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2022 (2) TMI 379 - AT - Income TaxDisallowance of interest expenses - adding the interest income on the financial transactions carried out with the sister concern - HELD THAT:- Generally it is not expected from the assessee to raise the issue before the higher forum when the same was not pressed before the lower authorities - there are certain exceptions to it. If the assessee under wrong appreciation of facts and the law has not pressed the issue before the lower authorities, the same can be raised before the higher forum. It is for the reason that the assessee should not be deprived of the benefit for which it is entitled under the provisions of law merely on wrong appreciation of facts/law. All the facts relating to the issue are arising from the order of the AO and there is no need to refer to any fresh document to decide the issue on hand. Therefore in the interest of justice and fair play, we have no hesitation in admitting the ground raised by the assessee as discussed above though the same was not pressed before the learned CIT(A) by the assessee. As there is no finding by the learned CIT(A) qua the dispute on hand, therefore we are inclined to set aside the same to the file of the learned CIT(A) for fresh adjudication as per the provisions of law. Hence, the ground raised by the assessee is allowed for statistical purposes. TDS u/s 194C read with section 40(a)(ia) - disallowances of expenses on account of non/short deduction of Taxes provided that the assessee furnishes the certificate in the prescribed form - HELD THAT:- Assessee has not furnished the necessary certificate in form 26A prescribed by the CBDT. Now at the time of hearing before us, the learned AR has also not furnished any certificate in form 26A prescribed by CBDT. Now the issue arises, can the matter be set aside to the file of the AO for collecting the necessary evidences from the respective payees to ensure that such payees have paid the taxes on the amount received from the assessee. We note it is the duty of assessee to deduct appropriate tax from the amount paid/payable to any party i.e. payee if such amount falls under the preview of provision of chapter XVII(B) of the Act i.e. deduction at source - provision of section 40(a)(ia) of the Act provides that if assessee failed to deduct or failed to deduct appropriate tax on amount paid on which it was liable to deduct tax then such amount will not be allowed as business expenses. However the legislator provided relaxation to the assessee by inserting the 2nd proviso to section 40(a)(ia) on account of failure to deduct if it fulfill the condition prescribed under proviso to section 201(1) of the Act i.e. furnishing a certificate from accountant in from 26A. To our understanding the duty cast on the assessee cannot be transferred to revenue. If such burden transferred to revenue then the importance of provision of tax deduction at source will be of no relevance. Therefore the alternate contention of the assessee is dismissed. Hence the ground of appeal of the assessee is partly allowed. Disallowance of interest expenses under the provisions of section 36(1)(iii) - HELD THAT:- We are not inclined to make any reference to consider the financial transactions carried out by the assessee with the sister concern for making the disallowance of the interest expenses claimed by the assessee with respect to its project. Assessee in the year under consideration has not claimed any deduction of the interest being shown as part of the closing WIP. Indeed, in the later years, this closing WIP shall become the opening WIP and again the same will be allowed as deduction in the subsequent year which will result in the reduction of the profit of the assessee of the subsequent years. Once, an amount of interest has already been suffered to tax, if the addition is sustained, then the same amount should not be treated as opening WIP. In doing so, it would lead to the double taxation which is not warranted under the provisions of law. On this count as well as, the addition to the extent of ₹ 37,99950 is liable to be deleted. All the details about the interest expenses, financial statements, written submissions of the assessee were available before the learned CIT(A) and no defect of whatsoever was pointed out by him therein. CIT(A) has just dismissed the claim of the assessee by observing that the assessee failed to furnish the necessary details. To our understanding, this kind of approach of the learned CIT(A) is unwarranted for confirming the addition made by the AO after ignoring the necessary details which were available on record.Hence the ground of appeal of the assessee is allowed.
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