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TMI Blog2014 (1) TMI 1298X X X X Extracts X X X X X X X X Extracts X X X X ..... r & Ors. [2013 (5) TMI 457 - GUJARAT HIGH COURT] - the provisions of section 40(a)(ia) cover not only the amounts which are payable as on 31st March of a particular year but also which were paid during the end of the year – Decided partly in favour of Revenue. Application of Section 194C of the Act – Held that:- Commissioner of Income Tax (Appeals) has not dealt with the aspect of whether the provisions of section 194C apply to the hire charges paid by the assessee so as to invoke the provisions of section 40(a)(ia) of the Act – As the CIT (Appeals) has not dealt with this aspect, thus, the issue is remitted back to the CIT(A) for fresh adjudication – Decided partly in favour of Assessee. - ITA No.1136/Mds/2013 - - - Dated:- 30-7-2013 - N S Saini And Challa Nagendra Prasad, JJ. For the Appellant : Mr Shaji P Jacob, Addl.CIT For the Respondent : Mr T Banusekar, CA ORDER:- PER : Challa Nagendra Prasad The Revenue filed this appeal against the order of the Commissioner of Income Tax (Appeals)-XII, Chennai dated 28.02.2013 for the assessment year 2006-07 raising the following grounds:- 1. The Commissioner of Income Tax (Appeals) has erred in directing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 38 for which the disallowance under section 40(a)(ia) attracts. According to the Commissioner of Income Tax (Appeals), the expenses allowable under section 30 to 38 only are liable for disallowance under section 40(a)(ia) of the Act but not the expenses allowable under section 28 of the Act. The Commissioner of Income Tax (Appeals) held that since the hire charges incurred by the assessee are direct expenses allowable under section 28 of the Act, the provisions of section 40(a)(ia) have no application. The Revenue is in appeal before us contending that the Income Tax Act does not distinguish between expenses made under section 28 and section 30 to 38 for the purpose of tax deducted at source and non-deduction warrants disallowance of expenses under section 40(a)(ia) of the Act. 4. The Departmental Representative submits that this aspect of the matter was decided by the Chennai bench of this Tribunal in favour of the Revenue in the case of DCIT Vs. Macro Marvel Projects Ltd. (140 ITD 472) and ITO Vs.Sarvodaya Mutual Benefit Trust [22 TTR (Trib) 277]. The Departmental Representative submits that in view of the above decisions of co-ordinate benches of this Tribunal, the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) has made an observation at para 13 of its order that provisions of Section 40(a)(ia) were applicable only to items covered under Sections 30 to 38 and not for expenditure in the nature of direct cost covered by Section 28 of the Act. However, in the said case, books of accounts of the assessee were rejected and profits were estimated. Disallowance under Section 40(a)(ia) was mainly held to be not warranted for the reason that estimation of income took into account all irregularities committed by the assessee, and a further disallowance under Section 40(a)(ia) would amount to punishing the assessee twice for the same offence. Thus, observation of Hyderabad Bench of this Tribunal was in a case where books of accounts were rejected and estimation of income was made based on best of judgment. On such a factual situation, it was observed by the Bench that Section 40(a)(ia) covered only those items falling within Sections 30 to 38 of the Act. Here, on the other hand, books were not rejected by the Assessing Officer at all. Hence, in our opinion, the said decision will not help the assessee s case. 7. Similarly, the co-ordinate Bench of this Tribunal in the case of ITO Vs. Sar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 28 itself provides for expenditure and, therefore, the assessee can claim the expenditure of interest payment as an expenditure deductible at source itself under section 28. We disagree with the legal proposition laid out by the Commissioner of Income-tax(Appeals) and his legal conclusion on that point is set aside. 8. In view of the above decisions of the co-ordinate Benches of the Tribunal, we reverse the impugned order of the Commissioner of Income Tax (Appeals) on this aspect. The decision of the Hon ble Supreme Court in the case of Madeva Upendra Sinai (supra) relied on by the counsel for the assessee has no application in the facts and circumstances of the case, if we read the provisions of Chapter XVII-B read with section 40(a)(ia) of the Act. Reliance placed by the Commissioner of Income Tax (Appeals) on this decision of the Hon ble Supreme Court is therefore misplaced. 9. We find from the impugned order that the Commissioner of Income Tax (Appeals) has not dealt with the aspect of whether the provisions of section 194C apply to the hire charges paid by the assessee so as to invoke the provisions of section 40(a)(ia) of the Act. One of the grounds raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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