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2017 (3) TMI 262 - ITAT KOLKATAPayment of Standby Letter of Credit charges (SBLC) charges - Allowable business expenses or not - Held that:- There is a commercial expediency in payment of SLBC charges by the assessee to M/s. Shalini P.Ltd and hence payment is an allowable expenditure. Therefore the deletion of disallowance made by the ld. CIT(A) is sustained. - Decided in favour of assessee TDS u/s 194C and 194J - consultancy and professional charges - disallowance made u/s 40(a)(ia) - mounts which is shown as payable on the date of balance sheet - Held that:- The majority ruling in the case of Merilyn Shipping and Transports (2012 (4) TMI 290 - ITAT VISAKHAPATNAM ) was that if all amounts have been paid then no disallowance can be made u/s 40(1)(ia) of the Act if the amounts are found to be payable as on the year end then no disallowance can be made u/s 40(10(ia) of the Act. That in effect the Tribunal analyzing the section 40(a)(ia) of the Act had held that in the case of omission to deduct tax even the genuine and admissible expenses are to be disallowed. But it sought to remove the rigour of law by holding that the disallowance shall be restricted to the money which is yet to be paid. However, we have observed that in the case of Crescent Export Syndicate (2013 (5) TMI 510 - CALCUTTA HIGH COURT) observed that there can be no denial that the provision in question is harsh. But there is no ground which was not intended by the Legislature. The law was deliberately made harsh to secure compliance of the provisions requiring deduction of tax at source. It is not the case of an inadvertent error and accordingly the Hon’ble High Court held that the provision of section 40(a)(ia) of the Act are applicable not only to the amounts which is shown as payable on the date of balance sheet but it is applicable to such expenditure which becomes payable at any time during the relevant previous year and was actually paid within the previous year. In the result the question is decided in favour of the revenue and against the assessee. TDS u/s 194I and 194C - failure to deposit within 31st March, 2009 - disallowance u/s 40(a)(ia) - Held that:- The appellant has deducted the tax at source on these payments in the month of Feb. 2009 but has deposited the tax after the end of the accounting year.That the provision of section 40(a)(ia) has been amended by Finance Act 2010. As per the amended provision if the TDS amount is deposited before due date of filing of return then no disallowance can be made under section 40(a)(ia). It has been held by Supreme Court in the case of CIT v Alom Extrusions Ltd.(2009 (11) TMI 27 - SUPREME COURT) that the amendment made in the section 43B is not prospective but is explanatory and will accordingly apply retrospectively. Similarly view has been taken in the case CIT v Virgin Creations [2011 (11) TMI 348 - CALCUTTA HIGH COURT ]. In view of above discussed legal and factual position the further addition of ₹ 9,38,408/- made by applying the provision of section 40(a)(ia) is delete and thus the appellant gets relief of ₹ 9,38,408/- (11.32.925-194517) on this ground. CIT(A) had rightly sustained the disallowance of ₹ 73556/- u/s 194J of the Act and ₹ 120961/- u/s 194C of the Act in the facts and circumstances of the case. - Decided partly in favour of assessee
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