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TMI Blog2019 (8) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... or payable whereas the issue before us relates to the amendment of second proviso to Section 40(a)(ia) which has been held to have a retrospective effect by the Hon'ble High Court of Delhi in the case of Ansal Landmark Township Pvt. Ltd. [ 2015 (9) TMI 79 - DELHI HIGH COURT] However, in the interest of justice and fair play, we restore this issue to the files of the A.O. The assessee is directed to furnish necessary evidences to show that the payee has filed returns and offered the sum received to tax. The A.O. is directed to verify the same and decide the issue in the light of the ratio laid down by the Hon'ble High Court of Delhi (supra). - R/TAX APPEAL NO. 539 of 2019 - - - Dated:- 5-8-2019 - MR J. B. PARDIWALA AND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty is nothing but an unascertained liability. It was also observed by Assessing Officer that appellant has not produced any bills in respect of the said expenditure which also proves that the provision of expenditure is liability. The appellant has reversed its provision in succeeding year which also proves that the provision created is in respect of unascertained liability, which is not an allowable expenditure. The Assessing Officer has rejected the ultimate claim of appellant that payment of ₹ 3,77,74,260/was paid before due date of filing return of income hence disallowance u/s 40(a)(i) cannot be made on the ground that provision of Royalty is made for payment to Nonresident person and the same is not credited to Government Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter deducting TDS. The appellant company has followed matching cost principles and made provisions for expenditure pertaining to income booked in current year. It is settled legal accounting practice that assessee company makes lump sum provision of expenditure on the basis of their own estimate in financial year and such provision is immediately reversed on first day of subsequent financial year and actual amount paid is booked as expenditure in subsequent year which means that only excess/short expenditure is booked in subsequent year. This does not mean that expenditure provided in year is contingent or unascertained as same is based upon agreement executed with various parties and are against income booked in current financial year. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [Partly in favour of revenue]. Thus, addition made by Assessing Officer on the ground of nondeduction of TDS is upheld. However, it is observed that appellant has duly deducted TDS on royalty payment at the time of payment to nonresident hence Assessing Officer is directed to verify the above contention of appellant and allow the expenditure as deduction in subsequent assessment year if same is not claimed by appellant as deduction or not already allowed in any proceedings in subsequent assessment years. This ground of appeal is partly allowed. 4. The aforesaid findings of fact recorded by the CIT(A) ultimately came to be affirmed by the appellate tribunal, held as under: - 10. During th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a)(ia) by the Finance Act, 2012 w.e.f. 01.04.2013 is prospective and by holding so the assessee is aggrieved by the disallowance of interest expenditure. 4. While scrutinizing the return of income, the A.O. noticed that the assessee has taken loan for purchase of property from Reliance Capital and has also taken Car loan from Kotak Mahindra Ltd. The A.O. further noticed that the assessee has made interest payment to these parties without making any deduction of tax at source. Assessee was asked to explain on the disallowance of interest expenditure should not be made u/s.40(a)(ia) of the Act. 5. Assessee filed a detailed reply claiming that if the payee have offered the income for tax and has paid taxes t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s relates to the amendment of second proviso to Section 40(a)(ia) which has been held to have a retrospective effect by the Hon'ble High Court of Delhi in the case of Ansal Landmark Township Pvt. Ltd. 279 CTR 384. 8. However, in the interest of justice and fair play, we restore this issue to the files of the A.O. The assessee is directed to furnish necessary evidences to show that the payee has filed returns and offered the sum received to tax. The A.O. is directed to verify the same and decide the issue in the light of the ratio laid down by the Hon'ble High Court of Delhi (supra). 9. In the result, both these appeals by the assessee are treated as allowed for statistical purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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