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2018 (3) TMI 1569 - ITAT HYDERABADAddition made u/s. 43B - interest paid to financial institutions on loans - assessee argued that the company constructed the buildings to the Government of Andhra Pradesh on no profit and no loss basis and disallowance of any expenditure would result into income which the assessee has not derived from carrying on its operations - Held that:- In the assessee’s case, the entire amount of funds were received from Government of AndhraPradesh as interest free advance which utlised for construction of police housing and after completion of construction, the property is handed over to the Government of AndhraPradesh and the loan / advance interest gets adjusted towards cost of construction. The interest payment has to be received from the Government of Andhra Pradesh. Neither the income is accrued nor the assessee claimed the interest expenditure which remained unpaid. Hence, we hold that Section 43B not is applicable in assessee’s case. However it is not clear from the assessment order or the P&L account whether the assessee has claimed the interest due to financial institutions i.e ₹ 2,11,22,788/- in other income. Hence we remit the matter back to the file of the AO to examine whether the impugned expenditure is claimed in other income (other than income of interest from Govt. of AP as per schedule –L) or not and decide the issue as per merits. In case the assessee has not claimed the expenditure in other income the same is not to be disallowed u/s 43B. The assessee’s appeal on this ground is allowed for statistical purposes. TDS u/s 194C - Disallowance u/s. 40(a)(ia)- Held that:- The amount of the amount of ₹ 5,20,88,872/- was the amount of break up of expenditure incurred on contractors and TDS required to be deducted as on 31/03/2009. From page No.73 onwards the assessee has submitted the details of payments made and remittances made to government account before filing the return and balance remained was only ₹ 1,26,25,001/- for non deduction of tax at source. DR did not dispute the fact. Therefore, we do not find any justifiable reason for the enhancement made by the CIT(A). Hence the enhanced addition made by the CIT(A) is unsustainable and accordingly deleted. TDS u/s 194C - payment to contractor - Held that:- The assessee has submitted that neither it had made the payment nor credited the amount to the account of the contractor. Assessee also submitted that journal entries have been passed on 31st March only for the sake of showing the true and correct financial affairs and the same was reversed immediately in the beginning of the subsequent year. Further, assessee also in the subsequent year made the payments and the TDS was made on respective payments. Therefore, there is no loss to the Government. Since the assessee has neither made the payment nor credited the contractors account, there is no case for deduction for TDS tax at source u/s. 194C. Consequently, there is no case for deduction of TDS u/s 194C and does not attract the consequent disallowance u/s. 40(a)(ia) of the Act. Hence, the orders of the lower authorities are set a side and the appeal of assessee on this ground is allowed.
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