2016 (6) TMI 1326 - AT - Income Tax

Disallowance u/s 40(a)(ia) even if the amount has been paid by the assessee - Whether can be applied when payments in respect of which tax is deductible at source has already been made by the assessee to the payee at the time of computing the income chargeable under the head profits and gains of business or profession i.e. at the close of the year? - Held that - We not inclined to interfere with the orders of the authorities below. Hon ble Punjab & Haryana High Court in the case of M/s PMS Diesels (2015 (5) TMI 617 - PUNJAB & HARYANA HIGH COURT) held that Provisions of Section 40(a) (ia) of the Ac t would cover amount payable at any time during the accounting year . The issue is therefore covered against the assessee. Addition on account of personal expenses - addition on account of personal expenses details of the same are noted in the appellate order which were about 25% of the total expenses claimed - Held that - CIT(Appeals) considering the details of the expenses and submissions of the assessee restricted the disallowance to 10% on account of telephone vehicle and running repair and maintenance car loan interest and depreciation etc. No arguments have been made before me as to how the disallowance is excessive or not reasonable. Therefore this ground has no merit same is accordingly dismissed. - decided against assessee.

Summary

Issues:
1. Non-deduction of TDS on interest payments to non-banking financial companies.
2. Disallowance under section 40(a) (ia) of the Income Tax Act.
3. Challenge of addition on account of personal expenses.

Analysis:
1. In the assessment years 2011-12 and 2012-13, the appellant contested the addition of amounts due to non-deduction of TDS on interest payments to non-banking financial companies like M/s Bajaj Finance and M/s Sabsons Agency P. Ltd. The ld. CIT(Appeals) upheld the disallowance under section 40(a) (ia) of the Income Tax Act as the appellant failed to deduct tax at source on the interest amounts paid. The appellant relied on decisions of the Special Bench of ITAT Vishakhapatnam and the Allahabad High Court, but the Hon'ble Punjab & Haryana High Court's ruling in the case of M/s PMS Diesels confirmed the disallowance, leading to the dismissal of the appeals.

2. The Hon'ble Punjab & Haryana High Court's judgment established that the provisions of section 40(a) (ia) of the Act cover amounts payable at any time during the accounting year, thereby supporting the disallowance even if the amount has been paid by the assessee. The appellant did not provide any new evidence to challenge the findings of the ld. CIT(Appeals), resulting in the dismissal of the appeals concerning this issue.

3. Additionally, in the assessment year 2012-13, the appellant disputed the addition of personal expenses. The Assessing Officer had made an addition on personal expenses, which the ld. CIT(Appeals) restricted after considering the details of the expenses. The disallowance was limited to 10% for specific expenses like telephone, vehicle maintenance, car loan interest, and depreciation. The appellant failed to present arguments against the reasonableness of the disallowance, leading to the dismissal of this ground as well.

In conclusion, both appeals by the assessee were dismissed based on the non-deduction of TDS on interest payments to non-banking financial companies and the disallowance under section 40(a) (ia) of the Income Tax Act. The appellant's challenges were not supported by sufficient evidence or legal arguments, resulting in the confirmation of the disallowances and the dismissal of the appeals.