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2017 (9) TMI 1741 - AT - Income TaxSection 40(a)(ia) disallowance - assessee had not deducted any TDS on rent / lease rent/godown rent, machinery hire, vehicle hire, consultancy, shuttering work, lamination, site office expenses, steel transport, road work and legal / professional charges - Held that:- We first proceed to deal with Revenue’s arguments in support of its grievance that the Assessing Officer had rightly disallowed assessee’s expenses to the tune of ₹ 5,48,450/- since it had deducted less than the prescribed TDS deduction in chapter XVIIB of the Act. We find that judgment in CIT vs. S. K. Tekriwal [2012 (12) TMI 873 - CALCUTTA HIGH COURT] holds that Section 40(a)(ia) disallowance does not apply in case of short deduction of TDS. DR thereafter seeks to invoke proportionate disallowance of expenses to the extent of short deduction of TDS only. We find no merit in the instant alternative plea as well since there is no such course of action prescribed in the Act. The Revenue therefore fails in first substantive ground. Section 36(1)(iii) interest disallowance - Held that:- The assessee’s advances in question of ₹ 63.08 crores are much less than its interest free funds of ₹ 29.90 crores. Relevant parties have also been found to be the same as in the said earlier assessment year. All these clinching facts have gone unrebutted in the course of hearing. We therefore affirm the CIT(A)’s findings deleting the impugned disallowance. The Revenue fails in its second substantive ground Section 80IA deduction - assessee’s BOT road project cannot be treated as an instance of infrastructure development rendering profits derived therefrom in the form of toll collection as eligible for the impugned Section 80IA deduction - Held that:- The relevant items are Director’s remuneration, audit fees, consultancy charges, postage / telegram expenses, general expenses, telephone expenses, board meeting sitting fees expenses and depreciation etc. Learned counsel appearing at assessee’s behest is fair enough in not pressing for the impugned challenge made to all above heads of allocation except depreciation. We therefore uphold both the lower authorities’ action allocating the impugned expenses other than depreciation pertaining to building, air conditioner, computers, office equipments, furniture/fitting and vehicles. We find no merit in learned Departmental Representative’s vehement contentions supporting both the lower authorities’ action allocating assessee’s depreciation claim in this regard since the same is applicable qua the relevant block of assets as defined in Section 2(11) r.w. Section 32 of the Act prescribing block wise depreciation qua buildings, machinery, plant or furniture in tangible assets category followed by intangible one specifying knowhow, patent, copyright etc. The Revenue fails to quote any case law that the impugned depreciation is not allowable once a particular asset stands included in the corresponding block hereinabove. We therefore reverse both the lower authorities’ action allocating assessee’s depreciation claim. The consequential disallowance arising therefrom for the purpose of assessee’s deduction claim u/s. 80IA of the Act is directed to be deleted. Correctness of Section 14A r.w. Rule 8D disallowance - Held that:- Hon’ble Delhi high court’s judgment in Joint Investments Pvt. Ltd. vs. CIT (2015 (3) TMI 155 - DELHI HIGH COURT) that such a disallowance cannot exceed the exempt income amount itself. The Revenue is unable to rebut application of the above judicial precedent. We therefore direct the Assessing Officer to restrict the impugned disallowance to the extent of ₹ 46,643/- only. The assessee partly succeeds in the instant substantive ground.
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