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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 ..... sent case is a limited company and is engaged in the business of sale and servicing of vehicles as well as sale of spare parts and accessories. The assessee, in the year under consideration has made an investment of Rs. 3,15,00,023/- which was shown under the head "capital work-in-progress". It means the expenditure incurred on the investment was capitalized by the assessee. It was also observed that the assessee has taken a loan from SBI A/c No.30871938804 for the purpose of investment as discussed above. The assessee claimed interest expenses on such loan for Rs. 15,93,440.006/- which was also capitalized and included in the aforesaid capital work in progress. However, the AO observed that a sum of Rs. 62.50 lakhs dated 28.08.2009 has also been withdrawn from the cash credit a/c no. 30187727041 of SBI which was also invested in the same capital work-inprogress. But the interest paid on such loan (CC loan) has been claimed as expenditure in profit and loss account and the same was not capitalized. Therefore, the AO called upon the assessee to explain the reasons for non capitalization of interest of cash credit account in proportionate to Rs. 62.50 lakhs which was invested in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Capital expenditure as against Revenue expenditure is arbitrarily bad in law as well as on facts. 2. For that in view of the facts and circumstances of the case that the Ld. Assessing officer failed to understand and appreciate the submission made regarding utilization of funds for acquiring the Land & building for the workshop of the company and the Ld. CIT(A) was not justified in confirming the addition made by the Assessing officer on mere surmise supposition and hypothetical reasons which is not justified and the additions needs to be deleted in full." 5. The ld. AR before us reiterated the submissions made before ld. CIT(A) and submitted paper book which is running pages 1 to 52 and copy of the bank statement of SBI A/c No.30187727041 to justify that it was not cash credit account. On the other hand the ld. DR vehemently supported the orders of the authorities below. 6. We have heard the rival contentions and perused the material available 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 Rs. 62.50 lakhs and the capital work-in-progress was categorized under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en claimed without deducting TDS u/s 194J of the Act. Accordingly the AO called upon the assessee for the clarification on the non deduction of TDS. The assessee in compliance thereto submitted that the said amount was discharged by way of debit note and the same does not represent the professional services. Therefore, there is no question of deducting TDS on the aforesaid amount. However, the AO observed that the expenses has been claimed in the books of accounts and whether it was claimed by way of debit note or any other reason but the same was liable for the TDS provision which the assessee has failed to comply. Therefore, the same was disallowed under the provision of section 40(a)(ia) of the Act and added to the total income of the assessee. 9. Aggrieved, the assessee preferred an appeal before ld. CIT(A). The assessee before the ld. CIT(A) submitted that the party M/s Ford India Ltd has debited to the assessee for the aforesaid 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration. 11. We have heard the rival contentions and perused the materials available on record. The issue in this instant case relates to the expenses claimed by the assessee without deducting TDS. The ld. AR before us inter-alia submitted that there is an amendment by the Finance Act 2012 which provides no disallowance if the recipient has included the payment by the assessee in its turnover and has paid the taxes thereon. In this regard we find force in the alternative arguments of the ld. AR. 11.1 At the outset we find that there is amendment in the 1st proviso to Sec. 201, wherein, if any payee has paid the taxes by offering / disclosing the said receipt in its return of income, then the payer (the assessee herein) should not be treated as assessee in default. The said proviso reads as under : Consequences of failure to deduct or Pay 201. (1) Where any person, including the principal officer 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 ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia) when there was no loss to revenue. The Agra Tribunal in the case of Rajiv Kumar Agarwal-vs-ACIT [2014] 45 taxmann.com 555 (Agra - Trib) had held that the second proviso to Section 40(a)(ia) is declaratory and curative in nature and has retrospective effect from 1st April, 2005, being the date from which subclause (ia) of section 40(8) was inserted by the Finance No.(2) Act, 2004, even though the Finance Act, 2012 had not specifically stated that proviso is retrospective in nature. The High Court affirmed the ratio laid down by the Agra Tribunal and held that said provisos is declaratory and curative in nature and ha retrospective effect from 1st April, 2005." Respectfully following the aforesaid decision of the Hon'ble Delhi High Court in the case of Ansal Land Mark Township (P) Ltd., (supra) 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 asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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