SHRI SALASAR INFRASTRUCTURES & DEVELOPERS,HYDERABAD vs. INCOME TAX OFFICER, WARD-14(1), HYDERABAD
In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal confirmed the disallowance of interest expenditure. It found that the assessee had debited the interest, shown TDS as a liability, and the tax audit report also noted the non-remittance of TDS.
What were the facts?
The assessee, a real estate firm, debited interest expenditure and deducted TDS but failed to remit the TDS amount to the government treasury. The AO disallowed the expenditure under Section 40(a)(ia) for non-remittance of TDS.
What were the issues?
Whether the disallowance of interest expenditure is justified when TDS was deducted but not remitted to the government treasury.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, HYDERABAD BENCH “SMC”, HYDERABAD
Before: SHRI A. MOHAN ALANKAMONY
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “SMC”, HYDERABAD (Through Virtual Hearing) BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER Assessment Year: 2012-13 Shri Salasar Infrastructures & Vs. Income Tax Officer, Developers, Ward-14(1), Hyderabad. Hyderabad. PAN: ABIFS 3323 B (Appellant) (Respondent) Assessee by: Shri P. Murali Mohana Rao Revenue by: Shri Sitarama Rao Akunuru Date of hearing: 11/01/2021 Date of pronouncement: 21/01/2021 ORDER PER A. MOHAN ALANKAMONY, AM.:
This appeal is filed by the assessee against the order of the Ld. CIT (A)-6, Hyderabad in appeal no. 0194/2016-17/A3/CIT (A)-6, dated 23/01/2019 passed U/s. 143(3) r.w.s 250(6) of the Act for the AY: 2012- 13.
The assessee has raised eighteen grounds in its appeal however the crux of the issue is that, the Ld. CIT (A) has erred in confirming the order of the Ld. AO who had made addition of Rs. 34,60,870/- U/s. 40(a)(ia) of the Act., for non-remittance of TDS on interest paid by stating that it is an agreed addition.
The brief facts of the case are that the assessee is a firm engaged in real estate business, filed its return of income for the AY 2012-13 on 29/9/2013 admitting total income of Rs. 11,440/-. Initially, the return was processed U/s. 143(1) of the Act and thereafter the case was taken up for scrutiny under CASS and the assessment was completed U/s. 143(3) of the Act vide order dated 23/2/2015 wherein the Ld. AO disallowed the expenditure incurred towards interest on loan paid to M/s. Abhishek Transtel Limited because though the assessee had deducted TDS of 10% on Rs. 34,60,870/- (interest) viz., Rs. 3,46,087/- , failed to remit the same in the Government Treasury. The assessee has explained before the ld. AO that the TDS deducted could not be remitted in the Government Treasury due to financial crunch.
Before the Ld. CIT (A), the assessee had submitted that it had reversed the entry with respect to payment of interest and therefore, the assessee was not bound to remit the amount in the Government treasury. It was further submitted that the Ld. AO had passed the order without considering these facts. However, on perusing the Order of the Ld.CIT(A) I find that the Ld. CIT (A) after examining the case of the assessee had made a categorical finding that the assessee had debited in its books of account the interest expenditure incurred for Rs. 34,60,866/- and the TDS deducted of Rs. 3,46,087/-was shown under the head “current liabilities” as ‘TDS payable on interest payment’. The Ld. CIT (A) in his order also pointed out that, in the tax audit report filed in Form 3CB and 3CED of the Rules, the Chartered Accountant (Tax Auditor) had mentioned, the TDS on interest to the extent of Rs. 3,46,087/- was not remitted in the Government Treasury. The Ld.CIT(A) has also extracted the certified profit & loss A/c. and the Balance Sheet of the assessee to justify his finding. Based on these facts, the ld. CIT (A) confirmed the order of the Ld. AO.
Before us, the Ld. AR vehemently argued stating that it was not an agreed addition and the Ld. AO without considering the explanation offered by the assessee had made the addition which is erroneously sustained by the Ld. CIT (A). It was therefore pleaded that the matter may be remitted back to the file of the Ld. AO in order to provide one more opportunity to the assessee of being hearing. The Ld. DR on the other hand vehemently opposed to the submissions of the Ld. AR and prayed for confirming the orders of the Ld. Revenue Authorities.
I have heard the rival submissions and carefully perused the materials on record. At the outset, I do not find any merit in the submission of the Ld.AR. The Ld. CIT (A) in his order has categorically given a finding that the assessee had debited the interest paid to M /s. Abhishek Transtel Limited in its profit & Loss account and also shown the TDS deducted towards the same as its liability in the Balance Sheet. To justify his stand he has also extracted the certified profit & loss and the Balance Sheet of the assessee. The Ld. CIT (A) has also pointed out the Tax Audit Report wherein the Tax Auditor has qualified in his report that the assessee had not remitted the TDS of Rs. 3,460,87/- in the Government Treasury. From these facts it is apparent that the Ld. AO, the Ld. Tax Auditor and the Ld. CIT (A) have all arrived at the same conclusion on the issue. The Ld. AR has not brought out any materials before me to negate the stand of the Ld. Revenue Authorities and the Tax Auditor. The case laws cited by the Ld. AR has no relevance considering the facts of this case before me. In this situation, I do not have any other option but to confirm the orders of the ld. Revenue Authorities. Accordingly, the order of the Ld. CIT (A) is hereby confirmed.
In the result, appeal of the assessee is dismissed.
Pronounced in the open Court on the 21st January, 2021.
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