9911796707
TMI Blog2014 (2) TMI 987X X X X Extracts X X X X X X X X Extracts X X X X ..... dered in the course of buying or selling of goods - The Assessing Officer has miserably failed to appreciate the real controversy - He has totally misconstrued the explanation given by the assessee - The dealers and sub-dealers had purchased the goods directly from the assessee - They have not acted as a commission agent for third person where upon sec. 194H would be applicable – Decided in favour of Assessee. Disallowance of interest paid – excessive and unreasonable expenditure - Held that:- Section 40A(2)(b) is not applicable on a public limited company - The premises in question, consisting of 21000 sq. ft. of office area, was taken on rent in Assessment Year 1999-2000 - During the year, total rent amounted to Rs. 48 lacs - In additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs.111100000/- to M/s Dua Engineering Works Pvt. Ltd. and has calculated pro-rata interest @ 12% thereon amounting to Rs.8100000/-." 2. The Registry has taken an objection vide defect notice that challan has been filed in Minor Head : (400), i.e., Tax on Regular Assessment, instead of (300), i.e., Self Assessment Tax, which is not treated as appeal fees. 3. In this regard, vide application filed, the assessee has contended that the order dated 03.12.2012 passed by the CIT (A)-VIII, New Delhi, i.e., the impugned order, was received by the assessee on 03.01.2013 and as such, the last date of filing the appeal was 03.03; that the appeal was filed on 27.02.2013 within limitation; that admittedly, the challan had been unintentionally filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is nothing other than incentive/commission; that this fact was evident since the higher sales achieved by the dealers would result in more bonus points to the dealers; that commission includes any payment received directly or indirectly by a person acting on behalf of another, for services rendered in the course of buying or selling of goods; and that the payment of foreign travel being in the nature of commission within the meaning of Section 194H of the IT Act, it was the duty of the assessee to deduct TDS thereon. 6. Before us, the ld. Counsel for the assessee has contended that the issue stands covered in favour of the assessee by the Tribunal Order (placed on file) dated 12.07.2013, in the assessee's own case in ITA No.4879/Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said person was a person covered under the provisions of Section 40A(2)(b) of the IT Act, being a related party; that during the year, the assessee had increased the interest free security deposit from Rs. 5.35 crores to Rs. 11.35 crores; that as per the prevailing market practice and other standard rent agreements, the interest free security deposit was usually equal to a maximum of six months' rent, which in the present case, worked out to Rs. 24 lac; that since the assessee has not been able to file any explanation regarding the increase in the interest free deposits, the interest of Rs. 81 lac was being disallowed out of the interest debited to the Profit Loss Account by the assessee. 10. The Ld. CIT (A) confirmed the disallowan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits made by the assessee with the landlord is excessive. Had the Assessing Officer looked into the reasons for making such deposits probably he would have not made the disallowance. Apart from the stand taken on legal principle that section 40A(2)(b) is not applicable on a public limited company. The assessee has demonstrated that it has sufficient interest free fund available which can take care such types of deposits, it has taken the premises on a monthly rent @ Rs.19 per sq. ft. whereas the market rate is Rs.60- 80 per sq. ft. per month. Had these factors been looked into by the Assessing Officer, probably he would have not formed the opinion that assessee has given undue benefit to its landlord. Learned First Appellate Authority has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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