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M/s. Er. A. Veerappan and Associates (TN) Pvt. Ltd. Versus The Income-tax Officer, Company Circle-II (1) , Chennai.

2015 (10) TMI 1880 - ITAT CHENNAI

Disallowance of interest paid - in-genuine loans - Held that:- It is already observed that the loan is not genuine in earlier assessment years. When the principal loan itself is not genuine, there is no question of allowing of any interest on such non-genuine loan. Being so, disallowance of interest on on-genuine loan is justified. Regarding the disallowance of interest on the unsecured land utilized for the purchase of land, in our opinion, the interest incurred upto the date of sale deed regis .....

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partly in favour of assessee.

Disallowance of sub-contract expenses u/s.40(a)(ia) - AO noticed that the assessee has neither deducted any TDS as per the provisions of sections 194A and 194C of the Act, nor remitted to the Govt. of India as on 31.03~2008 - Held that:- Similar issue was considered in the case of Shri N. Palanivelu v. ITO (2015 (10) TMI 1415 - ITAT CHENNAI), wherein held that sec 40(a)(ia) is not applicable when there is no outstanding balance at the end of the close of .....

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he claim of the assessee and the assessee shall place necessary evidence in support of his claim. - Decided in favour of assessee by way of remand. - ITA No. 2210/Mds/2014 - Dated:- 7-8-2015 - SHRI CHANDRA POOJARI AND SHRI V. DURGA RAO, JJ. For The Appellant : Shri Y. Sridhar, CA For The Respondent : Shri A.V.Sreekanth, JCIT ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER This appeal by the assessee is directed against the order of the Commissioner of Income-tax(Appeals) dated 21.5.2014. 2. The fir .....

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of A.Y.2006-07, along with the interest claimed to have been paid on the said loan. During the current financial year also the assessee claimed interest payment on the said loan of ₹ 8,00,000/-. Hence the Assessing Officer disallowed interest claim (of ₹ 96,000/- calculated @ 12%) on the said non-genuine unsecured loan of ₹ 8,00,000/- and included in the total loans of ₹ 36,00,235/. The Assessing Officer, in his order also observed that an amount of ₹ 11,33,188/- wa .....

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included in the total unsecured loans of ₹ 36,00,235/-, was considered as non-genuine in the assessment of A.Y. 2006-07, no interest on the corresponding loan can be allowed in the current assessment year also. Therefore, the CIT(Appeals) held that the Assessing Officer s action of calculating interest payment on the said loan of ₹ 8,00,000/- @ 12%, amounting to ₹ 96,000/-, and disallowing the same is justified and confirmed. Further, the CIT(Appeals) observed that similarly, t .....

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fore us. 5. We have heard both the parties and perused the material on record. It is already observed that the loan is not genuine in earlier assessment years. When the principal loan itself is not genuine, there is no question of allowing of any interest on such non-genuine loan. Being so, disallowance of interest on on-genuine loan is justified. Regarding the disallowance of interest on the unsecured land utilized for the purchase of land, in our opinion, the interest incurred upto the date of .....

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ssue. Accordingly, this ground is partly allowed. 6. The next ground in this appeal is with regard to disallowance of sub-contract expenses u/s.40(a)(ia) of the Act. 7. The facts of the case are that the Assessing Officer, in his assessment order u/s.143(3) r.w.s.147 of the Act, observed that there were certain interest and sub-contractual payments of ₹ 1,83,082/- and ₹ 15,90,215/-,respectively, debited in the P&L account. On verification, the Assessing Officer noticed that the a .....

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before us. 8. We have heard both the sides and perused the material on record. The main contention of the ld. AR is that these payments already paid before the end of the close of the year and not payable by the end of the close of the financial year 2008 relevant to the assessment year 2008-09. In our opinion, similar issue was considered by this Tribunal in the case of Shri N. Palanivelu v. ITO (40 ITR (Tri) 325), wherein it was held as under : 3. We have heard both the sides and perused the .....

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