TMI Blog2013 (4) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... ing balance under the head ‘capital work in progress’. This shows that the work was completed during the relevant year & assets were ready for use or used for the business purposes during the year. Since there was nothing under the head ‘capital work in progress’, therefore, there is no question of establishing the nexus between the borrowed fund and the investment made - order of the CIT (A)sustained. In favour of assessee. Disallowance of un-vouched expenses under the sub-head leakage and wastage - CIT (A) deleted the addition - Held that:- CIT (A) has rightly deleted the addition as these leakages and wastages debited in the books of account are part and parcel of manufacturing activity of the assessee. In favour of assessee. - ITA NO.2740/DEL.2011 - - - Dated:- 19-8-2011 - Shri C. L. Sethi And Shri B. C. Meena,JJ. For the Petitioner : Shri Gautam Jain, CA For the Respondent : Mrs. Shyama S. Bansia, DR ORDER Per B. C. Meena, Accountant Member :- This is an appeal filed by the Revenue against the order of the CIT (Appeals), Rohtak dated 31.03.2011 for the assessment year 2008-09. The grounds of appeal taken by the Revenue are as under :- 1. On the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue learned DR relied on the order of AO and submitted that the assessee was giving discount to the dealers/subdealers. They are not the ultimate end user/customers. He submitted that these dealers/sub-dealers function for all practical purposes as agent of the assessee, therefore, there existed the relationship of principal to agent. In view of these facts, there was obligation on assessee to deduct tax at the time of payment which has not been done. For not making TDS, the provisions of section 40(a)(ia) are applicable. Therefore, order of CIT (A) deserves to be set aside. 6. On the other hand, the learned AR submitted that the commission or the brokerage has been defined in Explanation to Section 194H of the Income-tax Act and as per this section, any payment for services rendered by a person acting on behalf of another person or for any services in the course of buying or selling goods or in relation to any transaction relating to any asset, valuable article or thing is commission or brokerage. Thus, the essential precondition for holding any sum to be commission is that such payment must have been for services rendered by a person acting on behalf of assessee or such services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Pvt. Ltd. in ITA No.399/2010 dated 6.1.2011, ITAT decision in the case of Addl. CIT vs. Pearl Bottling (P) Ltd. in ITA No.367/Vizag/2009 dated 10.02.2011, Shri Baiyanath Ayurved Bhawan Ltd. vs. JCIT 83 TTJ 409 and ITO vs. Mother Dairy Food Processing Ltd. in ITA No.385/Del/2010. He also submitted that discount is abetment of cost and is not in the nature of commission so that provisions of section 194H comes into play. For this, he relied on the decision of Hon'ble Gujarat High Court in the case of Ahmedabad Stamp Vendors Association vs. UOI 257 ITR 202 (Guj.), M.S. Hameed vs. Director of State Lotteries 249 ITR 186 (Ker.), CIT vs. Moving Picture Co. (India) Ltd. 20 SOT 120 (Del.) and Kerala State Stamp Vendors Association vs. Office of the Accountant General and Ors. 282 ITR 7 (Ker.). He finally submitted that AO s contention that assessee was having principal agent ITA 6 NO.2740/DEL/2011 relationship is factually and legally incorrect. The relationship between assessee and the dealers/ sub-dealers was of principal principal basis. He also submitted that the contention of the AO that payment was made for promotion of goods is also factually incorrect. There is no such sale p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this issue and we sustain the same. Accordingly, this ground of revenue s appeal is dismissed. 8. In the ground no.2, the issue involved is deleting the addition of Rs.14,91,637/- which the AO held by disallowing interest attributable to the amount invested on the capital work in progress of Rs.1,10,49,168/-. This capital work in progress has not been put to use for its business during the relevant period, therefore, interest attributable to this investment in capital work in progress is not allowable expenditure. The learned DR relied on the order of AO and submitted that the assessee has taken fresh interest bearing loans during the year and has also made investment in the capital work in progress to the tune of Rs.1,10,49,168/- and these assets were not put to use during the relevant period. Therefore, interest attributable to these investments deserves to be disallowed and CIT (A) is not justified in allowing the claim of the assessee. 9. On the other hand, the learned AR submitted that there was an opening balance in the capital work in progress. Further the work was completed during the year and the asset was put to use which is evident from the fact that there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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