision by the jurisdictional High Court, the Tribunal held that the TDS payment was allowable as the amendment in the provision of section 40(a)(ia) was retrospective. Therefore, the Tribunal allowed the claim of the assessee regarding the deduction for non-payment of TDS.

In conclusion, the appeal of the revenue was dismissed, and the Cross Objection of the assessee was allowed based on the detailed analysis and application of relevant legal provisions and precedents.