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TMI Blog2020 (8) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... tely made disallowance @ 20% of motor car expenses as prescribed in the provisions of section 38(2) of the I. T. Act. During the course of appellate proceedings before us the ld. counsel has failed to refer any specific material to demonstrate any infirmity in the decision of the lower authority. Therefore, we do not find any merit in this ground of appeal of the assessee and the same stands dismissed. TDS u/s 194A - Disallowance u/s. 40(a)(ia) - disallowance of interest on car loan and amount paid to M/s. Naveen Trade Link Pvt. Ltd. as handling charges on which no TDS was deducted - HELD THAT:- Ld. counsel has neither demonstrated how the financial charges paid for car loan are not covered u/s. 194A nor pointed out any specific exception prescribed in section 194(3) of the Act under which the payer of the interest on car loan was covered. Alternative contention of the ld. counsel that no TDS to be made if the payee has paid tax as per proviso to section 40(a)(ia) and the judicial pronouncements referred in his submission and the claim that payment made to Navin Tradelink Pvt. Ltd. was towards reimbursement of expenses are required to be considered after examination and verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Cars amounting to Rs.l,98,672/-made by the A.O. 2.2 It is submitted and contended that the Ld. C.I.T. (A) ought not to have dismissed the above referred ground of appeal but ought to have allowed the appeal of the Appellant in view of detailed facts and submission made before him. 3. The Ld. C.I.T. (A) has erred in dismissing the appeal preferred by the Appellant against the disallowance made by the A.O. u/s 40(a)(ia) amounting to ₹ 7,34,456/-. 3.1 It is submitted and contended that the Ld. C.I.T. (A) ought not to have dismissed the above referred ground of appeal but ought to have allowed the appeal of the Appellant in view of detailed facts and submission made before him. 4. The Ld. C.I.T. (A) has erred in dismissing the appeal preferred by the Appellant against the disallowance made by the A.O. u/s 36(1)(iii) amounting to ₹ 3,49,216/-. 4.1 It is submitted and contended that the Ld. C.I.T. (A) ought not to have dismissed the above referred ground of appeal but ought to have allowed the appeal of the Appellant in view of detailed facts and submission made before him. Under the facts and circumstances of the case, the order of the C.I.T.(A) confirming the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stating that assessee could not substantiate that motor car has been exclusively used for business purposes. Ground No. 3 ( Disallowance of ₹ 7,34,456/- u/s. 40(a)(ia) of the Act) 8. During the course of assessment, the assessing officer asked the assessee to furnish detail of interest paid on car loan and TDS deducted thereupon and further to explain if TDS has not been deducted on such interest paid then why the said interest should not be disallowed u/s. 40(a)(ia) of the Act. The assessee explained that no TDS on interest paid of ₹ 5,51,159/- on car loan was deducted since the amount of monthly EMI determined by the car loan provider was inclusive of principal + interest amount secured by way of post dated cheque presented every month for a clearance on stipulated date. The assessing officer has not accepted the explanation of the assessee and disallowed interest of ₹ 5,51,159/- paid on car loan u/s. 40(a)(ia) of the Act. The assessing officer has also noticed that the assessee has paid sum of ₹ 3,54,746/- on account of handling expenses to Mr. Naveen Trade Link Pvt. Ltd. without deduction of tax. The assessing officer was of the view that since the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieved assesse has filed appeal before the ld. CIT(A) . The ld. CIT(A) has dismissed the appeal of the assessee reiterating the facts reported by the assessing officer. 12. During the course of appellate proceedings before us, in respect of disallowance u/s. 14A, the ld. counsel contended that assessee has earned dividend income to the amount of ₹ 2,10,249/- whereas assessing officer had made disallowance to the amount of ₹ 5,13,516/- which was more than the exempt income earned. The ld. counsel has further stated that assessee has correctly computed the disallowance to the extent of ₹ 43,634/- which has not been considered by the lower authorities. During the course of appellate proceedings before us, the ld. counsel has also furnished paper book comprising copies of bills furnished before the lower authorities and referred pages no. 8 to 23 of the paper book. The ld. counsel has contended that detailsof exempt income was furnished along with computation u/s. 14A of the Act which was not properly considered by the lower authorities. Regarding motor car expenses, the ld. counsel contended that assessee is a company and the motor car was used for business purpose, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers were in the negative as on 31st March, 2009 at Rs. -81,05,598/- whereas the sarafi deposit shown at ₹ 3,78,52,532/- and secured loan and unsecured loan was to the amount of ₹ 77,29,181/- and total investments was reflected at ₹ 1,12,44,492/-. No other information i.e. break-up of investment or schedules of the balance sheet were submitted to substantiate that no expenses were incurred towards earning exempt income. Therefore, we do not find any substance in the contention of the assessee of computing disallowance to the extent of ₹ 43,634/- towards expenditure incurred for earning exempt income, however, we restrict the disallowance to the extent of exempt income to the amount of ₹ 2,48,183/- as held in the various decisions of ITAT Ahmedabad i.e. Jivraj Tea Lt. Vs. DCIT, ITA No. 886/Ahd/2012 dated 28th August, 2014 and the decision of ITAT Delhi in the case of Sahara India Finance Corporation Ltd. 1481 ITD 336. The assessing officer had made disallowance out of depreciation holding that same was not fully used for the purpose of business. The assessee is not a company but a partnership firm. The assessee has suo motto made disallowance of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and the claim that payment made to Navin Tradelink Pvt. Ltd. was towards reimbursement of expenses are required to be considered after examination and verification of the relevant material. Therefore, we restore both the issues as supra to the file of the assessing officer for deciding afresh after examination/verification of the relevant material to be furnished by the assessee at the time of set aside proceedings. Accordingly, this ground of appeal of the assessee is allowed for statistical purposes. The assessing officer has made disallowance of interest expenditure of ₹ 3,49,216/- u/s. 36(1)(iii) treating the advances made for non-business purposes. On this issue, the ld. CIT(A) has held that interest cost on investment made in the capital assets i.e. on purchase of shops, purchase of machinery should have been capitalized and the assessee has not given any fund flow analysis to substantiate that amount used for investment in such asset was generated from the internal accrual of the partnership firm. It is observed that assessee has not demonstrated with any evidences that said assets has been reflected as business asset in the balance sheet of the assessee. During the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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