9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 1697 - AT - Income TaxDisallowance u/s 40(a)(ia) - expenditure under various heads and to the payment of share of commission (paid to VAV Air conditioning) - HELD THAT - In this case the assessee has not deducted and deposited the tax either during the current financial year or up to the date of filing of the return but tax was deducted and deposited in the assessment year i.e. 2013-14. We find merit in the contentions of the assessee that as per the amended provision of section 40(a)(ia) which is a retrospective in nature, the disallowance has to be made equal to 30% of the total disallowance as has been held in the case of M/s. Asphalt India Corporation vs. DCIT 2017 (5) TMI 1705 - ITAT MUMBAI In the context of the insertion of 2nd proviso to section 40(a)(ia), held that though it has been stated in the 2nd proviso to section 40(a)(ia) of the Act that the same is inserted from 01.04.2013 but the same has retrospective application as the insertion of 2nd proviso is declarative and curative in nature and would be effective from the date of main proviso to section 40(a)(ia). We, therefore, respectfully following the ratio laid down in the above decisions, direct the AO to restrict the disallowance equal to 30% of the total expenses Disallowance of trade discount and commission paid to VAV Air Conditioning a proprietary concern of the assessee s husband - HELD THAT - We are of the view that the entire amount is paid to the sister concern without any deduction of TDS during the year and therefore as has been held by us in the ground No.1A (supra) the disallowance has to be restricted to 30% of the said expenditure. We are not convinced with the arguments of the ld DR that the genuineness of payments are in doubt as the payments were made to the related parties without proving the nature of services rendered. DR also stressed the point that reasonability of the payments is not the issue in this case but the allowability of the expenses u/s 37 is doubted by the AO on the ground of non rendering of services. However, we observe that the AO has not brought any materials on record to rebut the submissions of the assessee that the proprietary concern was a leading contractor and has been providing the information as to the requirements of the customers in that field on HVAC and air conditioning. So we are not in agreement with the conclusion of the ld CIT(A) on this issue. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to make the disallowance @ 30% as the assessee has not deducted tax at source on the same lines as decided by us in ground no. 1A supra.
Issues:
1. Condonation of delay in filing appeal 2. Disallowance under section 40(a)(ia) for various expenses 3. Disallowance of trade discount and commission paid to a related party Issue 1: Condonation of delay in filing appeal The appeal was delayed by 71 days, attributed to the previous accountant leaving the job. The delay was beyond the assessee's control, leading the Tribunal to condone the delay and allow the appeal to proceed. Issue 2: Disallowance under section 40(a)(ia) for various expenses The AO disallowed expenses of ?12,51,858 for failure to deduct and deposit TDS. The CIT(A) upheld the disallowance. The Tribunal, citing amendments to section 40(a)(ia), restricted the disallowance to 30% of the total expenses, considering the retrospective nature of the amendment. Issue 3: Disallowance of trade discount and commission paid to a related party The AO disallowed ?10,22,888 paid to the husband as trade discount and commission without TDS deduction. The CIT(A) upheld the disallowance, citing diversion of income. The Tribunal found the disallowance should be restricted to 30% of the expenditure, as TDS was not deducted, and the genuineness of payments to the related party was not proven. In conclusion, the Tribunal allowed the appeal, condoning the delay and directing the AO to restrict disallowances under section 40(a)(ia) to 30% of the total expenses. The disallowance of trade discount and commission paid to a related party was also restricted to 30% due to non-deduction of TDS and lack of evidence disputing the genuineness of the payments.
|
