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TMI Blog2014 (4) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of assessee were examined by the authorities, the matter is required to be re-examined – thus, the matter is matter is remitted back to the AO for examination about the borrowed funds and see whether any part of the amount has been diverted for non-business purposes – Decided in favour of Assessee. Disallowance u/s 40(a)(ia) of the Act – Held that:- Assessee contended that the amount added back need not be added back is correct - since the CIT(A) has already directed the AO to verify and as submitted by the assessee the details of payments are already stated in the 3CD report as well as enclosure to the returns, AO is directed to allow the amount, if the amounts are paid by due date as per the amended provisions of the Act - It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return of income and, therefore, the entire amount would have been allowed. 2. The Ld. Counsel submitted that consequent to the amendment to section 40(a)(ia) brought out by Finance Act, 2010 which was interpreted to be retrospectively applicable by various High Courts including the jurisdictional High Court, assessee has raised an additional ground which is legal in nature as all facts are available on record. 2.1. Ld. D.R. however, objected allowing additional ground as it will result in reduction of returned income. Therefore, the additional ground need not be admitted/adjudicated. 3. Having considered the rival contentions, we are of the opinion that this being a legal ground is allowable, on the principles laid down by Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany for business purpose but they are given as advance to sister concerns and others on which not interest is charged. As the borrowed funds are not utilized for the purpose of business, the interest expenditure is not to be allowed atleast in proportion to the unutilized funds. Hence, the interest charged on these funds amounting to Rs.31,18,462/- is disallowed and added to the income returned. 5.1. The Ld. CIT(A) considering the assessee s written submissions that it has not diverted any funds from business, however, did not agree by stating as under : 4.2. I have considered carefully the facts and evidence. It is very clear that the sister concerns are independent companies having their own business and books of account. For co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that funds have been advanced for business purposes. It was the submission that details of utilization of borrowed funds were furnished to the Ld. CIT(A) which were not considered. 7. Ld. D.R. however, submitted that the orders under section 2(22)(e) does not pertain to the A.Y. under consideration but earlier years. Therefore, there is no corelation of that order to the facts of the case. He relied on the Orders of the A.O. and CIT(A). 8. We have considered the issue and examined the facts on record. As seen from the balance sheet, the term loan obtained by assessee among various other secured loans was in fact carried-over term loan which was reflected in the Balance Sheet as on 31st March, 2008 as well. The outstanding term loan at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll make it clear that only those two amounts which are mentioned by the A.O. for consideration should be examined and decided. With these observations, the grounds are considered allowed for statistical purposes. 9. Ground No.4 and additional ground are on the issue of disallowance under section 40(a)(ia). 9.1. Brief facts are that during the course of assessment proceedings, it was noticed from the TDS particulars that assessee deducted the tax but failed to remit the same into Government account. The details are as under : S.No. U/s. Nature of Work Amount Quantified(Rs) 1 u/s. 194J Professions Consultancy 184396 2 u/s. 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions (GA.No.3200/2011), wherein it has been held that the amendment to the provisions of section 40(a)(ia) is retrospective in operation and consequently in respect of any payment to TDS made before the due date for the f iling of the return of income, the provisions of section 40(a)(ia) cannot be invoked. Therefore, we do not f ind any reason to see that any further decision on this point is required by this Court. 10.2. Consequently, assessee s contention that amount added back need not be added back is correct. However, since the CIT(A) has already directed the A.O. to verify and as submitted by the assessee the details of payments are already stated in the 3CD report as well as enclosure to the returns (copy placed at page 20 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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