DEVI TRADING CORPORATION,CHENNAI vs. ITO NON CORPORATE WARD 4(1), CHENNAI

आदेश / O R D E R

This is an appeal filed by the assessee against the order of

Commissioner of Income-tax (Appeals)-5, Chennai in appeal

No.167/CIT(A)-5/2016-17 dated 24.08.2017 for the assessment year

2014-15.

shri B.Sagadevan represented on behalf of the Revenue.

ITA No.2800/CHNY/2017 :- 2 -:

the ld.A.R submitted an affidavit prepared by Managing Partner of the

Firm dated 23.05.2018 for condoantion of delay. I have gone through

the affidavit filed by the assessee stating that the delay was occurred

on the reason that the set of appeal papers received from my counsel

was mixed up with other files of office. Hence, Managing Partner of

the firm requested that the ld.A.R was unable to file the appeal in

time. Therefore, ld.A.R prayed that delay of 14 days may be

condoned. In my opinion, the reasons shown are justified and hence,

delay in filing the appeal belatedly for 14 days before the Tribunal is

condoned and appeal is admitted for adjudication.

ld. Assessing Officer had disallowed a sum of `76,648/- being the

labour charges paid for loading and unloading goods which formed

part of purchase invoices by invoking provisions of the section

40(a)(ia) of the Act. It was a submission that the assessee is a dealer

in Iron and Steel Products and the assessee used to buy Re-Bar and

sell the same. It was a submission that when purchasing re-bars, the

invoices would contain the price of the re-bars along with the freight

charges and handling charges. It was a submission that though freight

charges and handling charges were specified in the invoices being a

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consolidated invoice, the payment was made directly for the full

amount. It was a submission that the assessee was not paying the

handling charges or labour charges separately for loading and

unloading of the goods. It was a submission that as the assessee has

not paid the handling charges, loading and unloading charges

separately, no disallowance is called for.

Officer and the Ld.CIT(A).

in the case of M/s.Vishnu Enterprises, main supplier of iron and steel

re-bars to the assessee, shows that the invoice is a consolidated

invoice including the price of the re-bars along with the freight charges

and handling charges. There are no invoices separated for labour

charges. This being so, I am of the view that as the assessee has paid

for the purchase of re-bars on consolidated invoice, no TDS was liable

to be made in respect of the payments to M/s.Vishnu Enterprises as no

labour charges have been paid separately. Further, M/s.Vishnu

Enterprises is not a labour contractor or labour supplier. The payments

are not exceeding the specified amounts also. In these circumstances,

Ground No.2 of the assessee’s appeal stands allowed.

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6, the ld. Assessing Officer had disallowed a sum of `2,39,113/-

representing clearing & forwarding expenditure paid to M/s.Bharat

Logistics Solutions Pvt Ltd., by invoking the provisions of section

40(a)(ia) of the Act. Before me, ld.A.R placed a copy of certificate of

Accountant in Form 26A confirming that M/s.Bharat Logistics Solutions

Pvt Ltd. has taken into account the sum referred to, being the sum

paid by the assessee, when computing taxable income. It was a

submission that in view of decision of Hon’ble Delhi High Court in the

case of CIT Vs.Ansal Lank Mark Township (P.) Ltd., reported in [2015]

377 ITR 635 (Del.), the issue may be restored to the file of ld.

Assessing Officer for verification and re-adjudication.

authorities.

assessee has filed Form No.26A in respect of non-deduction of TDS in

respect of payment made to M/s.Bharat Logistics Solutions Pvt Ltd.,

under clearing and forwarding charges. This being so, this issue is

restored to the file of ld. Assessing Officer for verification and re-

adjudication in line with the decision of Hon’ble Delhi High Court in the

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case of CIT Vs.Ansal Lank Mark Township (P.) Ltd., referred to supra.

In these circumstances, Grounds Nos. 3 to 6 of the assessee are partly

allowed for statistical purposes.

ld. Assessing Officer disallowed interest @ 12% on the negative

current capital balance of one of the partners Shri Rajesh Dhokani. It

was a submission that the assessee firm has two partners and though

the debit balance in current account of one of the partners to an

extent of `4,81,618/-, there was a credit balance in the other

partner’s account to an extent of `31,78,832/- and no interest has

been paid on the same. It was a submission that net of the current

account of both the partners had only credit balance and no interest

has also been charged on the same. Consequently, no interest is liable

to be disallowed on the debit balance of one of the partner’s current

capital account.

the Ld.CIT(A).

assessment order as well as the order of the CIT(Appeals) clearly

shows that one of the partners was having a debit balance and other

partner was having credit balance in their credit capital account.

Admittedly, no interest has been paid on the credit balance in the

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current account. The net of the current capital account also shows the

credit balance only. The Partnership Deed also does not provide the

interest on current account. This being so, no disallowance of interest

can be made on account of debit in the current capital account of one

of the partners. In these circumstances, the disallowance of interest as

has been made by the ld. Assessing Officer and confirmed by the

Ld.CIT(A) stands deleted. Ground No.7 of assessee stands allowed.

statistical purposes

Order pronounced in the open court after conclusion of hearing

on 23rd May, 2018, at Chennai.

Sd/- ( जॉज� माथन) (GEORGE MATHAN) �या�यक सद�य/JUDICIAL MEMBER चे�नई/Chennai �दनांक/Dated: 23rd May, 2018. K S Sundaram आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF