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TMI Blog2022 (4) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... rt "Ld AO"] u/s 143(3) of the Income-tax Act, 1961 [for short "the Act"] for assessment year [for short "AY"] 2010-2011. 2. The dispute under this tax litigations is twofold, firstly it challenges the legality of ad-hoc disallowance of business expenses and secondly claims rescue from the application of 40(a)(ia) on the evidential documents of identification and copy of ITR. 3. Before advancing the matter on facts for adjudication, we reproduce grounds challenged by the appellant as under; "1.That under the facts and the law, the learned commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs. 8,30,975/- made by the learned Assessing Officer u/s 40(a)(ia) for non-deduction of tax u/s 194A from NBFC, namely M/s Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance charges Rs.8,30,975/- u/s 40(a)(ia) paid to certain Non-Banking-Financial-Corporation [for short "NBFC"] without deduction of tax at sources [for short "TDS"] u/s 194A of the Act. 4.3 Aggrieved assessee carried the matter in an appeal before the first appellate forum, wherein Ld CIT(A) not finding any infirmity in the view taken by the Ld AO, upheld the disallowance carried out in its entirety. 4.4 The appellant being aggrieved with the order of the CIT(A), has carried the matter in appeal before us with the grounds of appeal set herein before at Para 3. 5. We have heard the rival contention of both the parties; perused material placed on record and duly considered the facts of the case in the light of settled legal position and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ructure Finance Ltd 4,84,975 No Certificate Placed On Record 6.3. As regards to allowability of interest/finance charges, it is imperative to make note of insertion of first proviso to Section 201 (1) by the Finance Act 2012, operative with effect from 1st July 2012 which reads as under: "Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in 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 compu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 194J; (iv) "work" shall have the same meaning as in Explanation III to section 194C; 37[(v) "rent" shall have the same meaning as in clause (i) to the Explanation to section 194-I; (vi) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;] (Emphasis supplied) 6.5. The conjunctive & constructive interpretation first proviso to Section 201(1) and second provision to section 40(a)(ia) of the Act reveals that, these have been inserted to benefit the Assessee, to provide that where a person fails to deduct tax at source (TDS) on the sum paid or credited to a resident payee under certain contingencies, such person; a. Shall first be excluded from holding as the assessee in de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see's claim, the reliance was placed on copy of PAN and a certificate of lower deduction obtained by the said NBFC from the Income Tax Authority and contended the due compliance of first provision to section 201(1) vis-à-vis second proviso to section 40(a)(ia) of the Act, however the assessee failed to substantiate how these documents alone testify the twofold establishment of aforesaid provision of law, therefore the appellant disentitled himself from immunity of being held as "the assessee-in-default" within the meaning of Section 201(1) of the Act and resultantly, un-distanced from application of provisions of section 40(a)(ia) of the Act. Thus, in the light of aforesaid observations, the ground number 1 is dismissed. 7. We shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er found to be bogus or fictitious, nor was found to have not been incurred by the assessee wholly and exclusively for the purpose of his business. Indeed, it showcased an exercise of running around the circle by both the lower tax authorities while dealing with the present case. 7.4. We neither could come across any provision in the present Income Tax Statute nor it has been brought to our notice by either parties to dispute, which subscribes vis-à-vis authorises the tax authorities to arrive at this logic of subscribing ad-hoc disallowances. Evidently, there has been no clear findings as to number of vouchers requiring denial of allowances with the amount of expenditure and nature of defects therein or therewith, moreover departme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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