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2022 (11) TMI 178 - AT - Income TaxAddition u/s 40(a)(ia) - disallowance for the office rent paid to the Directors, payments made to Hypercube Architect, Directors remunerations, interest paid to Directors and salaries paid to employees, etc. - HELD THAT:- Once the recipients have disclosed the remunerations in their respective returns of income and discharged the payments and complies with the filing of the return of income having been completed, no disallowance can be made for the non-deduction of TDS by invoking the provisions of Section 40(a)(ia) if the Act. In view of the second proviso to this Section, we are in full agreement with the arguments of the learned Counsel for the Assessee, as well as the Departmental Representative that, in case the recipients have disclosed the remunerations received from the Assessee in their individual tax returns and discharged the taxes payable there under, in those case, the disallowance should not be made in terms of the second proviso of Section 40(a)(ia). This will also apply to the salaries paid to the employees, namely, salary for the AY 2014 – 2015, 2015 – 2016 and 2016 – 2017 and salaries paid to Shri Sathish and Shri Giri for the Assessment Years 2016 – 2017 and 2015 – 2016 respectively. In terms of the above, in all these years, i.e. 20-12 – 2013, 2013 – 2014, 2014 – 2015, 2015 – 2016 and 2016 – 2017, the directions will apply accordingly. Thus, in principle we have decided the issue in favour of the Assessee, but subject to the verification of the facts by the AO. Hence, this matter is restored back to the file of the AO for limited purpose of verification of facts, as to whether the recipients have disclosed the remunerations received on the salaries received from the Assessee in their individual tax returns and discharged the taxes payable there under in terms of the second proviso to Section 40(a)(ia) - AO will accordingly allow the claim after verifying the same. Thus, this common issue in all these years is allowed partly as indicated above. Claim of depreciation and expenses on motor vehicles, i.e insurance, interest on vehicle loan, vehicle maintenance and other repairs, etc. for the reason that the aforesaid motor vehicles are registered in the name of individual Directors of the Assessee Company - HELD THAT:- We noted that the cars are registered in the name of the Directors but the vehicles are used for the purpose of business of the Assessee Company and even the funds towards the purchase of the vehicles were provided by the Assessee Company and they have been shown as assets of the Assessee Company in the balance sheet and in the fixed asset chart for claiming depreciation. We are of the view that the Assessee is entitled for the claim of depreciation and other related expenses, but subject to the verification of the Assessing Officer. This issue has been considered by the Co-ordinate Bench of this Tribunal in the case of Edwise Consultants Private Limited [2015 (12) TMI 297 - ITAT MUMBAI] We direct the Assessing Officer to allow depreciation and other related expenses claimed by the Assessee. Thus, we allow this issue accordingly. Hence, this issue in the Assessee’s appeal in all the Assessment Years is allowed. Disallowance u/s.40(a)(ia) as well as 40A(3) - HELD THAT:- Revenue has committed double jeopardy in respect of these disallowances made on the same set of expenses, i.e. both 40(a)(ia) of the Act for non-deduction of TDS and 40A(3) of the Act for exceeding cash payment of Rs.20,000/-. Assessee stated that the Tribunal in the earlier ground, i.e. first issue, has already considered the disallowance u/s.40(a)(ia) of the Act and had directed to be deleted, and thus the provisions of 40A(3) cannot be invoked. We are in agreement with the learned Counsel for the Assessee that the disallowance can be made only by invoking one provision, i.e. 40(a)(ia) of the Act, but since we have deleted the addition, no disallowance can be made on this count. Hence, this ground of the Assessee is decided in favour of the Assessee in both the Assessment Years. Thus, this issue in the Assessee’s appeal is allowed. Disallowance u/s.37(1) in respect of the payment titled “Pannallur Minister Expenses” - HELD THAT:- We noted that the addition that was made of Rs.64.00 lakhs should be restricted to Rs.60.00 lakhs only for the reason that the payment of Rs.60.00 lakhs made to the Minister on 03.11.2015, i.e. “Pannallur Minister Expenses” is clearly hit by the Explanation 1 of Section 37(1) of the Act. We affirm the findings of the lower authorities and this issue in the Assessee’s appeal is dismissed. Addition of interest payment u/s.40A(3) - payment exceeding Rs.20,000/- as mandated under the said Section - HELD THAT:- We are inclined to remit the matter back to the file of the Assessing Officer who will verify individually the payments which are disbursed to the workers at the construction site besides other legitimate expenses classified as the imprest amount given in lumpsum to be disbursed in smaller fractions to the workers. Accordingly, this issue in the Assessee’s appeal is remitted back to the file of the Assessing Officer and is allowed partly.
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