2013 (1) TMI 1012 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition u/s 40a(ia) for TDS not deposited within due date.
2. Deletion of addition for disallowing interest charged.
3. Reopening of assessment u/s 147.
4. Sustaining addition of Rs. 2,67,300/- for TDS not deducted.

Summary:

Issue 1: Deletion of addition u/s 40a(ia) for TDS not deposited within due date
The CIT(A) deleted the addition of Rs. 11,53,378/- by holding that the payment was for capital expenditure and not covered u/s 40a(ia). The Tribunal upheld this decision, noting that the assessee deposited the entire TDS before the last due date for filing the return. The Tribunal referenced the decision of the Coordinate Bench in the case of Shri Jawahar Lal, which held that the amendment to Section 40a(ia) by the Finance Act, 2010, was retrospective from 1.4.2005. Therefore, no disallowance was warranted as the TDS was paid before the due date for filing the return.

Issue 2: Deletion of addition for disallowing interest charged
The CIT(A) deleted the disallowance of Rs. 10,94,314/- for bank charges and finance charges, holding that these were revenue expenditures incurred after the commencement of production and were allowable u/s 36(i)(iii). The Tribunal agreed, stating that such expenses are revenue in nature and allowable u/s 37 of the Income-tax Act, 1961.

Issue 3: Reopening of assessment u/s 147
The assessee challenged the reopening of the assessment u/s 147. The Tribunal found that the Assessing Officer had recorded detailed reasons for reopening the assessment and upheld the CIT(A)'s decision to maintain the reassessment proceedings.

Issue 4: Sustaining addition of Rs. 2,67,300/- for TDS not deducted
The CIT(A) sustained the addition of Rs. 2,67,300/- for payments on which TDS was not deducted and which pertained to revenue expenditure. The Tribunal, however, noted that since the entire amount of TDS was deposited before the last date of filing the return, no disallowance was warranted. Consequently, the CIT(A) was not justified in sustaining the addition of Rs. 2,67,300/-.

Conclusion:
The appeal filed by the Revenue was dismissed, while the cross objection by the assessee was allowed in part. The order was pronounced in the open court on 14th January, 2013.