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Issues involved: Appeal against order of Commissioner of Income(Appeals) for assessment year 2008-09 regarding deletion of addition of unsecured loan and deletion of addition of interest paid on late payment of TDS.
Issue 1 - Unsecured Loan: The Revenue appealed against the deletion of addition of Rs. 7 lakhs on account of unsecured loan. The Revenue argued that the assessee failed to prove the genuineness of the transaction as no confirmation was filed before the Assessing Officer. The assessee, however, submitted the confirmation before the Commissioner of Income(Appeals) without it being confronted to the Assessing Officer. The Tribunal noted that the audited account clearly mentioned the loan of Rs. 7 lakhs taken from Allied Traders for bill discounting. The Tribunal found that the confirmation was not furnished before the Assessing Officer but was presented before the Commissioner of Income(Appeals) without allowing an opportunity for the Revenue to respond. Consequently, the Tribunal set aside the order of the Commissioner of Income(Appeals) and directed the assessee to provide the confirmation/confirmed account details with PAN of Allied Traders to the Assessing Officer for re-adjudication of the addition of Rs. 7 lakhs. Issue 2 - Interest on Late Payment of TDS: The second ground of appeal pertained to the deletion of the addition of Rs. 11,676 on account of interest paid on late payment of TDS. The Assessing Officer disallowed this interest, stating that interest on TDS is not an allowable expense. The Commissioner of Income(Appeals) allowed the deduction, equating it to interest received on tax refund. However, the Tribunal referred to a Supreme Court judgment which held that interest for late payment of direct taxes is not deductible. As the assessee paid interest due to late deposit of TDS, the disallowance of Rs. 11,676 was upheld. In conclusion, the appeal of the Revenue was treated as partly allowed with respect to the disallowance of interest on late payment of TDS.
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