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TMI Blog2017 (3) TMI 961X X X X Extracts X X X X X X X X Extracts X X X X ..... bank statement which is additional document and needs to be verified by the AO. Therefore, we are inclined to restore this issue to the file of the AO for fresh adjudication - Decided in favour of assessee for statistical purposes. TDS u/s 194J - non deduction of tds on expenditure under the nomenclature of Quality Care Expenses - as per AO such expenses is in the nature of fees for professional and technical services - Held that:- Respectfully following the decision in the case of Ansal Land Mark Township (P) Ltd. (2015 (9) TMI 79 - DELHI HIGH COURT ) we deem it fit and appropriate in the interest of natural justice and fair play to set aside this issue to the file of AO to decide the issue afresh in the light of the aforesaid judgment. Accordingly, we direct the AO to verify whether the payees have included the subject-mentioned receipts in their respective returns and paid taxes thereon or not. If that is so, then the assessee should not be treated as assessee in default u/s. 201(1) of the Act. We also find from the submission of Ld. AR that there were certain transactions for the purchase of the goods and the same has been disallowed for non deduction of TDS. In our conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the AO called upon the assessee to explain the reasons for non capitalization of interest of cash credit account in proportionate to ₹ 62.50 lakhs which was invested in the impugned capital work-in-progress. The assessee in compliance thereto submitted that no fund from the bank has been used in making the investment in the aforesaid capital work-in-progress. In fact a sum of ₹ 35 lakhs was invested by its directors in the aforesaid capital work-inprogress. However, the AO disagreed with the submission of the assessee and held that a sum of ₹ 62.50 lakhs has been withdrawn from cash credit account and therefore proportionate interest amounting to ₹ 5,79,837/- is treated as capital expenditure which was disallowed and added to the total income of the assessee. 4. Aggrieved, assessee preferred an appeal before ld. CIT(A). Before ld. CIT(A) the assessee submitted that the AO has misunderstood the current account maintained with State Bank of India as cash credit account. In fact the cash credit account No.30187727041 is the current account of the assessee and therefore the interest is not required to be disallowed. Further, the ld. CIT(A) disregar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le on record. The issue in the instant case relates to the diversion of funds from the cash credit account maintained with SBI towards capital work in progress of ₹ 62.50 lakhs and the capital work-in-progress was categorized under the head investment in the balance sheet and therefore any interest paid on any loan in connection with this capital working progress is to be capitalized. As such, the interest on such loan cannot be claimed as revenue expenditure. However, both the lower authorities found that there is a diversion of funds from the cash credit account whereas the assessee claimed that there is no diversion of funds as observed by the lower authorities. On examination of the records, it was found that the account which the lower authorities treated as cash credit account is in fact the current account of the assessee. Therefore, the observations made by the ld. Counsel in their respective years are baseless. The ld. AR before us has submitted the bank statement from where the fund was invested in the capital work-in-progress. On perusal of the bank statement, we find that this is the current account of the assessee and not the cash credit account as held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount which represents the activities of quality care services to dealers. As such, it is not a fee in the nature of professional services and therefore not liable for TDS deduction. However, the ld. CIT(A) disregarded the contention of the assessee and confirmed the order of AO by observing as under :- Hence, based upon a plain reading of section 194J read with explanation 9(1 )(vii) clearly shows that the expression Fees for Technical Services includes rendering any managerial services also. In the present case, the appellant company made the payment to a resident company i.e. Four India Ltd. in connection with providing the Quality Care Services which are in the nature of professional or technical services. It has been stipulated in the provision of section 194J that the deduction of TDS has to be made at the time of credit in any account in the books of accounts of the assessee or at the time of payment, whichever is earlier. Therefore, the appellant's claim that there was no liability to deduct TDS as the sum of ₹ 3,00,000/- was directly debited by the recipient company is not tenable as the liability to deduct had arisen at the time of credit in the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer of a company,- (a) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: [Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed ..... 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