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TMI Blog2013 (12) TMI 595X X X X Extracts X X X X X X X X Extracts X X X X ..... -04 and 2004-05 - The group concern namely Lakhani Marketing Incorporation in A.Y 2000-2001 are exactly identical to the facts of the assessee in A.Y. 2006-07 - The applicability of the facts pertaining to commercial expediency as considered in the facts of group concern needs to be seen and brought on record - No such exercise has been done by the A.O. - The issue was set aside for fresh adjudication. Tax not deducted on interest - Held that:- Following Merilyn Shipping & Transports vs. Addl. CIT [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] - what can be disallowed u/s 40(a)(ia) is only the outstanding balance as on 31st March of the year and cannot be invoked against payment made prior to 31st March of every year - The issue in question has become debatable in view of Special Bench judgment and contrary judgments of High Courts - The issue was set aside for fresh adjudication to verify whether the TDS has been deducted in the subsequent year and to decide the same in accordance with law keeping in view the latest legal position. X X X X Extracts X X X X X X X X Extracts X X X X ..... l proceedings and cause consternation in our mind. As the issues are pleaded by assessee to be covered by ITAT order in it's own case and on several earlier occasions the appeals have been adjourned. The 'D' Bench DR's attitude is of recalcitrance and non- cooperation, in the public interest and interest of justice we are of the view that further adjournment of a seemingly covered matter will cause hardship to assessee and amount to obstruction to dispensation of justice. Under these circumstances, we are left with no choice but to proceed with the hearing of these appeals ex parte qua the department. 2.6. After this hearing was over, at about 11.30AM a bunch of hastily written adjournment applications by the department was moved with scribbling "DR is not available". We have adjourned all the other matters on these revenue's applications. Though the cause of the adjournments sought by revenue is non specific and does not invoke any judicial conscience. Nevertheless to emphasize that the ITAT Benches consider "Revenue" with due regards and esteem, these belatedly and hastily moved adjournment applications were allowed except the heard appeals. 2.7. From the above proceedings it b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 ITR 939; and (iii) CIT Vs. Smt. Leena Ramchandran 339 ITR 296 (Ker)." 6. Ld. Counsel for the assessee contends that the issue in question is covered by ITAT's consolidated order dated 30-3-2012 in assessee's own case in ITA nos. 3361 & 3362/Del/2010 for A.Y. 2003-04 & 2004-05, inter alia, observing as under: "8. ........ The assessee has business relationship with all persons with whom trading is made. Business relationship can be said to exist even with the persons from whom funds are borrowed. Hence the principle of commercial exigency cannot be blindly applied in the case of persons with whom the assessee has some business relationship. The assessee ahs to demonstrate the purpose for which he was making the investment in the shares of associate concern; whether it is for getting distributorship or earning dividend income or for controlling interests. The assessee had borrowed money for its own purpose but has been investing it in shares. Prima facie it appears to be diversion of funds for acquisition of share. It is not a case of deposit of money with Lakhani India for the purpose of securing business of distributorship. What was the position in the very first year when bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in confirming disallowance of interest of Rs. 49,87,440/- u/s 40(a)(ia) of the Income Tax Act, 1961. 2. That the Ld. CIT(A) has wrongly confirmed the disallowance of administrative expenses of Rs. 3,03,000/- u/s 14A of the Income Tax Act read with clause (iii) of Rule 8D (2) of the Income Tax Rules." 10. The sole effective ground of revenue's appeal and ground no. 2 of assessee's appeal are common. Here also ld. Counsel for the assessee contends that similar issue arose in A.Y. 2006-07 and 2007-08 and ITAT vide consolidated order dated 22-3-2012 in ITA nos. 2117 and 2118/Del/2011, referred to the following judgments: - Godrej & Boyce Mfg. Co. Ltd. Vs. DCIT & another 328 ITR 81 (Bom.); - Maxopp Vs. CIT ( Hon'ble Delhi High Court ITA no. 667/2009 dated 18-11-2009); - CIT Vs. Winsome Textile Industries Ltd. 319 ITR 204 (P&H) - Jurisdictional High court in assessee's case. 11. The ITAT referring to the Jurisdictional High Court judgment (supra) and various other judgments and considering the arguments and on perusal of the record set aside the issue, restored back to the file of assessing officer by following observations: "8.3. In the light of the aforementioned peculiar fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank and interest was also paid to the bank and in such a situation there is no need of deduction of tax u/s 194A of the Income Tax Act, 1961. It is not a case of the revenue that money was borrowed from the saving bank of Mr. Nitin Miglani Nor is the case that money/ interest was paid to Nitin Miglani. There are no two independent transactions that is company with Mr. Nitin Miglani and Mr. Nitin Miglani with the bank. This is rather one transaction in which Mr. Nitin Miglani was a conduit to circumvent the problem faced due to cessation of Board and to prevent the closure of business. From the conduit loan directly come to appellant, interest was paid to the bank by the group company/ it's MD. It is respectfully submitted that the provision of section 40(a)(ia) are introduced to protect the evasion of taxes. There is no such case. The bank is a nationalized bank and ahs paid the taxes on the interest earned in its assessment. It is held by the Hon'ble Supreme Court that in case the tax is paid by the payee no disallowance can be made u/s 40(a)(ia). Assessee relies upon the judgment of the Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverage Pvt. Ltd. vs. CIT (293 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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