TMI Blog2011 (11) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... : AO has not found any abnormality in assessment of AY 2007-08, and the expenses are exactly similar and the nature of business and competitiveness of business, where direct expenses were incurred for earning professional income to the P & L Account, are found reasonable and fair. CIT(A) justified in deleting addition - Decided in favor of the assessee. - ITA No. 1980/Kol/2010 - - - Dated:- 29-11-2011 - S.V. Mehrotra, Mahavir Singh, JJ. S.K. Roy for the Appellant ORDER Mahavir Singh: This appeal by revenue is arising out of order of CIT(A)-I, Kolkata in Appeal No. 483/CIT(A)-I/Wd-2(3),08-09 dated 05.08.2010. Assessment was framed by ITO, Wd-2(3), Kolkata u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for Assessment Year 2006-07 vide his order dated 30.12.2008. 2. The first issue in this appeal of revenue is against the order of CIT(A) deleting the disallowance made by Assessing Officer on account of payment of interest in the absence of deduction of TDS by invoking the provisions of section 40(a)(ia) of the Act. For this, revenue raised following ground no.1: "1. That on the facts and circumstances of the case, the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section (2) provides that the person responsible for paying interest shall deliver or cause to be delivered to the CCIT or CIT one copy of the declaration submitted by the payee of the interest to the assessee on or before the seventh day of the month next following the month in which the declaration was furnished to him. If the person responsible for paying the interest (i.e. the assessee) does not comply with sub-section 2 of section 197A, he is liable to pay penalty of Rs. 100/- for every day during which the failure continues. Such penalty can be imposed only by the Commissioner or Chief Commissioner of Income Tax as stated in clause (b) of sub-section 3 of Section 272A and sub-section 4 requires that an opportunity shall be given to the assessee before any penalty order is passed. 7. In the present case the claim of the asses see is that at the time of paying the interest to the 34 persons mentioned in the assessment order, he had before him the appropriate declarations in the prescribed form from the payees stating that no tax was payable by them in respect of their total income and therefore tax need not be deducted from interest under section 194A, and in the light of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest. The sub-section uses the word 'shall' which leaves no choice to the assessee in the matter. In the case of payment of leave travel concession and conveyance allowance to employees who are liable to deduct tax from the salary paid to the employees under section 192, the Supreme Court has held in CIT vs. Larsen and Toubro Ltd. (2009) 313 ITR 1, that the assessee was under no statutory obligation under the Act or Rules to collect evidence to show that the employee had actually utilized the money paid towards leave travel concession/conveyance allowance. The position is stronger under section 197A which does not apply to section 192, but which provides in sub-section (1A) that if the payee of the interest has filed the prescribed form to the effect that he is not liable to pay any tax in computing his total income, the payer shall not deduct any tax. The subsection does not impose any obligation on the payer to find out the truth of the declarations filed by the payee. Even if the assessee has delayed the filing of the declarations with the office of the CIT/CCIT (TDS) within the time limit specified in subsection (2) of section 197A, that is a distinct omission or default for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled to furnish the details about the persons who executed the work and similar type of expenditure were debited in P/L A/c. in addition to direct expenses." 5. We have heard rival submissions and gone through facts and circumstances of the case. We find that the Assessing Officer while completing assessment found that assessee has debited a sum of Rs.27,10,121/- in the PandL Account under the head salary, bonus, rent, electricity charges, professional fees etc. As the assessee could not submit the details of expenses like general charges, Mailers, Printers, conveyance to staff, rent and electricity, telephone charges, postage telegram, audit fees, computer hire charges, consultancy, computer software etc., the Assessing Officer disallowed by stating that all the above expenses reflected in the PandL Account under the same name or with slight various implying similar nature of expenses. He also noted that the assessee was given opportunity to explain these expenses with supporting evidence but the assessee could not produce any documentary evidence to substantiate its claim. Aggrieved, assessee preferred appeal before CIT(A), who deleted these expenses by giving following findi ..... 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