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TMI Blog2014 (6) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... s engaged in the business of building construction. The first issue relates to the disallowance of interest expenditure. The assessee has claimed interest expenditure of Rs.21,79,500/- on unsecured loans borrowed by it. The AO noticed that the partners' account showed heavy debit balances and accordingly took the view that the assessee has diverted interest bearing funds to the partners by allowing them to withdraw the same through their current accounts. Accordingly he disallowed the entire interest expenditure claim. 4. In the appellate proceedings, the assessee submitted certain additional details before Ld CIT(A) in order to show that there was no diversion as presumed by the AO. The Ld CIT(A) did not confront those additional details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of sec. 40(a)(ia) of the Act. 7. In the appellate proceedings, the assessee submitted that a sum of Rs.1,24,669/- alone remained as payable as at the end of the year and the balance amounts have been paid during the course of the year. The Ld CIT(A), by following the decision rendered by Special bench of Visakhapatnam ITAT in the case of Meryline Shipping and Transports Vs. Addl. CIT (136 ITD 23)(SB), upheld the addition relating to the outstanding amount of Rs.1,24,669/- and deleted the balance amount of the addition, which were claimed to have been paid during the course of the year. 8. The Ld D.R submitted that the decision rendered by the Special Bench in the case of Merilyne Shipping and Transports Ltd (supra) was considered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bench decision referred supra was only a passing remark and hence it is only obiter dicta, having no binding effect. 11. We have heard the rival contentions on this issue. We notice that the issue before the Hon'ble Allahabad High Court in the case of Vector Shipping Services (P) Ltd was with regard the disallowance made u/s 40(a)(ia) of the Act for non-deduction of tax at source on salaries paid. The High Court noticed that another company M/s Mercator Lines Ltd had paid the salaries on behalf of the above said assessee and had also deducted tax at source there from. In this factual scenario, the Hon'ble Allahabad High Court held as under:- "In the present case tax was deducted as TDS from the Salaries of the employees paid by M/s Mercat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO has made the addition without properly examining the applicability of the TDS provisions to the quantum of payment made to each of the parties. Accordingly, we are of the view that this issue also requires fresh examination at the end of the assessing officer. Accordingly, we set aside this matter also to the file of the assessing officer for fresh examination.
14. Needless to mention that the assessee should be given proper opportunity of being heard. The assessee is also directed to furnish all the information / explanations that may be called for by the AO.
15. In the result, the appeal filed by the revenue is treated as allowed for statistical purposes.
Order pronounced in the open court on this 28th May, 2014. X X X X Extracts X X X X X X X X Extracts X X X X
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