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Issues involved: Appeal by Revenue and Cross Objections by assessee regarding disallowance of transport and CFS charges u/s 40(a)(ia) of the Income Tax Act 1961.
Summary: The appeal and cross objections arose from the order of the Commissioner of Income Tax (Appeals)-IX, Chennai for assessment year 2009-10 u/s 143(3) of the Income Tax Act 1961. The Revenue contended that the Assessing Officer disallowed transport and CFS charges for non-deduction of TDS, which was deleted by the CIT (A) based on a case law precedent. The Revenue argued that the CIT (A) erred in deleting the addition. The DR for Revenue referred to a recent Calcutta High Court decision overruling a Special Bench's decision and requested acceptance of the appeal. The assessee relied on CIT (A)'s order and cross objections, claiming that the merits were not considered by the CIT (A) and thus should be accepted. The ITAT Chennai heard the parties and reviewed the case file. The assessee, a Custom House Agent, had claimed expenses for transport and CFS charges without deducting TDS. The Assessing Officer added the amounts u/s 40(a)(ia) of the Act. In the appellate proceedings, the assessee raised additional grounds based on a Special Bench decision. The CIT (A) allowed the additional ground, stating that sec 40(a)(ia) applies only to expenditure payable on 31st March, not already paid amounts. The ITAT Chennai held that the Revenue's appeal on the legality aspect should be accepted based on the High Court decision. Regarding the cross objections on merits, the issue was directed to be restored to the Assessing Officer for fresh consideration after factual verification, with a time limit of four months for the order. Consequently, the Revenue's appeal was allowed, and the assessee's Cross Objection was partly allowed for statistical purposes. The order was pronounced in open court on April 18, 2013, in Chennai.
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