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TMI Blog2016 (6) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... e A.O. We do not see any error or infirmity in the order passed by the CIT(A) - Decided against assessee TDS u/s 194A - non TDS on finance charges - Held that:- Considering the ratio of the coordinate bench decision, in the case of M/s. Merilyn Shipping & Transporters (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ), we are of the opinion that no disallowance can be made u/s 40(a)(ia) of the Act for the amounts which have been already paid during the same financial year. The CIT(A) without appreciating the facts, simply uphold the additions made by the A.O. Therefore, we set aside the order passed by the CIT(A) and direct the A.O. to delete the additions made u/s 40(a)(ia) of the Act.- Decided against revenue - I.T.A. No. 686/Vizag/2013 - - - Dated:- 6-5-2016 - Shri V. Durga Rao, Judicial Member And Shri G. Manjunatha, Accountant Member For the Appellant : Shri V.K. Jain, AR For the Respondent : Shri K. Hari Prasad, DR ORDER Per G. Manjunatha, Accountant Member This appeal filed by the assessee is directed against the order of CIT(A), Visakhapatnam dated 20.9.2013 and it pertains to the assessment year 2008-09. 2. The brief facts of the case are that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the interest paid to finance companies is in respect of hire purchase agreements and therefore no TDS is deductible u/s 194A of the Act. Consequently, disallowance u/s 40(a)(ia) of the Act cannot be made. 3. The A.O. after considering the explanations furnished by the assessee held that the assessee has not proved with any evidence to justify the foreign travel expenditure of the Directors. Though assessee contends that the Directors have visited foreign countries to discuss with the executives of the PEPSI holding in respect of company s operations, failed to furnish any evidences in support of its claims. With these observations, disallowed the foreign travel expenditure of ₹ 29,44,193/-. Similarly, in respect of finance charges, the A.O. observed that though, assessee needs to deduct TDS u/s 194A of the Act in respect of interest payments, failed to deduct TDS in respect of such payments. Therefore, invoked the provisions of section 40(a)(ia) of the Act and disallowed the interest payments of ₹ 5,56,122/-. 4. Aggrieved by the assessment order, the assessee preferred an appeal before the CIT(A). Before the CIT(A), the assessee reiterated the submissions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,44,193/- towards Directors foreign travel expenditure. The Ld. A.R. submitted that the A.O. was not correct in disallowing the foreign travel expenditure, as the travel expenditure has been incurred exclusively for the purpose of business of assessee. It is further submitted that the Directors of the company have visited the countries like Dubai, Australia, Singapore and London to meet the executives of the PEPSI holdings to discuss about the business plan of the company in India. The assessee company is engaged in the business of manufacture of PEPSI brand soft drinks in India. The Directors have met the company executives to chalk out the marketing and expansion plan of the product in the coming years. The Directors also met the NRIs by mobilizing the funds for the expansion of the company s business. The A.O. failed to appreciate the fact that the expenditure has been incurred exclusively for the purpose of business. The A.R. further submitted that after meeting the company executives, it was helped the business profile of the company in India and company could achieve more turnover. Therefore, the A.O. was not correct in holding that the assessee has not produced any evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not been incurred exclusively for the purpose of business of the company. 8. Section 37 of the Act, provides for deduction of any expenditure (not being expenditure of the nature described in section 30 to 36 of the Act and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended only and exclusively for the purpose of business or profession of the assessee. Therefore, any expenditure incurred in relation to the business of the assessee and exclusively for the purpose of business of the assessee is allowed as deduction in computing the income under the head Profits Gains of business or profession. To claim the expenditure, the assessee needs to prove beyond doubt that the expenditure has been incurred exclusively for the purpose of business. The onus is on the assessee to furnish necessary evidence before the A.O. to claim such expenditure has been actually incurred for the purpose of business. In the present case on hand, the assessee claims to have incurred foreign travel expenditure in respect of two of its Directors towards the business purposes of the assessee. Though assessee claims to have incurred the expenditure exclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee uphold the order of the A.O. We do not see any error or infirmity in the order passed by the CIT(A). Hence, we inclined to uphold the CIT(A) order and reject the ground raised by the assessee. 9. The next issue came up for our consideration is disallowance of finance charges u/s 40(a)(ia) of the Act. The A.O. disallowed finance charges for the reason that the assessee has not deducted TDS u/s 194A of the Act, consequently, disallowed the expenditure u/s 40(a)(ia) of the Act. The Ld. A.R. submitted that the Ld. CIT(A) has erred in confirming the disallowance made by the A.O. by invoking the provisions of section 40(a)(ia) of the Act. The A.R. further submitted that the finance charges paid to the finance companies in respect of hire purchase agreements is not interest which attracts the provisions of TDS u/s 194A of the Act. Therefore, the A.O. was not correct in disallowing the amount by invoking the provisions of section 40(a)(ia) of the Act. Alternatively, the Ld. A.R. submitted that though assessee has not deducted TDS on such payments, all the payments have been paid during the same financial year. Therefore, in view of the special bench decision of ITAT, Visakha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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