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TMI Blog2019 (12) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties and to examine as to whether such credit to the account of a party amounts to payment or not, the definition of word paid as per section 43(2) has to be analyzed. Definition of amount paid, clearly demonstrates that in case the assessee is following the mercantile system of accounting, which system records revenues and expenses when they are incurred, regardless of when cash is exchanged, therefore, the amount credited to the payee account will also amount to payment. Since the assessee was following the mercantile system of accounting, the entries of interest credited by him to the payees accounts were entries of accrual in the absence of cash transactions, which amounted to payment and, therefore, the Assessing Officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed application for condonation of delay and the reason for delay in filing the appeal before Hon'ble Tribunal has been explained in the condonation application. It was submitted that in the interest of substantial justice the delay may be condoned. 4. Learned D. R. had no objection to the condonation of delay. Keeping in view the substantial justice and being convinced with the explanation given by the assessee in the condonation application, the delay was condoned. 5. Learned A. R., at the outset, submitted that the only objection of Pr. CIT is that the assessee had paid interest on the loan borrowed but had not deducted TDS hence as per the provisions of section 40(a)(ia), the deduction claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere the assessee had enclosed as per Annexure-6, the copy of confirmed accounts of unsecured loans and we were further taken to pages 43 to 60 of the paper book where the copies of ledger accounts of unsecured loan creditors were placed and where the fact of interest having been being credited without deduction of TDS was placed. In view of these facts and circumstances, it was argued that the Assessing Officer had applied his mind and had examined that assessee had paid interest without deduction of TDS as that that point of time the liability to deduct TDS was only in respect of interest payable, as was held by Hon'ble Allahabad High Court in the case of Vector Shipping Services. It was submitted that in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y expenditure on account of interest on borrowed loan has been claimed then it may be shown as to why such interest may not be disallowed. Vide para 7, again the assessee was required to file datewise and confirmed copy of interest account including the complete address and PAN to whom the interest was paid. The assessee, vide letter dated 13/01/2015, vide para 10, had submitted the ledger accounts of unsecured loans as per Annexure- 6, a copy of which is placed at pages 43 to 68 of the paper book. The examination of these ledger account shows that as on 31/03/2012 the assessee had credited interest to the unsecured loan accounts of these parties. These ledger accounts were before the Assessing Officer and he consciously did not make disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partmental View1 thereon shall not be operative in the area falling in the jurisdiction of the relevant High Court. However, the CCIT concerned should immediately bring the judgment to the notice of the CTC. The CTC shall examine the said judgment on priority to decide as to whether filing of SLP to the Supreme Court will be adequate response for the time being or some legislative amendment is called for. 6. The above clarification may be brought to the notice of all officers. 8.1 In the present case, the assessee is covered by jurisdiction of Hon'ble Allahabad High Court and in the case of Vector Shipping Services Hon'ble Allahabad High Court had held that tax is required to be deducted only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture unless the liability has become an ascertained sum of money. Until ascertained, the liability no doubt exists, but proceedings have yet to be taken some way or other to determine the exact amount. A vague liability to make a payment cannot be entered into accounts and, in that state, it cannot be said to have been incurred , so as to count as paid within the meaning of section 43(2) [Kanpur Tannery Ltd. v CIT, (1958) 34 ITR 863 (All)]. Also see, Addl. CIT v. Kale Khan Mohammad Hanif, (1978) 114 ITR 812 (MP). In view of the definition of the expression paid in section 43(2), that expression paid in section 36(1)(iii) should be construed to mean paid in accordance with the method of accounting followed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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