PROMEDIA TRADING PVT. LTD.,CHENNAI vs. DCIT, CORPORATE CIRCLE-1 LTU,, CHENNAI

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ITA 2350/CHNY/2025Status: DisposedITAT Chennai16 April 2026AY 2023-245 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal remitted the issue of interest disallowance back to the AO for verification of the assessee's claim of double disallowance. For sales promotion expenses, the Tribunal also remitted the issue to the AO to allow the assessee to submit documentary evidence.

What were the facts?

The assessee's appeal concerns disallowance of interest under section 201(1A) and sales promotion expenses. The Assessing Officer disallowed these amounts for failure to submit documentary evidence and for delayed TDS payment, respectively.

What were the issues?

Whether interest under section 201(1A) was correctly disallowed and whether sales promotion expenses were adequately substantiated with documentary evidence.

Which sections of the Income-tax Act were involved?

Section 201(1A),Section 37(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY.S

Hearing: 09.04.2026Pronounced: 16.04.2026

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, (in short "CIT(A)") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 16.06.2025 for Assessment Year (AY) 2023-24. The various grounds raised by the assessee pertain to the following issues; 1. Disallowance of interest u/s. 201(1A) of the Act – Rs. 1,26,340/- 2. Disallowance of sales promotion expenses – Rs. 20,67,000/-

ITA No.2350/Chny/2025 Promedia Trading Pvt. Ltd. :- 2 -:

2.

The assessee is a private limited company and engaged in the business of import purchases and sale of printing papers and medium density fibre boards (MDF), domestic purchase and sale of steaming coal and transportation services. The assessee filed a return of income for AY 2023-24 on 20.10.2023 declaring total income of Rs.1,17,91,682/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The A.O based on the tax audit report disallowed a sum of Rs.1,32,430/- towards interest u/s. 201(1A) of the Act and towards interest on custom duty. The A.O also disallowed sales promotion expenses and office maintenance to the tune of Rs. 22,54,923/- on the ground that the assessee failed to submit complete documentary evidences with regard to the said expenses. Aggrieved, the assessee filed further appeal before the CIT(A). The CIT(A) gave partial relief to the assessee, whereby the disallowance towards interest u/s. 201(1A) of the Act and sales promotion expenses were sustained. The assessee is in appeal before the Tribunal against the order of the CIT(A).

Disallowance of interest u/s. 201(1A) of the Act: 3. We have heard the parties, and perused the material available on record. The Ld. Authorized Representative (AR) of the assessee submitted that the assessee has made payment towards TDS on 31.08.2023 relevant to AY 2024-25 along with interest u/s. 201(1A) of the Act. The Ld. AR further submitted that hence the interest u/s. 201(1A) of the Act is paid during the AY 2024-25 and that the assessee in the computation statement for the said AY already disallowed the interest. Accordingly, the Ld. AR submitted that the disallowance made by the A.O during the year under consideration is not correct and would amount double disallowance. In this regard, we notice that the A.O has made the disallowance based on the audit report where the

ITA No.2350/Chny/2025 Promedia Trading Pvt. Ltd. :- 3 -:

auditor has stated that the interest for delayed payment of TDS u/s. 201(1A) of the Act is reported. The contention of the assessee is that the said interest is not debited to the P & L account of the year under consideration and that the same is debited in the AY 2024-25 in which year it is disallowed in the computation of income. In our considered view, the submissions of the assessee need factual verification and therefore, we remit the issue back to the A.O. The A.O is directed to verify the claim of the assessee that the interest is actually paid and disallowed in AY 2024-25 and accordingly delete the disallowance made in the year under consideration in accordance with law. Needless to say that the assessee be given a reasonable opportunity of being heard.

Sales Promotion Expenses: 4. We have heard the parties, and perused the material available on record. From the perusal of the order of the lower authorities with regard to the impugned disallowance, we notice that the reason for making the disallowance is that the assessee has merely made a submission that the expenses are incurred wholly and exclusively for the purpose of business and that the assessee has not submitted any documentary evidences. The Ld. AR during the course of hearing submitted the following table to argue that the sales promotion expenses incurred by the assessee are in line with the percentage of expenses has compared to earlier AYs:

ITA No.2350/Chny/2025 Promedia Trading Pvt. Ltd. :- 4 -:

5.

The ld. AR also argued that the sales promotion expenses have been accepted by the Revenue without making any disallowance in the earlier years. In our considered view, the contention that the sales promotion expenses are not disallowed in earlier years cannot be the ground for claiming the same for the year under consideration for the reason that the principle of res-judicata is not applicable to proceedings under the Act, more so when allowance of a claim is to be tested on merits. Further, the claim of the assessee that the expenses are incurred wholly and exclusively for the purpose of business and that the other conditions for deduction u/s. 37(1) of the Act are fulfilled needs to be verified based on the documentary evidences. Therefore, in the interest of natural justice and fair play, we are inclined to give one more opportunity to the assessee to substantiate the claim of expenses as deduction with proper supporting documents. Accordingly we remit the issue back to the A.O with a direction to call for necessary details to decide the allowability of the claim in accordance with law. The assessee is directed to furnish the details as may be called for and cooperate with the assessment proceedings. It is ordered accordingly.

6.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 16th day of April, 2026 at Chennai.

Sd/- Sd/- (एबी टी. वक�) (पदमावती यस) (ABY. T. Varkey) (Padmavathy.S) लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य �याियक सद�य �याियक सद�य / Judicial Member �याियक �याियक सद�य सद�य चे�नई/Chennai, �दनांक/Dated: 16th April, 2026. EDN, Sr. P.S

ITA No.2350/Chny/2025 Promedia Trading Pvt. Ltd. :- 5 -: आदेश क� �ितिल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF EJTADA Digitally signed by EJTADA DURGA DURGA NARESH Date: 2026.04.20 NARESH 10:14:34 +05'30'

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