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2022 (3) TMI 1573 - AT - Income TaxTDS u/s 194A - finance charges paid to NBFCs without deducting TDS - Addition u/s 40(a)(ia) - assessee in default u/s 201(1) - As Certificate of Chartered Accountant filed certifying that the finance charges paid by the appellant had been considered by deductees in Return of Income, have paid the taxes and filed the Return of Income - HELD THAT:- As law laid down in CIT Vs Ansel Landmark Township [2015 (9) TMI 79 - DELHI HIGH COURT] and M/s Hindustan Coca Cola Beverages Pvt Ltd [2007 (8) TMI 12 - SUPREME COURT] and in the context of circular number Circular No. 275/201/95-IT(B) dt 29/1/1997 issued by CBDT the Hon’ble Lordships have observed that, once it is proved on record that, the payee has accounted the amount in question as income and discharged the due taxes thereon then, no recovery of tax demand be enforced against the assessee. Applying the same analogy to the case at hand, the assessee placed on records a certificate from a chartered accountant showcasing the income accounted and due discharge of taxes paid thereon by one of the resident payee. Consequently, for the said amount of certificate the assessee cannot be held as “the assessee-in-default” within the meaning of Section 201(1) and resultantly, such amount shall distant from application of provisions of section 40(a)(ia). Thus, in the light of aforesaid observations, the ground number 1 & 2 are partly allowed in terms of above. Disallowance in case of travelling & vehicle maintenance - allowable business expenditure u/s 37(1) - HELD THAT:- Neither of the lower tax authorities had pointed any such voucher, the genuineness of the expenditure therein claimed to have been incurred by the assessee wholly and exclusively for the purpose of its business did not inspire any confidence, nor it was the case of the revenue that any part of the expenditure in question was either found to be bogus or fictitious, nor was found to have not been incurred by the assessee wholly and exclusively for the purpose of his business. Indeed, it showcased an exercise of running around the circle by both the lower tax authorities while dealing with the present case. We neither could come across any provision in the present Income Tax Statute nor it has been brought to our notice by either parties to dispute, which subscribes vis-à-vis authorises the tax authorities to arrive at this logic of subscribing ad-hoc disallowances. Evidently, there has been no clear findings as to number of vouchers requiring denial of allowances with the amount of expenditure and nature of defects therein or therewith, moreover department could not bring out any deprecative material on record to substantiate its logical conclusion. We couldn’t also see remotely there is any mention of rationale in arriving at the percentile of disallowance in the present case, consequently we find substantial force in the claim of the assessee that devoid of any specific infirmity qua the assessee’s claim for deduction of the aforementioned expenditure by the lower tax authorities, and hence the ad-hoc disallowance carried out in a most arbitrary manner could by no means be held to be justified. We, do not find favour with the view taken by the lower tax authorities, consequently we set-aside the impugned order of CIT(A) on this score and vacate the ad-hoc disallowance in its entirety and thereby allow the ground number 3 of the appeal
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