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TMI Blog2017 (3) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... n upholding the disallowance made u/s 40(a)(ia) of the Act in the sum of Rs. 82,650/- towards Annual Maintenance Charges in the facts and circumstances of the case. 4.1. The brief facts of this issue is that the assessee is running a restaurant in Mani Square Mall. The ld AO observed that the assessee paid a sum of Rs. 61,650/- to HCL Infosystems Ltd towards supply of HCL machines and Thermal Printer and a sum of Rs. 21,000/- paid to IDS Softwares Pvt Ltd towards product service contract charges for Fortune R & B Software without deduction of tax at source u/s 194C of the Act and accordingly invoked the disallowance u/s 40(a)(ia) of the Act, which was also confirmed by the ld CITA in first appeal. The ld AR produced the bills that were produced before the lower authorities and prayed that in respect of payment of Rs. 61,650/- to HCL Infosystems Ltd, the same represents only purchase of machines and printer for which provisions of section 194C of the Act could not be invoked and consequential disallowance u/s 40(a)(ia) of the Act could not be made thereon. However, he fairly conceded that the disallowance u/s 40(a)(ia) of the Act was rightly made in respect of AMC charges of Rs. 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 75:25 ratio respectively) , Clause 12 towards payment of fixed common area maintenance charges of Rs. 23,295/- plus service tax on account of servicing, managing and maintaining the common area installation and facilities in the mall including electricity, repairs, replacement, refurbishment, painting, maintenance, cleaning and security of common indoor and outdoor sitting area etc and also the forecast costs on account of advertisement , promotion and marketing of the food court , Clause 12.1 containing minimum guarantee amount of Rs. 80,000/- per month payable by the assessee to Mani Square Ltd (MSL) with an option given to the vendor to retain the portion of the sales or minimum guarantee whichever is higher. He also argued that the assessee scope of deliverables as per the JV agreement is as follows:- "a. All ingredients and raw material for preparation of food. b. Necessary well cooked food with good wrap and hygiene. c. Cooking area equipment built in food grade material/quality. d. Necessary Tiling & Plumbing in the cooking area. e. Cleanliness of the attire provided by MSL for the persons/representatives facing the customer. f. Equipment for Counter. g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt dated 15.7.2008. Needless to mention that the assessee be given reasonable opportunity of being heard. Accordingly, the Ground 3(b) raised by the assessee is allowed for statistical purposes. 6. The next issue to be decided in this appeal is as to whether the ld CITA is justified in upholding the disallowance of interest paid to Kotak Mahindra bank Ltd in the sum of Rs. 1,91,816/- in the facts and circumstances of the case. 6.1. The brief facts of this issue is that the ld AO observed that the assessee had paid a sum of Rs. 1,91,816/- to Kotak Mahindra Bank Ltd as interest on unsecured loan without deduction of tax at source under Chapter XVIIB of the Act. Accordingly he disallowed the same u/s 40(a)(ia) of the Act, which was also upheld by the ld CITA. Aggrieved, the assessee is in appeal before us. 6.2. The ld AR argued that there is no need to deduct tax at source when the interest is paid to a banking company. In response to this, the ld DR vehemently relied on the order of the lower authorities. 6.3. We have heard the rival submissions. We find lot of force in the argument of the ld AR in this regard and accordingly hold that no disallowance u/s 40(a)(ia) of the Act wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same are payable every month and there cannot be substantial variance between salary reported in the profit and loss account as on 23.3.2010 and that on 31.3.2010 except the provision to be made for the month of March 2010 thereon. The ld AO observed that the salary reflected in the final profit and loss account was Rs. 64,71,010/- as against Rs. 40,36,896/- on the date of survey. The assessee was asked to furnish the details of salary expenses. The assessee filed complete details in 6 pages vide reply dated 18.11.2011 before the ld AO including the details of salary and wages paid directly and also paid through contractor named Kolkata Dynamic Service Pvt Ltd. The ld AO observed that the assessee had shown salary for March 2010 as only Rs. 5,50,781/- apart from observing some discrepancies in the total salary figure given by the assessee from time to time before the ld AO. He also observed that the individual salaries of 66 persons out of 84 persons are below Rs. 50,000/- each. He accordingly concluded that with high attrition rate generally among employees getting such low salaries and disbursal of the same in cash, it was very easy for the assessee to inflate its expenses under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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