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TMI Blog2014 (11) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that:- Complete details of payment to each individual is available with the assessee along with the details of work done - the AO without going into details of the issue has made the disallowance as he has applied provisions of section 40A(3) without considering the fact that many parties are involved and payment to none of them exceeds ₹ 20,000 – the order of the CIT(A) is upheld – Decided against revenue. Disallowance out of discount expenses deleted – Held that:- Apparently the AO appears to have not applied his mind and not gone into detailed enquiry of the matter - CIT(A) has perused the material made available before him which is part of regular books of accounts of the assessee - CIT(A) rightly found that as there are many parties involved in total discount of ₹ 23,000/- , provision of section 40A(3) does not apply – thus, the order of the CIT(A) is upheld – Decided against revenue. Disallowance on interest expenses in interest free advances given to sister concern deleted – Held that:- The AOhas observed about reducing the interest cost without finding any nexus of advance to sister concern with the interest bearing funds - Assessee has ample interest f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) 35. He also relied on judgement of ITAT, Jaipur Bench in the case of Jaipur Vidyut Vitran Nigam Ltd. Vs. DCIT (2009)-123 TTH 88 (JP) and Special Bench Vishakhapatnam in case of Merlyn Shipping Transport vs. Addl. CIT, 136 ITD 23 and also ITAT Bangalore in case of S S Ward (Supra) to hold that the provision of section 40(a)(ia) is not applicable in the case where the amount of expenditure has been actually paid during the year and it does not remain unpaid or payable at the end of the year. He accordingly deleted the disallowance. 2.3 Before us the ld. D.R pointed out that the provisions of section 40(a)(ia) of the Act are clear and unambiguous. The amendment made by the Finance Act, 2010 is prospective in nature. He further relied on the Departmental Circular dated 16.12.2013 wherein the controversy regarding applicability of provision of section 40(a)(ia) of the Act on the amount of expenditure paid during the year has been discussed. In view of the judgement cited in the Circular, he requested to reverse the order of CIT(A). 2.4 On the other hand, the ld. A.R supported the order of CIT(A) on both the aspects. He drew our attention to the order of this bench dated 05.06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt from the decision of ITAT Chennai in the case of ITO Vs. Theekathir Press, ITA No. 2076(Mds)/2012 (Order dated 18th September, 2013) and also ACIT Vs. M/s Eskay Designs, ITA No. 1951/Mds/12 wherein the matter was decided in favour of the assessee on the same issue after taking into considering the controversy created from different decisions of Gujarat, Calcutta and Allahabad High Courts. The Chennai Bench relied on the decision of Supreme Court in the case of CIT Vs. Vegetable Products Ltd., 88 ITR 192 wherein it was held that in case of judicial controversy, the view favourable to the assessee should be adopted. Thus Ground No. 1 of appeal is dismissed. 3. Ground No. 2 is against deletion of allowance of ₹ 19,932/- in respect of delayed deposition of Employees Contribution to PF ESI. The AO found that certain payments towards employees contribution to PF ESI were made beyond the dates prescribed under the respective Acts. Though the same have been paid before the due date of filing return u/s 139(1) it can't be allowed in view of provision of section 36(1)(va). The CIT(A) deleted the disallowance holding that provisions of section 43B are applicable in such ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a case of the AO that he examined the recipients of the payment and they have denied of having done any work and received any payment from the appellant. In view of above he found the disallowance without any basis and deleted the same. 3.4 Before us the Ld. D/R supported the order of assessment whereas the ld. A.R supported the order of CIT(A). 3.5 After considering the rival submissions we find that complete details of payment to each individual is available with the assessee along with the details of work done. It appears that the AO without going into details of the issue has made the disallowance as he has applied provisions of section 40A(3) without considering the fact that many parties are involved and payment to none of them exceeds ₹ 20,000/-. In this view of the matter we are inclined to uphold the findings of CIT(A) and dismiss this ground of appeal. 4. The next ground no. 4 is against deletion of disallowance of ₹ 23,000/- out of discount expenses. 4.1 The assessee has claimed total discounts of ₹ 6,55,644/- of which the Ld. Assessing Officer found that a sum of ₹ 23,000/- was paid in cash on 01.11.2008. He observed that since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the loans taken by it, the assessee would have incurred interest expenses less by ₹ 1,55,246/-. As the assessee failed to file any satisfactory explanation for not charging the interest, the AO held the interest of ₹ 1,55,246/- as unreasonable and added to the total income of the assessee. As against this the CIT(A) in para 9.3 of his order has found that it is not a case of Assessing Officer that the appellant has used the interest bearing loans taken by it for giving interest free loan to its sister concern. But the AO has made the disallowance of interest on the presumption that if the appellant used the interest free loan taken by it, it could have paid less interest to the extent of ₹ 1,55,246/-. Admittedly, the AO failed to establish direct nexus between the interest bearing loan and interest free loan given by it to its sister concerns. He further found that, as per the copy of balance sheet filed, the appellant had interest free funds of ₹ 42,33,148/- available in the current account of the partners and therefore, it can be said that the appellant has advanced the interest free loans to its sister concern out of this funds and therefore, no interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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