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2017 (4) TMI 823 - AT - Income TaxDisallowance u/s 14A - Held that:- The issue in dispute is squarely covered in favour of the assessee by the decision of the Hon’ble High Court rendered in the case of Correctech Energy [2014 (3) TMI 856 - GUJARAT HIGH COURT] as observed that if no tax free income was earned by the assessee, then no expenses can be construed as incurred by the assessee, because plain reading of section 14A provides that if an assessee incurred expenditure in relation to earning of tax free income then such expenditure would not be allowed. The assessee did not earn tax free income, then where is the question of allocating expenditure. CIT(A) is not justified in confirming the disallowance. - Decided in favour of assessee Nature of expenditure - revenue v/s capital expenditure - Non-deduction of TDS - Held that:- With the assistance of the ld.representatives, we have gone through the record. He disallowed claim of the assessee on account of non-deduction of TDS. Thus, the ld.CIT(A) has changed the colour of the dispute. The ld.CIT(A) thereafter did not confront the assessee as to why this expenditure should not be treated as capital expenditure. Similarly, the ld.CIT(A) himself has also not tallied with items purchased by the assessee whether these electrical fittings were meant for repairing work or they are related to some new products/items. Considering this aspect, we vacate the findings of the ld.CIT(A). The expenditure cannot be disallowed to the assessee, because it was not required to deduct TDS on the purchases. In case the AO has granted deprecation, then, he will withdraw depreciation and allow the expenditure as revenue expenditure. Thus, this ground of appeal is allowed in favour of assessee TDS u/s 194C - disallowance under section 40(a)(ia) - argument raised by the assessee that payment did not exceed ₹ 50,000/- and therefore, liability for TDS deduction does not arise - Held that:- .CIT(A) has considered this aspect and observed that the assessee was required to deduct TDS under section 194C where the limit is ₹ 20,000/-. Before us, the ld.counsel for the assessee failed to controvert this finding of the CIT(A). Similar argument was raised with regard to the payment made to Hemal Shah and Associates. The ld.CIT observed that limit was of ₹ 20,000/- which has been exceeded by the assessee. In view of this finding of CIT(A), we do not see any reason to interfere in it. - Decided against assessee
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