SHRI SATNAM SINGH WADHAWA,PROP M/S PALI TRANSPORT & M/S COAL MOVERS,H.NO. 20,BEEDPARA, WARD NO.10,DIST: RAIGARH(CG) vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1), MAHIMA COMPLEX, VYAPAR VIHAR, BILASPUR

The present appeal filed by the assessee is directed against the order passed by the CIT(Appeal), Bilaspur (C.G.) dated 30.03.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) dated 23.03.2015 for the assessment year 2012-13.The assessee has assailed the impugned order on the following grounds of appeal: “1. That under facts and the law, Ld. Commissioner of Income Tax (Appeals) erred in confirming the disallowance of Rs.10,68,591/- made by the learned Assessing Officer U/s.40(a)(ia) for non-deduction of tax at source u/s.194A on interest paid to NBFC, by rejecting the explanations filed. Prayed that addition of Rs.10,68,591/- is unjustified and be deleted.

Succinctly stated, the assessee who is engaged in the business of transportation had filed his return of income for the A.Y.2012-13 on 31.03.2013, declaring an income of Rs.20,35,760/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act.

During the course of the assessment proceedings, it was observed by the A.O that the assessee had claimed deduction of interest expenditure of Rs. 10,68,591/- that was claimed to have been paid on a secured loan raised from Tata Motors Finance Ltd. (NBFC). As the assessee had failed to deduct tax at source on the aforesaid interest, therefore, the A.O called upon the assessee to explain as to why the same may not be disallowed u/s.40(a)(ia) of the Act. In reply, it was claim of the assessee that as the aforesaid interest expenditure as on the date of the “balance sheet” on 31.03.2012 had been “paid” and was not “payable”, therefore, the provisions of section 40(a)(ia) of the Act could not be triggered for making the said disallowance. However, the A.O not finding favor with the claim of the assessee disallowed the aforesaid interest expenditure of Rs.10,68,591/- u/s.40(a)(ia) of the Act. Also, the A.O taking note of the fact that the vouchers maintained by the assessee did not support his claim for deduction of expenses booked under the head “Truck repair & maintenance”, therefore, on an ad hoc basis disallowed an amount of Rs.1 lac. Accordingly, the A.O vide his order passed u/s.143(3) dated 23.03.2015 determined the income of the assessee at Rs.32,04,351/-.

Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without any success.

The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before me. As the assessee appellant despite having been intimated about the hearing of appeal had failed to put up an appearance, therefore, I am constrained to proceed with and dispose off the appeal as per Rule 24 of the Appellate Tribunal Rules, 1963, i.e, after hearing the respondent revenue and perusing the orders of the lower authorities.

The Ld. Departmental Representative (for short ‘DR’) relied on the orders of the lower authorities. It was submitted by the Ld. DR that as the assessee as per mandate of Section 194A of the Act had failed to deduct tax at source on the interest paid to Tata Motors Finance Ltd. (NBFC), therefore, the A.O had rightly disallowed u/s 40(a)(ia) its claim for deduction of the interest expenditure of Rs.10,68,591/-. Apropos the asesssee’s claim for deduction of “Truck repair & maintenance” of Rs.1 lacs, it was submitted by the Ld. DR that as the internal vouchers maintained by the assessee in support of his claim of expenditure did neither bear complete name and address of the recipients nor the registration numbers of the vehicles which were claimed to have been repaired, therefore, the A.O had already adopted a liberal view and disallowed only an amount of Rs.1 lacs ( out of Rs.30,82,813/-).

Having heard the Ld. DR and perusing the orders of the lower authorities, I finding no infirmity in the view taken by the lower authorities, who had rightly observed that as the assessee as per the mandate of Section 194A of the Act had failed to deduct tax at source on the interest paid to Tata Motors Finance Ltd. (NBFC), therefore, its claim for deduction of the said interest expenditure was liable to be disallowed u/s.40(a)(ia) of the Act. At this stage, I may herein observe that nothing had been placed on record either before the lower authorities or before me which would reveal that the interest expenditure claimed by the assessee had suffered tax in the hands of the payee i.e Tata Motors Finance Ltd. (NBFC). Apropos, the assessee’s claim that as the interest expenditure in question had been “paid” and was not “payable” as on 31.03.2012, therefore, the provisions of section 40(a)(ia) of the Act would not stand triggered, the said contention does no more survive pursuant to the judgment of the Hon’ble Supreme Court in the case of M/s Palam Gas Service vs Commissioner Of Income Tax, Civil Appeal No.5512 of 2017; dated 03.05.2017. In its aforesaid order, the Hon’ble Supreme Court upholding the view taken by the Hon’ble Punjab & Haryana High Court in the case of P.M.S. Diesels & Ors. Vs. Commissioner of Income Tax –2, Jalandhar & Ors., (2015) 374 ITR 562 (P&H) had rejected the claim of the assessee that the term “payable” in Section 6 Shri Satnam Singh Wadhawa Vs. DCIT, Circle-1(1)

Apropos, the ad-hoc disallowance of Rs.1 lac out of the assessee’s claim of deduction of “Truck repair & maintenance” of Rs.30,82,813/-, I find that the same was made by the A.O, for the reason that the internal vouchers maintained by the assessee in support of his claim of expenses did neither reveal the complete name and address of the recipients nor the registration numbers of the vehicles which were claimed to have been repaired. Apart from that, it was observed by the A.O that some of the vouchers were in a mutilated condition and were beyond recognition. Although, the A.O ought to have specifically pointed out the vouchers which suffered from the aforesaid infirmities, but considering the fact that the A.O had already taken a liberal view and disallowed only an amount of 7 Shri Satnam Singh Wadhawa Vs. DCIT, Circle-1(1)

In the result, appeal of the assessee is dismissed in terms of my aforesaid observations.