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TMI Blog2012 (12) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have rather verified if such quantities of steel indeed lifted by the assessee during the year, which has not been done by him - D.R. could not point out any specific defect in the claim of the assessee. He has simply relied upon the order of the Assessing Officer - Assessing Officer has made ad-hoc disallowance of Rs.25,000 without identifying a particular expenditure which is not supported by any bill/voucher - ad-hoc disallowance deleted Disallowance on account of application of section 14A of the Act - alleged that the assessee had considerable interest bearing borrowings which was, inter-alia, used by the assessee in making investments and the income therefrom was not chargeable to tax – Held that:- Both the lower authorities have examined the issue in dispute on different aspects. They have not examined whether the assessee has maintained separate account for making investments. Undisputedly the assessee has borrowed some funds but according to him these funds were utilized for business purposes. Since there is no categorical finding of the lower authorities in this regard - matter remanded back to the Assessing Officer - appeal of the Revenue is partly allowed for stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Assessing Officer dated 30.12.2009 be restored. 8. That the appellant craves leave to modify any of the grounds of appeal mentioned above and/or to add any fresh grounds as and when it is required to do so. 2. Grounds No.1 to 3 relate to the invocation of provisions of section 40 (a)(ia) of the Income-tax Act, 1961 (hereinafter called in short the Act ) with regard to payment of freight amounting to Rs.10,18,825. 3. The facts in brief borne out from the record are that during the course of assessment proceedings, the Assessing Officer has observed that out of total amount debited under the head freight and cartage , a sum of Rs.10,18,825 has been paid to five persons exceeding the prescribed limit of Rs.50,000 on which no tax has been deducted at source. According to the Assessing Officer, since no tax has been deducted at source, the said expenditure is not allowable. He accordingly made disallowance of the same after invoking provisions of section 40 (a)(ia) of the Act. 4. The assessee preferred an appeal before the ld. CIT(A) with the submission that the assessee has deposited tax amounting to Rs.25,398 on the same with BOB (Bank of Baroda) on 28.3.2007. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid order of the Special Bench of the Tribunal. 8. Having given a thoughtful consideration to the rival submissions, we find that the assessee has made deposit of the TDS though it might not have been deducted from the payments made to the payee, but it related to those payments. The fact that all the payments have been made before the end of the financial year has not been disputed by the Revenue. Therefore, even if the TDS was not deducted on these payments but these payments were made before the end of the financial year, disallowance under section 40 (a) (ia) of the Act cannot be made in the light of the order of the Special Bench of the Tribunal referred to above. Therefore, from any angle if we examine the case of the assessee, we would find that the disallowance under section 40 (a)(ia) of the Act is not called for. We accordingly confirm the order of the ld. CIT(A) on this issue. 9. Ground No.4 relates to the deletion of addition of Rs.25,000 made on account of lifting charges. 10. During the course of hearing of the appeal, our attention was invited to the fact that the disallowance was made by the Assessing Officer on ad-hoc basis without pointing out any specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he business enterprise and in his personal balance sheet there is no borrowing at all and the entire investments have been made from his capital. Therefore, no part of borrowed fund has been utilized for tax free income. It was also contended that Rule 8D came into force w.e.f. 24.3.2008 relevant to the assessment year 2009-10, therefore, the disallowance cannot be computed in accordance with Rule 8D. 16. Having convinced with the explanation of the assessee, the ld. CIT(A) deleted the addition after having observed that since the appellant had sufficient capital and also the fact that current year s investment in PPF and Insurance have been made from current year s withdrawals, no disallowance under section 14A of the Act is called for. 17. Aggrieved, the Revenue has preferred an appeal before the Tribunal with the submission that the borrowed funds were invested in various investments on which interest free income was generated. Therefore, the Assessing Officer has rightly made disallowance under section 14A of the Act. 18. The ld. counsel for the assessee, on the other hand, has submitted that the assessee has been maintaining a separate account relating to the investments ..... X X X X Extracts X X X X X X X X Extracts X X X X
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