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2013 (2) TMI 480 - ITAT CHANDIGARHDisallowance u/s 40(a)(ia) – TDS was not deducted on payment for packing material - Held that:- It is for purchase of packing material, which does not attract the provisions of TDS - AO has also mentioned it as payment for packing material. As TDS was not deductible on the packing material - provisions of Section 40(a) (ia) are not attracted. Hence, the addition made of Rs.2,73,360/- u/s 40(a) (ia) on account of packing material is deleted – Against the revenue. Interest on loan given to subsidiary – Held that:- The facts as available on record indicate that the sum of money was given by the assessee-company out of business expediency. Punjab Biotehnology park, a subsidiary of the assessee-company and therefore, the assessee is deeply interested in the working of the said company. Besides, the subsidiary company has been set in pursuance of joint collaboration agreement to which the assessee is a party for the development of Biotechnology Park. The subsidiary company is required to act as a facilitator for development of the biotechnology park in which the assessee is also interested – Therefore loan standing in the name of Punjab Biotehnology park is guided by business expediency - The AO is directed not to disallow any interest attributable to the loans given by the assessee- company to the said subsidiary company – Against the revenue. Interest free advance without commercial expediency - A sum of Rs. 49,38,930/- has been treated by the assessee-company itself as loan and advance given to Shri A.S. Bhatia, maternal uncle of Managing Director – Held that:- loans and advances have been treated as unsecured loans given by the assessee without any stipulation regarding their re-payment and interest - Auditors have considered the aforesaid loans as prejudicial to the interest of the assessee-company as no interest is being charged on them – Therefore amount standing in the name of Shri A.S. Bhatia is in the nature of loan advanced by the assessee to him without any commercial expediency - The interest attributable to a sum of Rs. 49,38,930/- being the amount of diverted by the assessee-company for the personal benefit of Shri A.S. Bhatia is therefore liable to be disallowed. The AO is directed to re-compute the disallowance accordingly – Against the assessee. Payments made towards freight charges :- As decided in CIT V Bhagwati Steels, 326 ITR 108 (P&H), where f reight expenses incurred added to cost of goods in invoice raised and No inference that assessee paid any amount of freight separately, assessee is not liable to deduct TDS - Assessee not a defaulter under Section 194C- Income- tax Act,1961 s.s. 40(a) (ia), 194C(3) (i)- In favour of assessee. provisions of Section 40(a) (ia) in respect of sales commission - TDS is to be deducted if the amount exceeds Rs.2500/- as per the provisions of Section 194H - AO was right in disallowing the sales commission of Rs.21,191/- u/s 40(a) (ia) - Appeal of the assessee is partly allowed.
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