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TMI Blog2022 (2) TMI 379X X X X Extracts X X X X X X X X Extracts X X X X ..... finding by the learned CIT(A) qua the dispute on hand, therefore we are inclined to set aside the same to the file of the learned CIT(A) for fresh adjudication as per the provisions of law. Hence, the ground raised by the assessee is allowed for statistical purposes. TDS u/s 194C read with section 40(a)(ia) - disallowances of expenses on account of non/short deduction of Taxes provided that the assessee furnishes the certificate in the prescribed form - HELD THAT:- Assessee has not furnished the necessary certificate in form 26A prescribed by the CBDT. Now at the time of hearing before us, the learned AR has also not furnished any certificate in form 26A prescribed by CBDT. Now the issue arises, can the matter be set aside to the file of the AO for collecting the necessary evidences from the respective payees to ensure that such payees have paid the taxes on the amount received from the assessee. We note it is the duty of assessee to deduct appropriate tax from the amount paid/payable to any party i.e. payee if such amount falls under the preview of provision of chapter XVII(B) of the Act i.e. deduction at source - provision of section 40(a)(ia) of the Act provides that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is allowed. - ITA No. 683/AHD/2018 - - - Dated:- 3-1-2022 - SHRI WASEEM AHMED, ACCOUNTANT MEMBER And MS SUCHITRA KAMBLE, JUDICIAL MEMBER For the Appellant : Parimalsinh B. Parmar, A.R. For the Respondents : R.R. Makwana, Sr. D.R. ORDER Per Waseem Ahmed, Accountant Member The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-6, Ahmedabad, dated 31/01/2018 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2014-2015. 2. The assessee has raised following grounds of appeal: 1. The learned CIT(A) has erred both in law and on the facts of the case in confirming the disallowance of interest expense of ₹ 4,72,860/-. 2. The learned CIT(A) has erred both in law and on the facts of the case in confirming the addition of ₹ 4,72,643/- as interest income. 3. The learned CIT(A) has erred both in law and on the facts of the case fn confirming the disallowance of ₹ 1,44,500/- u/s. 40(a)(ia) r.w.s. 94C of the Act. 4. The learned CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing loan to the sister concern and borrowing from the sister concern computed interest receivable at ₹ 5,23,718/- and interest payable at ₹ 51,075/- only. Thus, as per the AO the assessee should have received the interest income of ₹ 4,72,643/- (₹ 5,23,718.00 minus 51,075.00) instead of interest payment of ₹ 4,72,860/- which was claimed as an expense in the profit and loss account. Thus the AO disallowed the interest expenses of ₹ 4,72,860/- and made the addition of ₹ 4,72,643/- aggregating to the addition of ₹ 9,45,503/- to the total income of the assessee. 5. Aggrieved assessee preferred an appeal to the learned CIT(A) who confirmed the addition made by the AO by observing as under: The AO noted that he appellant had debited ₹ 4,72,860/- on account of interest paid to Anjani Enterprises while actually the appellant had received interest from Anjani Enterprises. Hence, the AO disallowed ₹ 4,72,860/- and added the same. During appeal proceedings, the appellant did not make any submission on this issue as can be seen from para 5.2 above. During hearing of the appeal, the authored representative of that appellant sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Krishna B. Agarwal Vs. ITO - ITA 2176/Ahd/2012; 8. On the other hand the learned DR vehemently opposed to accept the contention of the learned AR of the assessee. The learned DR vehemently supported the order of the authorities below. 9. We have heard the rival contentions of both the parties and perused the materials available on record. The question arises before us for adjudication whether the assessee can raise the ground of appeal which was not pressed before the learned CIT(A). Generally, it is not expected from the assessee to raise the issue before the higher forum when the same was not pressed before the lower authorities. However, there are certain exceptions to it. If the learned counsel for the assessee under wrong appreciation of facts and the law has not pressed the issue before the lower authorities, the same can be raised before the higher forum. It is for the reason that the assessee should not be deprived of the benefit for which it is entitled under the provisions of law merely on wrong appreciation of facts/law. All the facts relating to the issue are arising from the order of the AO and there is no need to refer to any fresh document to decide the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord. In the present case, the expense claimed by the assessee for colouring work was disallowed by the AO on account of non-deduction of TDS. The disallowance made by the AO was also subsequently confirmed by the learned CIT(A). Now, there are two issues which require consideration and the adjudication. The 1st issue is whether the disallowance of the expense should be restricted to 30% by virtue of the proviso to section 40(a)(ia) of the Act which was brought the statute by the Finance Act (No. 2) 2014. Admittedly, as per the proviso to section 40(a)(ia) of the Act, the disallowance has to be restricted to the tune of 30% in respect of the expenses on which TDS has not been deducted by the assessee. Such amendment was retrospective as held by the Delhi Tribunal in the case of Muradul Haque vs. ITO reported in 184 ITD 58wherein it was held as under: We find that Finance (No. 2) Act has made amendment to section 40(a)(ia) of the Act w.e.f. 1-4-2015. Various benches of the Tribunals including the Delhi Benches of the Tribunal, have held the amendment made by Finance (No. 2) Act to be curative in nature. We further finds the coordinate bench of the Tribunal in the case of R.H. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: 16.5. From the preceding discussion is transpired that Payers defaulting in deducting TDS from payments to resident payees not to be deemed as Assessee in Default if no loss to revenue results due to short deduction/non-deduction-i.e. (A) Payee has included the impugned amount, on which tax was not deducted/short deducted, in his return of income filed under section 139 and pays taxes due on returned income and (B) Payer produces a certificate in prescribed form from a CA to the effect that the payee has included the income in return and paid taxes thereof. 16.6. The CBDT has prescribed Form No. 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings claimed that there was interest expenses of ₹ 48,91,809/- which was incurred with respect to its project namely 'Shivdhara Site' and shown as part of the closing WIP as on the balance sheet date. As per the assessee the entire amount of loan shown by it was utilized for its projects namely 'Shivdhara Site' and therefore interest paid on such loan was shown in the closing work-in-progress. 18.1. However, the AO assumed that the assessee has borrowed fund of ₹ 4.07 crores taking the interest rate at 12% for the full year. As per the version of the assessee, the entire amount of loan has been used for the projects namely 'Shivdhara Site'. But on perusal of the account for the projects namely 'Shivdhara Site', it was found that assessee has shown sales of ₹ 51.24 lakhs, construction cost of ₹ 19.46 Lacs and purchase expenses of ₹ 41.85 lakhs with respect to its project namely 'Shivdhara Site'. Thus, the AO was of the view that the entire amount of borrowed fund approximately 5 crores was not utilized for the project namely 'Shivdhara Site'. Accordingly, it was not possible to claim such huge amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced in para 7.2 above, shows that there is no clarity in the same. The appellant has made long descriptive submission which lacks the quantitative details which could have explained its claim. It says that it has included interest in Opening Stock and in Closing Stock as cost but clear picture does not emerge. It has not given details of parties from whom loans were taken and to whom interest of ₹ 48,91,809/- was paid. Nor has it given details of work 7 purpose for which these loans were used. In fact, it must be said that there is no clarity in the submission of the appellant. In such scenario and in the absence of complete details, it is difficult to accept contention of the appellant. Case laws relied on by the appellant are not relevant as these are distinguished on facts. Accordingly, it is held that the AD was justified in making addition of ₹ 48,91,809/-. Accordingly the addition of ₹ 48,91,809/- is upheld. This ground of appeal is rejected. 21. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 22. The learned AR for us submitted that the entire interest bearing loan was utilized exclusively for the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan to the tune of ₹ 1.30 gross approximately in the closing WIP. Thus, it appears that the fund has not been diverted for non-commercial activities as alleged by the authorities below. We have also perused the financial transactions carried out by the assessee with its sister concern and find that it is the running account where the assessee has accepted as well as advanced loan to the sister concern. The maximum outstanding debit balance in the account of the sister concern was ₹ 1,47,78,435.00 as on 11 May 2013 against the capital of the assessee at ₹ 1,49,56,320.00 at the end of the balance sheet date. Here we note that the assessee should have compared the maximum amount of loan given as on 11-5-2013 with the capital of the assessee as on that date. But the assessee has not done so. However we have found the opening capital account of the firm as on 1 April 2013, as evident from the balance sheet as on 31 March 2013 placed on page 18 of the paper book that it stands at ₹ 1,02,08,479.00 only which is less than the maximum amount of advance shown by the assessee. Be that as it may be, we note that the AO has already taken care of the adjustments of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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