V.K. MANIMARAN,CHENNAI vs. DCIT, MEDIA CIRCLE -1 , CHENNAI

(iii) Disallowance of certain expenses Rs.4,01,682/- The Assessee claimed in his profit and loss account Travelling Expenses of Rs.7,10,122/-, Payment to Music Party expenses Rs.7,01,800/-, Service charges of Rs.5,64,320/- and Production expenses of Rs.6,18,460/-. For the above expenses the Assessee's Representative produced the vouchers in support of the claim. On perusal of the same, it is seen that most of the vouchers are self-made and in many vouchers it is found no revenue stamp has been affixed and moreover payee's identity also not established. Similarly, in many cases, supporting evidences were not available. Therefore 20% of the expenses made in cash of Rs.4,01,682/- disallowed and the same is illustrated hereunder:-

Sl.No Nature of Amount Paid in cash 20% expenses Disallowed 1 Travelling 7,10,122 3,00,000 60,000 Expenses 2 Music Party 7,01,800 6,66,710 1,33,342 expenses 3 Service 5,64,320 4.23.240 84,648 charges 4 Production 6,18,460 6,18,460 1,23,692 expenses Total 4,01,682

(iv) Disallowance of sub-contract payment amounting to Rs.12,20,971/- The Assessee has debited Rs.75,00,000/- towards sub-contract payment. The Assessee's Representative was asked to furnish the agreement copies and TDS details and payment details. The Representative furnished the agreement copies from 4 persons and invoice from two persons and copy of Form No.27A. However, the Representative has not filed any details for the payment made to the persons Shri Muthukrishnan Rs.7,00,000/- and Shri Ganapathy Rs.5,00,000/-. The Assessee has also claimed payment of Rs.7,00,000/- for G.V. Communication and whereas they have raised invoice for Rs.6,79,029/- during the year. No proof for Rs.20,971/- was filed for the excess payment. Hence, Rs.12,20,971/- was added back to the total income of the assessee. (v) Disallowance of Under Section 40(a) (ia) Rs.4,05,500/- The Assessee was asked to file the TDS deducted details in respect of sub- contract payment of Rs.75,05,500/-. The Assessee's Accountant who appeared on 23-12-2011 has filed TDS Form No.27A for tax deduction on Rs.71,00,000/-. Thus, it is clear that the Assessee has not deducted TDS on the balance amount of Rs.4,05,500/- and the same is disallowed.

Groundwise disposal as under:- I. Disallowance u/s40(a)(ia) amounting to Rs.2,00,000/-:-

Before us, assessee submitted that the expenditure is in nature of direct cost not covered by the provisions of Section 40(a)(ia) of the Act. The payment towards expenditure incurred is also made to a person who is assessable to tax. The ld.AR relied upon the judgement of the Hon’ble Delhi High Court order dated 26.08.2015 in tited CIT Vs Ansal Land Mark Township (P) Ltd and contended that the second proviso to section 40(a)(ia) of the Act is declaratory and curative in nature and should be given retrospective effect from 01.04.2005. The ld.DR relied upon the orders of the lower authorities. We have heard the rival submissions and find substance in the arguments of the ld.AR of the Assessee supra. Hence, respectfully following the judgment of the Hon’ble Delhi High Court, we delete the addition of Rs.2,00,000/- on account of disallowance u/s.40(a)(ia) of the Act. II. Disallowance of Travelling expenses payment to Music Party and service charges and Production expenses amounting to Rs.4,01,682/-:-

The ld.CIT(A) and Ld.AO has disallowed 20% of the travelling expenses. We, after seeing the facts and circumstances of the case, find that 20% disallowance is arbitrary. As per the Indian Stamps Act, 1899, a receipt has been defined in Section 2 (23) and is made chargeable in accordance with Article 53 Schedule 1 of the Act. According to Article 53 Schedule 1 of the Indian Stamps Act, 1899, a receipt for any money, the amount of which exceeds Rs. 5000/ is chargeable with stamp duty of Rs.1/ and as per Section 11 of the Act and Rule 16 of Indian Stamp Rules, 1925, such a receipt is to be stamped with a adhesive stamp. In this case ld.CIT(A) has not pointed out which receipts are above Rs.5,000/-. Similarly, without inquiry ld.CIT(A) cannot say the receipts are self-made. Hence, we delete the addition of Rs.4,01,682/- on account of travelling expenses. III. Disallowance under Sub-contract payment of Rs.7,00,000/- and Rs.5,00,000/-:-

The ld.AR submitted that the assessee has filed evidence alongwith written submissions. He also asserted that the evidence for TDS made on the same. We find that this issue is not properly verified by the both authorities below hence, we remand back this issue to ld.AO to verify TDS and evidence and if found true the ld. Ld. Assessing Officer will allow the same.

IV. Disallowance u/s 40(a)(ia) amounting to Rs.4,05,500/-:- The appellant stated that he has produced necessary evidences to confirm the TDS were deducted and paid before the due dates for filing return of income alongwith written submissions on 27.11.2012. In the light of aforestated submissions we remand back this issue to ld.AO to verify TDS and whether paid before due date and if found true by the AO, he will allow the same.

V. The issue of credit of TDS of Rs.8,03,369/- and Interest u/s 234B are consequential in nature and direct the AO to recomputed the income a fresh after considering credit of TDS and Interest u/s 243B as per law.