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2018 (1) TMI 1187 - AT - Income TaxDisallowance of interest - non deduction of tds - Held that - Section 40(a) (ia) covers not only the amount which are payable as on 31st March but also amounts payable at any time during the year. As an alternative plea, the appellant has submitted that under the provisions of section 194A, payment to a company carrying on the business of insurance is out of ambit of the provisions for deduction of tax as as perused that extract of the website as quoted by the appellant in the written submission. It is seen that as per the information given in the website Reliance Capital has interest in life and general insurance but that does not mean that it is indeed engaged in the business of insurance. As the appellant has failed to provide clear evidence to support its claim that Reliance Capital is involved in Insurance business, this argument of the appellant is not acceptable. AO has rightly invoked the provisions of section 40 (a) (ia) Disallowance of freight - Held that - Though the AO has mentioned about the provisions of section 40(a)(i) but that is apparently a typographical error and he actually meant that the expenses are disallowable in view of provisions of section 40(a) (ia). In my opinion, inadvertent reference to wrong provisions would not make the disallowance bad in law as long as there is another provision which is actually applicable in the given facts. The appellant has not denied that tax was deductible on the payments made to the two companies u/s 194A. It has also not been denied that the tax was not deducted from such payments. When the tax was deductible and the same has not been deducted, it is obvious that in view of provisions of section 40(a)(ia), such expenses cannot be allowed. - Decided against assessee
Issues involved:
1. Disallowance of interest amount 2. Disallowance of freight payment 3. Disregarding previous judgments 4. Applicability of TDS provisions 5. Business activity classification 6. Disallowance of expenses under section 40(a)(ia) Analysis: 1. Disallowance of interest amount: The Assessing Officer (AO) disallowed interest payments due to non-deduction of TDS. The appellant argued that section 40(a)(ia) applies only if the amount remains payable at year-end, citing precedents. However, the Commissioner disagreed, citing Gujarat and Calcutta High Court decisions. The appellant's alternative plea regarding section 194A was rejected due to lack of evidence supporting the claim that the company was engaged in insurance business. The disallowance of interest was upheld, and the appeal was dismissed. 2. Disallowance of freight payment: The AO disallowed freight payments under section 40(a)(ia) for non-deduction of TDS. The appellant argued that the disallowance was based on a typographical error, but the Commissioner found the disallowance valid as tax was deductible and not deducted. The disallowance of freight payment was confirmed, and the appeal was dismissed. 3. Disregarding previous judgments: The appellant contested the CIT(A)'s decision by citing judgments of Jurisdictional Jaipur ITAT and Special Bench of Visakhapatnam ITAT. However, the Commissioner relied on Gujarat and Calcutta High Court decisions, dismissing the appellant's contentions. 4. Applicability of TDS provisions: The appellant argued that TDS provisions did not apply to the freight payments made. The Commissioner disagreed, emphasizing the importance of deducting TDS as required by law. 5. Business activity classification: The appellant claimed that the company receiving payments was engaged in the insurance business, exempting it from TDS provisions. However, the Commissioner found insufficient evidence to support this claim, leading to the rejection of this argument. 6. Disallowance of expenses under section 40(a)(ia): Both the disallowance of interest amount and freight payment were upheld under section 40(a)(ia) for non-compliance with TDS provisions. The Commissioner found the AO's actions justified and dismissed the appeal due to the lack of representation by the appellant. In conclusion, the ITAT Jaipur upheld the disallowances made by the AO, citing non-compliance with TDS provisions and dismissing the appeal due to lack of representation by the appellant. The Commissioner's decision was based on legal precedents and the factual and legal positions presented during the proceedings.
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