RECAP ASSOCIATES,CHENNAI vs. ACIT, CHENNAI

आदेश / O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER

ITA No. 1359/Mds/2016. :- 2 -:

The first ground raised by the assessee is with regard to 2. disallowance u/s. 40(a)(ia) of the Income Tax Act, 1961 (in short ‘’the Act’’) in respect of project expenses. Ld. Assessing Officer in the assessment order held that assessee had deducted TDS only on �9,00,000/- paid and thus, the ld. Assessing Officer disallowed a sum of �31,68,860/- and added to the total income u/s. 40(a)(ia) of the Act and ld. Assessing Officer also noted that assessee had not deducted TDS on payments made to Fana Enterprises and N. Govind Rajan of �10,00,000/- and �50,000/- respectively. Accordingly, he added the same u/s. 40(a)(ia) of the Act. Aggrieved, assessee filed an appeal before the ld. Commissioner of Income Tax (Appeals).

Ld. Commissioner of Income Tax (Appeals) placed reliance 3. on the judgment of Hon’ble Punjab and Haryana High Court in the case of P.M.S. Diesels vs. CIT (ITA No716 of 2009) (O & M) dated 29.04.2015 and dismissed the ground taken by the assessee.

Aggrieved, assessee filed an appeal before the Tribunal.

Before us, ld. Authorised Representative submitted that the 4. said payments was made in Arunachal Pradesh, the receiptant of the said payment was exempted from tax u/s. 10(26) of the Act. Therefore no tax was required to be deducted on this payments. Even though the assessee placed necessary evidence before ld. Commissioner of ITA No. 1359/Mds/2016. :- 3 -:

Income Tax (Appeals) as an additional evidence, it was not considered by the ld. Commissioner of Income Tax (Appeals) and prayed that the issue may be remitted to the ld. Assessing Officer for fresh consideration.

We have heard both the parties and perused the material on 6. record. We accede to the request of the ld. Authorised Representative.

Accordingly in the interest of justice, we remit the issue back to the file of the ld. Assessing Officer to examine the applicability of Sec. 10(26) of the Act in this case and decide accordingly. The ground of the assessee is allowed for statistical purpose.

Next ground raised by the assessee is with regard to 7. disallowance of �10,50,000/- paid to consultancy charges u/s. 40(a)(ia) of the Act. This payment was disallowed on account of non deduction of TDS by invoking the provisions of Sec. 40(a)(ia) of the Act.

After hearing both the parties, we are of the opinion that 8. this issue came for consideration before the Hon’ble Supreme Court in ITA No. 1359/Mds/2016. :- 4 -:

Civil Appeal No.5512 of 2017 in the case of M/s. Palam Gas Services vs. CIT, dated 03.05.2017 wherein it was held as under:-

‘’15. Ms. Dhugga invited our attention to a judgment of the Division Bench of Madras High Court in Tube Investments of India Ltd. v. Assistant Commissioner of Income-Tax (TDS), [2010] 325 ITR 610 (Mad). The Division Bench referred to the statistics placed before it by the Department which disclosed that TDS collection had augmented the revenue. The gross collection of advance tax, surcharge, etc. was Rs. 2,75,857.70 crores in the financial year 2008-09 of which the TDS component alone constituted Rs.1,30,470.80 crores. The Division Bench observed that introduction of Section 40(a)(ia) had achieved the objective of augmenting the TDS to a substantial extent. The Division Bench also observed that when the provisions and procedures relating to TDS are scrupulously applied, it also ensured the identification of the payees thereby confirming the network of assessees and that once the assessees are identified it would enable the tax collection machinery to bring within its fold all such persons who are liable to come within the network of tax payers. These objects also indicate the legislative intent that the requirement of deducting tax at source is mandatory’’.

Accordingly, this issue is decided against the assessee.

Brief facts of the case are that ld. Assessing Officer in the 10. assessment order held the assessee to produce bills and invoices for business promotion expenses. However, assessee has not produced bills and vouchers to the tune of �5,66,441/-. Thus, ld. Assessing Officer disallowed the same and added �5,66,441/- to the total income

ITA No. 1359/Mds/2016. :- 5 -: of the assessee. Aggrieved, assessee filed an appeal before ld. Commissioner of Income Tax (Appeals).

Ld. Commissioner of Income Tax (Appeals) observed the ld. 11.

Assessing Officer had disallowed business promotion expenses of �5,66,441/- as the bills were not produced before ld. Assessing Officer.

Since the assessee has not produced the bills, the Commissioner of Income Tax (Appeals) confirmed the action of the ld. Assessing Officer and dismissed the ground of the assessee.

. We have heard both the parties and perused the material 12. on record. This expenses are not properly vouched. In our opinion, when assessee claimed any expenditure, it is the duty of the assessee to place necessary bills and vouchers proving the expenditure. Since the assessee failed to establish incurring of expenditure, lower authorities are justified in disallowing the expenditure. The ground of the assessee is rejected.

Brief facts of the case are that the ld. Assessing Officer in the 14. assessment proceedings directed the assessee to produce

ITA No. 1359/Mds/2016. :- 6 -: confirmation from M/s.Backend Bangalore Pvt Ltd. However, assessee failed to produce the confirmation. Hence, ld. Assessing Officer added �10,00,000/- outstanding in the name of M/s.Backend Bangalore Pvt. Ltd to the total income of the assessee. Aggrieved, assessee preferred an appeal before ld. Commissioner of Income Tax (Appeals).

Before ld. Commissioner of Income Tax (Appeals), ld. 15.

Authorised Representative submitted that the sum of �10,00,000/- was a loan taken from M/s.Backend Bangalore Pvt. Ltd during the year ended 31.03.2012. The said amount was repaid by cheque in the subsequent year on 20.06.2012 as evidenced by the bank statement and the ledger account. Therefore the fact of repayment of �10,00,000/- to M/s.Backend Bangalore Pvt. Ltd in the subsequent year, by itself confirms the existence and genuineness of the outstanding liability of �10,00,000/-on account of the said creditor in the earlier year ended 31.03.2012. Ld. Commissioner of Income Tax (Appeals) observed that ld. Assessing Officer has added sundry creditors of �10,00,000/- as the assessee did not produce confirmation. The assessee has submitted that it has repaid loan on 20.06.2012. However, since no confirmation was filed, ld.

ITA No. 1359/Mds/2016. :- 7 -:

Commissioner of Income Tax (Appeals) confirmed the addition of �10,00,000/-

We have heard both the parties and perused the material on 16. record. In this case assessee placed PAN of the creditor. So, it is to appropriate to verify the identity of the parties and genuineness of the transactions alongwith capacity of the lender to advance the money to the assessee. Accordingly, the issue is remitted back to the file of the ld. Assessing Officer for consideration. Ld. Assessing Officer has to make necessary enquiry and decide thereupon. The ground of the assessee is partly allowed for statistical purpose.

Order pronounced on Wednesday, the 14th day of June, 2017, at Chennai.