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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-4, Chennai in 16/A.Y.2012-2013/CIT(A)-4, dated 26.08.2016.
:-2-: I.T.A. N0. 3220/Mds/2016
Shri G. Balasubramanian, an individual, the assessee is an engineering contractor undertaking civil contract for building houses in the name and style of M/s. Gee Kay Constructions. In the assessment made for the assessment year 2012-13, the assessee debited Rs. 9,10,000/- as flat promotion expenses and Rs. 4,72,241/- as advertisement expenses in the P&L account. The AO required the assessee to produce Ledger copies from which he noticed that for the flat promotion expenses of Rs. 3 lakhs and advertisement charges of Rs 4,72,241/-, the TDS was not deducted. Hence, he disallowed them u/s. 40(a)(ia).
Aggrieved, the assessee filed an appeal before the CIT(A)-4, Chennai, primarily pleading that the AO failed to appreciate that the payments were not made in pursuance of a contract, the provisions of section 194C are not applicable to the payments made by the assessee and hence the disallowance made was untenable in law etc. The CIT(A) dismissed the appeal. Aggrieved, the assessee filed this appeal with the primary ground that the CIT(A) failed to appreciate that the flat promotion charges of Rs. 3 lakhs and advertisement expenses of Rs. 4,72,241/- were not made pursuant to contract and the provisions of section 194C are not applicable to the assessee and hence invoking section 40(a)(ia) and disallowing the amounts are unjustified and untenable in law.
The AR submitted that the AO failed to appreciate the nature of payments and invoked the provisions of section 40(a)(ia). Though, the assessee has taken specific plea before the CIT(A), the CIT(A) has not addressed this issue but proceeded to decide the issue on the basis of ratio laid in Merilyn Shipping &
:-3-: I.T.A. N0. 3220/Mds/2016 Transports Vs ACIT (2012) and CIT Vs Vetor Shipping Services P. Ltd., Allahabad High Court etc.
We heard the rival submissions and find merit in the submissions of the AR. Since, the AO has not examined the nature of the impugned payments, the order of the CIT(A) is set aside and the issues are remitted back to the AO for due examination. The AO shall decide the issues, afresh, after giving due opportunity to the assessee.
In the result, the assessee’s appeal is allowed.
Order pronounced on Friday, the 9th day of June, 2017 at Chennai.