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2021 (1) TMI 917 - AT - Income TaxDisallowing u/s.43B - assessee could not explain the reasons for non-deposit before due date of filing the return of income, AO disallowed the same and added to the total income of the assessee - assessee explained that due to economic slowdown of infrastructure industry, the assessee company had suffered huge loss and as a result, all loan account from bank was declared as non-performing assets (NPA) thus could not deposit the amount before filing the return of income - HELD THAT - In this case, the Assessing Officer disallowed the liabilities claimed by the assessee on the ground that same have not been paid before the due date of filing the return of income for the assessment year 2012-13. The assessee also could not produce any evidence regarding the payment before the lower authorities or before the Tribunal. Therefore, we do not find any infirmity in the orders of lower authorities in disallowing the liabilities. Hence, we uphold the disallowance and dismiss this ground of appeal of the assessee. TDS u/s 40(a)(ia) - Disallowance of interest u/s.40(a)(ia) - Benefit of second proviso to Section 40(a) (ia) - HELD THAT - In this case, the assessee has furnished Certificates from Chartered Accountant in Annexure -A to Form 26A in respect of interest payment to NBFCs and the AO has not raised any objection or doubt regarding the certificate furnished from the Chartered Accountants regarding interest payment during the financial year 2011-12 but only basis for denying the benefit of second proviso to section 40(a)(ia) of the Act. Hon ble Delhi High Court in the case of Ansal Land Mark Townships (P) Ltd., 2015 (9) TMI 79 - DELHI HIGH COURT has held that the second proviso to Section 40(a) (ia) of the Act is declaratory and curative and has retrospective effect from 1st April 2005 being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. Respectfully following the same, we hold that the benefit of such proviso is available to the assessment for the transactions and payment made by it during financial year 2011-12 i.e. 1.4.2011 to 31.3.2012. Hence, we allow this ground of appeal of the assessee. Disallowance of interest on mobilization advance paid - assessee has paid interest to railway department towards mobilization advance, therefore, the AO disallowed the entire amount - HELD THAT - Before the ld CIT(A), the assessee could furnish a Bill No.Con/SPTR/137 dated 10.5.2011 for ₹ 11,44,366/- issued by the Railway Department. CIT(A) restricted the disallowance to ₹ 34,40,315/- as the assessee could not furnish any documentary evidence. Before us also, the assessee could not furnish any documentary evidence in support of the partly disallowed claim of interest paid on account of mobilization advance from the Railway Department. Hence, we see no reason to interfere with the order of the ld CIT(A), which is hereby confirmed.
Issues Involved:
1. General nature of the appeal. 2. Disallowance of ?2,02,54,656/- under Section 43B of the Income Tax Act, 1961. 3. Disallowance of ?5,17,74,383/- under Section 40(a)(ia) of the Income Tax Act, 1961. 4. Disallowance of interest on mobilization advance amounting to ?34,40,315/-. Issue-wise Detailed Analysis: 1. General Nature of the Appeal: The first ground of appeal is general in nature and does not require separate adjudication. 2. Disallowance of ?2,02,54,656/- under Section 43B: During the assessment proceedings, the Assessing Officer (AO) noticed that the assessee claimed interest expenses of ?150,68,34,000/-, out of which ?2,02,54,656/- was not deposited before the due date of filing the return of income. The AO disallowed this amount and added it to the total income of the assessee. The assessee explained that due to the economic slowdown and the declaration of loan accounts as non-performing assets (NPA), they could not deposit the amount before filing the return. The CIT(A) did not find this explanation plausible and confirmed the addition. The Tribunal upheld the disallowance, noting that the assessee failed to produce evidence of payment before the due date of filing the return. 3. Disallowance of ?5,17,74,383/- under Section 40(a)(ia): The AO found that the assessee paid interest to various entities without deducting tax at source as required under Section 194A. The assessee furnished Form 26A, showing that the recipients had included the interest in their income and paid the necessary taxes. However, the AO disallowed the interest payment under Section 40(a)(ia) for non-deduction of TDS. The CIT(A) confirmed this disallowance. The Tribunal noted that the second proviso to Section 40(a)(ia), inserted by the Finance Act, 2012, allows for deduction if the recipient has included the payment in their income and paid the taxes. The Tribunal held that this proviso is curative and retrospective, following the Delhi High Court's decision in the case of Ansal Land Mark Township (P) Ltd. Therefore, the Tribunal allowed this ground of appeal, granting the benefit of the proviso to the assessee. 4. Disallowance of Interest on Mobilization Advance Amounting to ?34,40,315/-: The assessee paid interest of ?34,40,315/- to the railway department towards mobilization advance. The AO disallowed the entire amount. The CIT(A) restricted the disallowance to ?22,95,949/- as the assessee could only furnish a bill for ?11,44,366/-. The Tribunal upheld the CIT(A)'s decision, noting that the assessee failed to provide documentary evidence for the remaining disallowed amount. Conclusion: The appeal is partly allowed. The Tribunal upheld the disallowance under Section 43B and the partial disallowance of interest on mobilization advance. However, it allowed the appeal regarding the disallowance under Section 40(a)(ia), granting the benefit of the second proviso to the assessee.
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