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2021 (12) TMI 442 - AT - Income TaxDisallowance of certain expenses claimed for the business purpose - assessee is an individual and engaged in the business of hospitality services - HELD THAT - As admitted that assessee has maintained regular books of accounts and complete bills and vouchers and other related details regarding the expenses which were filed by the assessee. Simply because assessee has not maintained separate ledger account and too for personal expenses, it does not mean that the expenses cannot be verified or are personal in nature. No discrepancy or any particular expenses have been pointed out as these are for personal nature or the expenses incurred are not for the purpose of business. Such adhoc disallowance cannot be sustained and the same is directed to be deleted. - Decided in favour of assessee. Refund on self assessment tax and advance tax u/s 244A - Disallowing the interest u/s 244A - Scope of amendment - HELD THAT - . The Finance Bill 2016, considered the Equity and justice amended The Act, introduced a Sec. 244A(1aa) - amendment provides that assessee shall be eligible to interest on refund of self-assessment tax for the period beginning from the date of payment of tax or filing of return, whichever was later, to the date on which the refund is granted. This amendment though has been brought w.e.f. 1.6.2016, but it is curative and declaratory provision therefore, same should be applied retrospectively. It has been held so by the Hon ble High Court in the case of CIT vs. Ansal Land Mark Township (P) Ltd 2015 (9) TMI 79 - DELHI HIGH COURT that if the amendment was declaratory and curative in nature, the same should have been on retrospective basis specially when this amendment has been brought to bring fairness and equity and proposed to pay interest in the case where the refund is a result of self assessment tax. Such a benefit has to be extended to all and not only from a particular date i.e. 1.6.2016. Accordingly we direct the AO to allow the interest u/s 244(A). Appeal of the assessee is allowed.
Issues Involved:
1. Disallowance of certain business expenses. 2. Non-allowance of interest under Section 244A of the Income Tax Act on the refund of self-assessment tax. Issue-wise Detailed Analysis: 1. Disallowance of Certain Business Expenses: The assessee, engaged in the hospitality business, claimed various expenses in the profit and loss account, including business promotion, car expenses and repair, festival expenses, telephone expenses, staff welfare, and general expenses, totaling ?26,44,114. The Assessing Officer (AO) disallowed 1/5th of these expenses on an adhoc basis, amounting to ?5,28,822, citing that some expenses could be personal in nature and certain vouchers and bills were not produced. The CIT(A) reduced this disallowance to 15%. Upon review, the Tribunal found that the assessee maintained regular books of accounts and provided complete bills and vouchers for the expenses. The Tribunal observed that the absence of a separate ledger for personal expenses does not imply that the expenses are unverifiable or personal. No specific discrepancies or personal expenses were identified by the AO. As such, the Tribunal held that the adhoc disallowance was unsustainable and directed its deletion. 2. Non-allowance of Interest under Section 244A: The assessee filed a return declaring a net income and paid tax, including TDS and self-assessment tax under Section 140A. The return was later revised, resulting in a refund due to the assessee. The AO issued a refund with interest only on the TDS amount, excluding the self-assessment tax, computed through the IT system. The CIT(A) upheld this computation without considering the correct facts. The Tribunal referred to Section 244A, which mandates interest on the refund of excess self-assessment tax. Citing the Supreme Court's judgment in CIT, Kolkata vs. Birla Corporation Ltd. and Union of India vs. Tata Chemicals Ltd., the Tribunal emphasized that interest on refunds should be considered liberally in favor of the assessee. Section 244A(1)(b) covers interest on refunds in cases not specified in Section 244A(1)(a), including self-assessment tax. The Tribunal highlighted the Supreme Court's stance that interest is compensation for the use and retention of money collected unauthorizedly by the department. The Tribunal also referred to the Bombay High Court's decision in Stockholding Corporation of India vs. N.C. Tewari, CIT, which supported interest on refunds of excess self-assessment tax. Furthermore, the Tribunal noted the Finance Bill 2016's amendment to Section 244A, which provides for interest on refunds of self-assessment tax from the date of payment or filing of return, whichever is later. Although effective from June 1, 2016, the Tribunal deemed this amendment curative and declaratory, thus applicable retrospectively. In conclusion, the Tribunal directed the AO to allow interest under Section 244A on the refundable amount of self-assessment tax, aligning with principles of fairness and equity. Conclusion: The appeal was allowed in favor of the assessee, with the Tribunal directing the deletion of the adhoc disallowance of expenses and the allowance of interest on the refund of self-assessment tax under Section 244A. Order Pronounced: The order was pronounced in the open court on October 8, 2021.
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