2022 (9) TMI 699 - AT - Income Tax

Disallowance of overdraft interest - addition u/s 43B - CIT-A deleted the addition - as per DR assessee has failed to comply with the provisions of section 43B(e) and Explanation 3D thereto and that the said interest was paid after the due date of filing of return of income under section 139(1) and also that the assessee is not entitled to the claim on the ground that the said interest expense towards OD account pertains to scheduled bank which is not admissible as per section 43B. - Whether CIT(A) failed to seed that debiting of interest and increase in debit balance in account is not actual payment as defined in explanation 3d to section 43 B ? - HELD THAT - From the submission of the assessee, it is seen that the assessee had filed additional evidence before the Ld.CIT(A), which includes copies of bank statements reflecting interest debited in assessee s account for each month. Banks mentioned have categorically certified that interest has been paid before 30/04/2011 in case of Axis Bank and Saraswat Bank and before 31/03/2011 in case of Yes Bank which shows that there is no outstanding interest payment as on these dates, respectively. As interest for the OD account is debited by the bank month to month and that in case of Axis Bank and Yes Bank, the OD accounts were converted into deposit account from January, 2011 and November,2010, respectively which shows that the interest upto the said date was paid much before the deposits. Similarly, in the case of Saraswat Bank interest paid on OD account whereas the interest received on fixed deposits for Rs.8,71,00,000/- was Rs.25,95,463/- which is evident that the receipt of interest is much higher than the interest paid. The assessee has also contended that the overdraft balance never exceeded the sanctioned limit at any point of time and that the assessee further contends that the assessee could have very well withdrawn the amount from the bank but whereas the assessee s deposits was subsequent to the debit of interest from the OD account. Thus we are of the considered view that the disallowance made by the AO under section 43B(e) of section on interest payment to the banks does not warrant merit and we find no infirmity in the decision of the Ld.CIT(A) on this issue. Ground 1 of the Revenue is dismissed. Disallowance made towards discount pertaining to the discount allowed / passed on to the customers on sale of air tickets - HELD THAT - AO had not denied the authenticity of the vouchers or invoices filed by the assessee during the assessment proceedings, but has stated that the said invoices does not bear the signature of the recipient who is benefitted from the said discount. Assessee has substantiated his claim that the computer generated bills will not contain the signature of neither the assessee nor the customers. AO has also failed to establish the fact that the assessee has received any sum over and above the net amount billed to the clients. Apart from the fact that these vouchers are unsigned, the Assessing Officer has failed to justify the disallowance - Decided against revenue.

Summary

Issues:
1. Disallowance of overdraft interest under section 43B of the Income-tax Act, 1961.
2. Disallowance made towards discount on sale of air tickets.

Issue 1 - Disallowance of Overdraft Interest:
The appeal by the Revenue challenged the deletion of disallowance of overdraft interest by the Ld.CIT(A) for the assessment year 2011-12. The assessing officer disallowed interest expenses and discount made towards scheduled bank accounts. The Ld.CIT(A) deleted the disallowance citing timely interest payments and deposits exceeding interest debits. The Revenue contended non-compliance with section 43B(e) and Explanation 3D, arguing that interest was paid after the due date. The Ld.AR supported the Ld.CIT(A)'s decision, referencing a Calcutta High Court case. The ITAT Mumbai found no merit in the Revenue's appeal, emphasizing the timely interest payments and deposits exceeding debits, dismissing Ground 1.

Issue 2 - Disallowance of Discount on Air Tickets:
The second ground of appeal concerned the disallowance of discounts on air tickets by the assessing officer. The assessee, an IATA member, generated computerized bills without physical signatures, citing automated billing processes. The Ld.CIT(A) upheld the assessee's claim, emphasizing that the discounts were part of the billed amount and no additional payments were received. The ITAT Mumbai noted the absence of evidence showing extra payments received by the assessee and upheld the Ld.CIT(A)'s decision, dismissing the Revenue's appeal on Ground 2.

In conclusion, the ITAT Mumbai dismissed the Revenue's appeal against the Ld.CIT(A)'s order, upholding the deletion of disallowances on overdraft interest and discounts on air tickets for the assessment year 2011-12.