2022 (9) TMI 334 - AT - Income Tax

TDS u/s 194A - Disallowance/addition of interest on car loan paid - non deduction of tax at source thereby making disallowance u/s. 40(a)(ia) - HELD THAT - CIT(A) has observed that the assessee did not press this ground before him and therefore, the same was dismissed. Before us the assessee has again raised this ground stating that M/s. Kotak Prime Ltd. is a subsidiary of M/s. Kotak Mahindra Bank and is in the list of notified exempted institution as provided in section 194A(iii)(f) of the Act. Since the assessee is neither present before us in the hearing nor placed any material to support/substantiate this claim through written submissions, we are of the view that this issue needs to be verified by the AO, before whom the assessee will file necessary details/evidences in support of this ground/claim. In addition to this, the assessee can also provide proof of alleged amount being offered to tax by the M/s. Kotak Prime Ltd. and if requisite certificate of the Chartered Accountants is obtained in the prescribed format evidencing that the alleged amount has been offered as revenue and due taxes have been paid, then the AO shall grant relief to the assessee by not making disallowance u/s. 40(a)(ia) of the Act of the alleged amount. Thus, ground No. 2 raised by the assessee is allowed for statistical purpose. Disallowance of donation and subscription - HELD THAT - The said amount is claimed to be incurred towards Puja expenses. The assessee could not produce any bills/voucher(s) to substantiate this claim, We, however, looking to the facts of the case and the expenses being incurred by the assessee company on festival and similar customary occasions for its employees find it proper to disallow only 10% of the alleged amount and delete the remaining disallowance. Accordingly, the addition is sustained and remaining disallowance is deleted. Thus, ground No. 3 raised by the assessee is partly allowed.

Summary

Issues:
1. Assessment Order passed by Ld. CIT(A) being unlawful and against Natural Justice.
2. Addition of interest on car loan without deduction of TDS.
3. Disallowance of donation and subscription expenses.

Analysis:

1. The appeal was against the assessment order for the year 2013-14. The appellant did not appear despite multiple opportunities granted, leading to an ex parte decision. The grounds of appeal included objections to the assessment order being unlawful and against natural justice. The appellant sought relief for specific additions made in the assessment.

2. The appellant contested the addition of interest on a car loan paid to a subsidiary of a bank, claiming it was exempted from TDS deduction. The Ld. CIT(A) had dismissed this ground as the appellant did not press it. However, the Tribunal allowed the ground for statistical purposes, directing the appellant to provide necessary details and evidence to support the claim. The Tribunal emphasized the need for verification by the Ld. AO and the submission of relevant documents to avoid the disallowance under section 40(a)(ia) of the Act.

3. The issue of disallowance concerning donation and subscription expenses was also raised. The appellant failed to produce bills or vouchers to substantiate the claim related to Puja expenses. The Tribunal decided to sustain only 10% of the alleged amount as a disallowance, considering the customary nature of the expenses for employees. Consequently, a portion of the disallowance was deleted, and the remaining amount was upheld. The Tribunal partly allowed this ground raised by the appellant.

In conclusion, the Tribunal partly allowed the appeal for statistical purposes, directing the appellant to provide necessary documentation to support their claims. The decision highlighted the importance of substantiating claims with evidence to avoid disallowances under the Income Tax Act.