NEW KABLE POINT,THRISSUR vs. ITO, WARD-2(1), THRISSUR

Brief facts of the case are that the assessee filed its return of income and thereafter its case was selected for limited scrutiny and the Assessing Officer pointed out that the assessee had not deducted TDS and paid to the department and also the AO based on the Profit & Loss account disallowed the expenses in respect of the interest and penalty payment. The assessee challenged the said order before the ld.CIT(A) on the ground that the interest and penalty amounts are nothing but the amounts paid to the suppliers for the delay in making \43. New Kable Point. payments and also delay in payment of sales-tax, and therefore, is an allowable expenses. The assessee further submitted that they had already disallowed 30% of the interest paid u/s.40 of the Act and also claimed that the assessee had also deducted 30% of the TDS amount for not deducting the same. The ld.CIT(A) without considering the submissions had dismissed the appeal by passing a non- speaking order, and therefore, the present appeal has been filed before this Tribunal, with the following grounds:- “

1. 1. The appellant firm had included the interest paid to suppliers and the interest paid to Bank and Sales tax Department amounting to Rs.3,35,961/- in the interest paid column of the Return of Income for the Asst. Year 2018-19 (column No44 of the Profit & Loss Account),though this amount was separately disclosed in Copy of the Profit Loss Account as Interest and Penalties. The interest paid disclosed in the Profit & Loss Account in the system clearly includes this amount. This includes the amount of Rs 3,10,160/ being interest paid to suppliers; Rs 5,869/,being amount of interest paid to Bank and the balance amount of Rs 19,931.53 ,being the interest paid to sales tax department. The CIT (Appeals) went wrong in not considering the details of disallowances made in the Total Income Statement, which includes thedisallowances of 30% Rs 3,10,160/,being the amount on which TDS had not been deducted, from the interest paid to suppliers. The disallowance amounts to Rs 93,048/, which had been clearly disallowed in the total income statement. The interest paid to bank and the sales tax department are allowable expenses. So, the additions of Rs 3,35,961/ made by the assessing authority and that retained by the CIT (Appeals) is against law and facts of the case and therefore unsustainable.

At the time of hearing, the learned AR invited our attention to the written submissions filed by them before the ld.CIT(A) and prayed to allow the appeal since the same were not considered and a speaking order was not passed.

The learned DR relied on the orders of the lower authorities and prayed to dismiss the appeal.

We have heard both the sides and perused the material available on record. As seen from the records, it is the specific case of the assessee that the interest and penalty debited in the profit and loss account is already included in the return of income filed by the assessee. The learned AR also brought to our notice that the assessee had included the interest paid to the suppliers and the interest paid to the banks and to the sales-tax department amounting to Rs.3,35,961 in the interest paid column of the return of income and shown this amount separately in the profit and loss account as under the head “interest and penalties”. We find that the interest and penalty disclosed in the profit and loss account includes this amount also. Rs.3,10,160 being the interest paid to the suppliers and Rs.5,869 being the amount paid to the bank