ACIT, NEW DELHI vs. SH. VINOD SHARMA, NEW DELHI

This appeal filed by the revenue is directed against the order dated 31.03.2016 of the CIT(A)-20, New Delhi relating to A. Y. 2011- 12.

Despite service of notice for a number of times nobody was appearing on behalf of the assessee. Therefore, this appeal is being decided on the basis of material available on record and after hearing the Ld. DR.

The ground No.1 by the revenue reads as under :-

Facts of the case, in brief, are that the assessee is an individual and engaged in the business of civil construction under the name and style of M/s. Laxmi Builders. He filed his return of income on 27.09.2011 declaring total income of Rs.1,07,87,520/-. The Assessing Officer during the course of assessment proceedings asked the assessee to provide the details of TDS deducted on interest payment against loan taken by the assessee during the year. From the various details furnished by the assessee he observed that assessee has not deducted any TDS from the payment of interest to the following parties :- S. Name Amount No. 1 Tata Capital Housing 1,41,600/- Finance Limited 2 Reliance Capital Limited 1,07,281/- 3 Bajaj Finsery Limited 2,06,199/- 4 Indiabulls Housing 5,45,704/- Finance Limited 5 Fortis Finvest Limited 2,48,516/- Total 12,49,300/-

The submission of the assessee is that no TDS is required to be deducted was not accepted by the Assessing Officer. Invoking the provision of section 40 (a) (ia) of the IT Act, the Assessing Officer made addition of Rs.12,49,300/- to the total income of the assessee.

Before CIT(A) it was submitted that the entire payment was paid by means of advance EMI cheques and those cheques were duly paid on presentation. All those companies are income tax payee and it would be impossible to presume that they might have tried to avoid payment of income tax on their regular business income. It was further submitted that no amount was payable at the end of the year and, therefore, provision of section 40 (a) (ia) are not applicable. Relying on various decisions it was submitted that the addition made by the Assessing Officer is not justified.

Based on the arguments advanced by the assesesee, the Ld. CIT(A) deleted the addition by relying on the decision of Hon’ble High court in the case of CIT-1 Vs. Ansal Landmark Township Private Limited vide and 161 /Del/2015 order dated 26.08.2015 on the ground that the assessee in the instant case has filed certificate under proviso to sub-section (1) of section 201 (1) of the Income Tax Act from NBFCs to whom interest were paid.

Aggrieved with such order of the CIT(A), the revenue is in appeal before the Tribunal.

After hearing the Ld. DR and on perusal of the orders of the authorities below we do not find any infirmity in the order of the CIT (A) on this issue. The assessee has filed certificates from Bajaj 3

The ground of appeal No.2 by revenue reads as under :-

Facts, of the case, in brief are that the Assessing Officer during the course of assessment proceedings observed from the various details furnished by the assessee that the assessee has made cash payments to various parties in violation of provisions of section 40A(3) of the IT Act. Rejecting the various explanation given by the assessee the Assessing Officer made addition of Rs.48,35,476/-.

Before CIT(A) it was submitted that the assessee is engaged in the business of civil construction work mainly for Government agencies and the project sites are situated in remote places. While executing the contractual obligations, the assessee had to hire labourers and purchase materials at the local level as and when required. The work at local level is mainly done through such contractors who incurred the expenditure at the local level. The provision of rule 6 DD (k) and 6DD (j) was brought to the notice of the CIT(A).

Based on the arguments advanced by the assessee and relying on the decisions of Hon’ble Delhi High Court in the case of RC Goyal Vs. CIT reported in 29 taxman.com 406, the Ld. CIT(A) deleted the addition holding that the case of the assessee falls under the ambit of Rule 6 DD(K).

Aggrieved with such order of the CIT(A), the revenue is in appeal before the Tribunal.

We have considered the arguments advanced by Ld. DR and perused the orders of the authorities below. We find the Assessing Officer invoking the provision of section 40 A (3) made addition of Rs.48,35,376/- on the ground that the assessee has violated the provisions by making cash payments in excess of Rs.20,000/- at a time otherwise than by crossed account payee cheques or crossed bank drafts. We find the Ld. CIT(A) relying on the provision of Rule 6 DD (k) deleted the addition holding that the payments have been made in cash are mostly done at the local level because of business exigencies through such contractors who act as his agent within the 5

The ground of appeal No.3 by revenue reads as under :- “In the facts and circumstances the Ld. CIT(A) has erred in deleting the addition on account of interest on service tax of Rs.9,26,182/-.”

The facts of the case, in brief, are that the Assessing Officer made addition of Rs.9,26,182/- on the ground that assessee has paid the above amount as interest on service tax for delayed payment. According to the Assessing Officer when the assessee has collected the amount from different customers and intentionally kept the money with it resulting into delay in deposit of the service tax, therefore, the assessee has violated the provision of relevant Act. Invoking the explanation to section 37 (1) of the Act, the Assessing Officer made addition of Rs.9,26,182/- treating the same as penalty for infringement of law.

The Ld. CIT(A) deleted the addition on the ground that such payment of interest on account of delayed deposit of service tax is compensatory in nature. We find no infirmity in the order of the CIT(A). The Ld. CIT(A) while deleting the such disallowance has followed various decisions where it has been held that such payment of interest on account of delayed payment of service tax is compensatory in nature. The Ld. DR could not point out any contrary decision so as to take a different view. We, therefore, uphold the order of the CIT(A) on this issue and the ground raised by the revenue is dismissed.

The Ground of appeal No.4 by revenue reads as under :- “In the facts and circumstances the Ld. CIT(A) has erred in deleting the addition in reducing the travelling expenses of Rs.1,53,317/0 to 31,326/-.”

We do not find any infirmity in the order of the CIT(A) on this issue. No doubt the assessee has not furnished the requisite details before the Assessing Officer for which verification that such expenses are wholly and exclusively incurred for the purpose of business was not possible. However, disallowance made by the Assessing Officer appears to be on the higher side under the facts and circumstances of the case. We find the CIT(A) has taken a pragmatic view on this issue which calls for no interference from our side. We, therefore, uphold the same and the ground raised