TMI Blog2012 (10) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance is warranted. Finance charges - Outstanding amount or the provision for expense (and not the amount already paid) is liable for disallowance if TDS is not deducted. Sec 40(a)(ia) can apply only to expenditure which is payable as of 31st March and does not apply to expenditure which has been already paid during the year - issue restored to the file of the Assessing Officer to decide the same appeal allowed for statistical purposes. Disallowance of Freight inward and Factory expenditure Held that as the expenditure is likely to have been incurred for Business purpose disallowance to 50% is restricted - appeal is partly allowed. Consultancy charges Held that :- Order of CIT(A) is confirmed in allowing claim of the assessee to the extent the TDS challans were furnished and proper deduction of tax at source had been made and has disallowed the balance on which assessee has not made TDS deduction - appeal of the assessee is dismissed. Water Charges Held that:- As the assessee had not deducted tax at source on such payment as per the provisions of section 194C of the Act issue restored to the file of the AO to decide the same - allowed for statistical pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a sum of Rs. 5,00,000/- out of the same towards unproved expenditure. 4. On appeal, before the CIT(A) the assessee submitted that the AO was not justified in making such disallowance on ground of heavy expenditure claimed in the return. It was stated that the AO erred in making such disallowance, as in the assessment proceedings, the assessee had produced cash book, journal and ledger before him. He, therefore, requested that the expenditure claimed by the assessee are genuine and the disallowance may be deleted. The CIT(A) after considering the submissions of the assessee and following the case laws, namely, i) CIT Vs. Imperial Chemical Industries India (P) Ltd., 74 ITR 17(SC), ii)Nund and Samant Co.P. Ltd. Vs. CIT, 78 ITR 268(SC), iii) Ramanand Sagar Vs. DCIT, 256 ITR 134(Bom.) and iv) TCI Ltd., 256 ITR 701, held that since the assessee has failed to produce the vouchers for various expenses claimed in respect of manufacturing division, the AO was justified in making such disallowance of Rs. 5,00,000/- towards inflated/unproved expenditure. 5. Aggrieved by the order of the CIT(A), the assessee is in appeal before us. 6. We have heard the arguments of both the parties an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture claimed by the assessee for the assessment year, the AO was justified in making the said disallowance out of interest in this case. Aggrieved, the assessee is in appeal before us. 9. We have heard the arguments of both the parties and perused the record as well as gone through the orders of the authorities. We restore this issue to the file of the Assessing Officer to decide the same in the light of the decision of the ITAT, Mumbai Bench in the case of H.P. Shah of H.P. Shah co in ITA No. 3694/M/06 order dated 15.01.09 wherein it was held that if the own capital is sufficient to cover up the interest free advances, no disallowance is warranted. 10. As regards disallowance u/s 40(a)(ia) of Rs. 70,890/-, the AO noticed that the assessee had debited an amount of Rs. 70,890/- under finance charges. He noted that the said amount paid to APIDC Ltd., towards discounting of hundi is in the nature of interest. Since, no tax had been deducted at source on such payment, the AO disallowed the said amount u/s 40(a)(ia) of the Act. Before the CIT(A), it was submitted that the AO erred in making such disallowance, as the provisions of section 40a(ia) apply in respect of expenses payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra). Thus, this ground is allowed for statistical purposes. 12. Ground No. 4 is pertaining to disallowance of expenditure of Rs. 5,00,000/-. The Assessing Officer noted that the assessee had claimed huge expenditure incurred in cash towards freight inward and for factory expenses. Since the assessee had not produced any voucher in respect of such expenses, he disallowed a sum of Rs. 5,00,000/- out of the same towards unverifiable expenditure. On appeal, the CIT(A) confirmed the action of the Assessing Officer holding that when the assessee has failed to produce any voucher in respect of such expenses during the assessment proceedings, the Assessing Officer was justified in making the said disallowance of Rs. 5,00,000/- towards unverifiable nature of expenditure. Aggrieved, the assessee is in appeal before us. 13. We have heard the arguments of both the parties, perused the record and gone through the orders of the authorities below. Since certain expenditure is likely to have been incurred towards freight inward and factory expenses, we restrict the disallowance to 50%, i.e. Rs. 2,50,000/- as against Rs. 5,00,000/- made by the Assessing Officer. Accordingly, this ground is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow. We find that this issue is squarely covered by the special bench decision of ITAT, Vizag in the case of M/s Merlyn Shipping Transport Others, 136 ITD 23(SB)(Vizag). Therefore, we restore this issue to the file of the AO to decide the same following the said special bench decision. Accordingly, this ground is allowed for statistical purposes. 18. Ground No. 7 is pertaining to the disallowance on account of employee contribution u/s 36(i) rws 2(24)(assessee) of Rs. 19,720/-. The Assessing Officer disallowed the said amount on the ground that the assessee had not remitted the said amount representing the employers contribution of provident fund within the due date. On appeal, the CIT(A) confirmed the action of the Assessing Officer. Aggrieved, the assessee is in appeal before us. 19. We have heard the arguments of both the parties and perused the record as well as gone through the orders of the authorities below. We remit this issue to the file of the Assessing Officer to verify the details as it has been submitted before us that the Assessing Officer has failed to consider the information furnished before him and the Assessing Officer shall decide same in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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