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TMI Blog2014 (3) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... sum exceeding 4% of discount granted in a sale invoice - The CIT (A) after examining the accounts of the assessee had held that the discounts are accounted on the basis of sale bill and reflected in each party's account - The findings of the CIT (A) does not call for any interference – thus, the order of the CIT(A) upheld – Decided against Revenue. Disallowance of interest as not relating to the business – Held that:- The CIT (A) rightly pointed out that disallowance u/s 14A is limited to expenditure attributable towards income which is not liable under the Income Tax Act - The Assessing Officer has not brought out on record any evidence that the interest expenditure has been incurred by the assessee for earning exempted income – thus, the order of the CIT (A) deleting the disallowance of expenditure is upheld – Decided against Revenue. - ITA No. 579 of 2012 - - - Dated:- 14-3-2014 - Shri George George K. And Shri D. Karunakara Rao,JJ. For the Petitioner : Shri Bijoy Kumar Panda,(DR) For the Respondent : Shri B. P. Gandhi, Advocate ORDER Per George George K. J.M. This appeal at the instance of the Revenue is directed against the CIT (A)'s order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material purchased from others would not work covered by section 194C. The learned DCIT has disallowed the processing charges Rs.13,95,201/-. Appellant admits that payments relate to embroidery charges paid and TDS is not deducted. However, appellant submits work of embroidery includes the labour and material purchased by the parties. Work of embroidery of goods to the required specification is not defined in the definition of 'work' under Explanation to 194C. However, clause (e) to Explanation to 194C is introduced from 1.4.2009. In this behalf it is submited that the clause (e) was not on the statute book during the year F.Y 2007-08. It has been introduced during the year F.Y 2007-08. In other words, the 'work of manufacturing and supplying the product to the requirement of the customer by using material purchased from a person other than such customer was not included in definition of work'. The question therefore, is whether the said amendment is clarificatory and thus whether even in the absence of such a law during 2007-08 the work of manufacture and supplying of the product by purchase of material from other person can be read in the definition of work. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 194C is attracted. In the absence of payment of TDS, section 40(a)(ia) is attracted and the same cannot be allowed as expenditure. The appellant has also accepted the same by not pressing the ground as is evident from the above submissions. This disallowance is, therefore, upheld. 3.7 The total disallowance u/s 40(a)(ia) is Rs.13,95,201/- plus Rs.3,99,290/- i.e. Rs.17,94,481. The appellant gets a relief of Rs.44,86,296/- as being purchases not liable for TDS . 4.4 The Revenue being aggrieved is in appeal before us. The learned DR supported the order of the Assessing Officer. Per contra, the learned AR reiterated the submissions made before the Income Tax Authorities and supported the findings/ conclusions of the CIT (A). 4.5 We have heard the rival submissions and perused the material on record. The CIT (A) has categorically held that a sum of Rs.44,86,296/- are inter-state purchases and section 194C is not applicable. The CIT (A) came to the above conclusion, after verifying the purchase bills and also the confirmations from the concerned parties that these sales were inter-state purchases. A sum of Rs.44,85,686/- comprising of purchase by the assessee from M/s. Ratir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... line of business. Assessing Officer has not doubted the genuineness of the rebate and discount. Assessing Officer made an adhoc disallowance of discount and rebate of a sum exceeding 4% of discount granted in a sale invoice. The CIT (A) after examining the accounts of the assessee had held that the discounts are accounted on the basis of sale bill and reflected in each party's account. These findings of the CIT (A) does not call for any interference, hence we confirm the order of the CIT (A) on this issue. 5.5 Therefore, grounds 4 and 5 raised by the Revenue are dismissed. Disallowance of interest as not relating to business - Rs.8,99,631/- (Ground Nos. 6 to 8): 6. The grounds raised by the Revenue relating to the above issue namely Ground Nos. 6 to 8 are as follows: 6. The learned CIT (A) has erred in deleting the addition of Rs.8,99,631/- made by the Assessing Officer on account of interest disallowed. 7. The learned CIT (A) has erred in holding that the Assessing Officer has not brought on record any evidence to support the view that the interest has been paid for earning income, which is exempt from Income- tax. 8. The learned CIT (A) has not appreciated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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