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TMI Blog2012 (10) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... statements and second, deduction of tax at source have conclusively proved that the assessee has in fact incurred the expenditure exclusively for the purpose of the business, therefore allowable u/s.37(1) - Decided in favor of assessee - I.T.A. No.4006/Ahd/2008 - - - Dated:- 13-7-2012 - SHRI MUKUL Kr.SHRAWAT And SHRI ANIL CHATURVEDI, JJ. Appellant by : Shri Rasesh Shah Respondent by : Shri Raj Mehra, Sr.D.R. ORDER PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER : This is an appeal filed by the Assessee arising from the order of Learned CIT(Appeals)-II Surat dated 18/09/2008 passed for A.Y. 2005- 06. Grounds raised by the assessee are as under:- 1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in partly confirming the addition of Rs.1,01,21,411/- out of total addition of Rs.1,35,62,524/- made by AO on account of nonpayment of TDS within specified time as per section 40(a)(ia). 2. On the facts and in circumstances of the case as well as law on the subject, the learned commissioner of Income-tax (Appeals) has erred in confirming the action of Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posited into the Government account before the due date of filing of the return and that the words used in section 40(ia) were payable and not paid therefore the said provisions did not apply on the facts of the case. However, CIT(A) was not convinced and held that the interpretation as advanced by ld.AR was not only a twisted interpretation but a perverse interpretation of the Statute. According to ld.CIT(A), the word payable has been defined in P Ramanathan Aiyar s Law Lexicon as the word payable is a descriptive word meaning capable of being paid; suitable to be paid; admitting or demanding payment; justly due; legally enforceable . According to him, what is to be paid under any liability and what is liable to be paid. In the mercantile system of accounting all amounts which the assessee is liable to pay or is payable are claimed and allowed as a deduction. Irrespective of whether such liability had been paid or discharged during the year or the liability remained outstanding at the end of the year. Ld.CIT(A) has further referred Explanation-2 to section 43B wherein any sum payable is defined as a sum for which the Assessee incurred liability in the previous year ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has also been ascertained by us that although the amounts were paid to the sub-contractors during the entire financial year under consideration on different dates but finally the entire payment of TDS to the Government Exchequer was paid on 31.5.2005, admittedly before the due date of filing of the return. On this aspect, we have found that the Hon ble Jurisdictional High Court in a latest decision dated 18/07/2011 in Tax Appeal No.706 of 2010 in the case of CIT vs. J.K. Construction Co. has held as under:- From the record, it emerges that for payment to contractor, the assessee had made deduction as required under law from time to time and in particular latest by 31.3.2005. This is clear from chart supplied by the assessee before CIT (Appeals) which would establish that deduction in case several contractors were made on 31.3.2005. All such amounts were deposited with the Government on or around 28.5.2005. In background of above undisputed facts, tribunal was of the opinion that by virtue of amended provisions of Section 40 (a)(ia) of the Income Tax Act, 1961, assessee has not breached the requirement of deduction and depositing of TDS. Section 40(a)(ia) of the Act as amende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red details in full. 7.1. As per AO, on account of failure on the part of the assessee to furnish the supporting evidence the expenditure to the extent of Rs.7,12,065/- was disallowed. The matter was carried before the first appellate authority and the ld.CIT(A) has confirmed the action of the AO as follows:- Decision 10. I have carefully considered both the positions. The point to note here is that, the claim of expenditure was made by the Assessee and therefore, the onus was entirely on the Assessee to prove that the recipients of the payments actually existed, that goods or services were supplied or rendered by them and that the payments made, even though by account-payee cheques, had reached the hands of the said parties. Out of these, the only evidence that the Assessee produced was the details of the payments made through account-payee cheques. Such payment was only one of the three limbs which had to be proved and established for the AO to allow such expenses, especially when, mere payment by account-payee cheques does not make the transaction sacrosanct and beyond any question or doubt. The letters issued by the AO found no response from the said three parties. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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