TMI Blog2014 (1) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... sister-concerns – Decided in favour of Revenue. Deletion made u/s 40(a)(ia) of the Act – Payment made without deducting TDS at the time of making payment – Held that:- The CIT(A) has decided the issue after following the decision in the case of Merilyn Shipping & Transports Versus Assistant Commissioner of Income-tax, Range-1, Visakhapatnam [2012 (4) TMI 290 - ITAT VISAKHAPATNAM] - which has been admittedly declared as not a good law by the Hon'ble Jurisdictional High Court - assessee contended that even otherwise also no disallowance is called for as the expenditure is merely a reimbursement, therefore no provisions of tax deduction at source would be applicable - This being a new contention raised before the Tribunal - this issue req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in appreciating that fact that the assessee had given interest free advances to its four associate concerns and on the other had he was paying hefty interest on borrowed funds. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in deleting addition of Rs. 20,00,000/- made u/s.40(a)(ia) of the Act being payment made to MPSIDC without appreciating the fact that the assessee had not deducted TDS at the time of making payment. 3. On the facts and in the circumstances of the case, the learned CIT(A) ought to have upheld the order of the Assessing Officer. 4. The appellant craves leave to add to, amend o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court rendered in the case of CIT vs. Reliance Utilities Power Ltd. (2009) 313 ITR 340 (Bom). He has also relied on the decision of the Jurisdictional High Court rendered in the case of CIT vs. R.L. Kalthia Engineering Automobiles (P) Ltd. reported at (2013) 33 Taxmann.com 14 (Guj.). He has also placed reliance on the decision of the Commissioner of Income Tax-II, Baroda dated 28/12/2011 pertaining to AY 2008-09. He submitted that there is no change in the facts and circumstances of the present case. Since the facts are identical, therefore the order passed by the ld.CIT(A) is justified. He also drew our attention towards page Nos.45 46 of the paper-book to demonstrate that the assessee had sufficient interest-free funds availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered with the non-interest-bearing funds available with the assessee, the question of disallowance of interest on borrowed funds would not arise. The ITAT, Delhi, in the case of DCIT vs U.K. Paints (India) Ltd. 4 ITR (A.T) 455, in a recent judgment, considered the panoply of the case law on this issue and held that even where all funds were deposited in a mixed account, the above noted principle would still apply, i.e. where the assessee had ample interest free funds in excess of the interest-free advances, then no disallowance can be made u/s.36(1)(iii). In the instant case also the assessee had sufficient non-interest-bearing funds available. From the copy of balance sheet and the consolidated cash flow statement, it is seen that the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is more than the borrowed fund, then no disallowance of interest is called for. Reliance is also placed on the judgement of Hon'ble Apex Court rendered in the case of S.A.Builders Ltd. vs. CIT 288 ITR 01. Ld.Counsel for the assessee also placed reliance on the judgement of Hon'ble Gujarat High Court in the case of CIT vs. R.L.Kalthia Engineering Automobile Ltd.(supra). Therefore, after considering the totality of the facts and circumstances of the case and the ratio laid down in the Judgements referred hereinbefore, we hereby direct the AO to verify whether the assessee is having sufficient interest-free funds to give advances to sister-concerns. If the advances are in excess of the interest- free funds available with the assessee, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has decided this issue after following the decision of Hon'ble Special Bench rendered in the case of M/s.Merilyn Shipping Transports in ITA No.477/Viz./2008 which has been admittedly declared as not a good law by the Hon'ble Jurisdictional High Court. The contention of the ld.counsel for the assessee that even otherwise also no disallowance is called for as the expenditure is merely a reimbursement, therefore no provisions of tax deduction at source would be applicable. This being a new contention raised before the Tribunal, therefore we feel in the interest of justice, this issue requires to be redecided by the AO in the light of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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