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The Commissioner of Income Tax -1 Versus Consumer Marketing (India) Pvt. Ltd.

2015 (11) TMI 124 - GUJARAT HIGH COURT

Disallowance of interest under section 36(1)((iii) - CIT(A) deleted the addition confirmed by ITAT - Held that:- The term loan, on which deduction of interest was sought, had entirely been used for the purpose of purchasing the assets which were hypothecated to the bank. The assessee had also produced sufficient evidence before the Assessing Officer to indicate that it had sufficient interest free funds to take care of the advances even if the same were accepted to be the advances. The Commissio .....

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corded by it after appreciation of the evidence on record, in the absence of any perversity being pointed out in the findings of fact recorded by the Tribunal, the same does not give rise to any question of law. - Decided against revenue.

Disallowance under section 40(a)(ia) - non deduction of TDS on the payment made to the C & F agent - CIT(A) deleted the addition confirmed by ITAT - Held that:- The assessee had deducted the TDS in respect of the payment made to the C & F agent and s .....

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educted in respect thereof. Under the circumstances, the impugned order passed by the Tribunal does not give rise to any question of law, much less a substantial question of law, as proposed or otherwise.- Decided against revenue. - Tax Appeal No. 646 of 2015 - Dated:- 21-9-2015 - Harsha Devani And A. G. Uraizee, JJ. For the Appellant : Mrs Mauna M Bhatt, Adv ORDER ( Per : Honourable Ms. Justice Harsha Devani ) 1. In this appeal under section 260A of the Income Tax Act, 1961 (hereinafter .....

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6(1)((iii) of the Act? [2] Whether the Appellate Tribunal has substantially erred in upholding the decision of the CIT (A) in deleting the addition of ₹ 55,94,825/- made on account of disallowance under section 40(a)(ia) of the Act ?" 2. The assessment year is 2008-09 and the relevant accounting period is the previous year 2007-08. The assessee filed return of income on 30.10.2008 declaring total income of ₹ 80,79,294/-. The case was selected for scrutiny. The Assessing Officer .....

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part as it should have been taken as "debtor". The assessee further pointed out that in any case, they had sufficient interest free funds to the tune of ₹ 1,99,40,000/- to take care of the advances. It was also pointed out that the payment of interest was specifically for term loan obtained for acquisition of assets for the business and had been obtained on hypothecation of that particular asset. The interest free loans (which were, in fact, debts) were not advanced out of the sa .....

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. 4. In respect of proposed question No.1, Mrs. Mauna Bhatt, learned senior standing counsel for the appellant submitted that the Tribunal has upheld the order passed by the Commissioner (Appeals) basically for the sake of consistency and that the Tribunal has not relied on its decision in the assessee's case, but has relied on the decision of the Commissioner (Appeals) in assessee's own case for assessment year 2007-08 in respect of which, further appeal was not filed in view of the low .....

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had come up for consideration in the previous year when such disallowance was deleted. Since the facts were identical in the year under consideration, he held that interest free funds were not diverted for non-business use and deleted the addition made by the Assessing Officer. The Tribunal concurred with the findings recorded by the Commissioner (Appeals) and upheld the said order. 6. From the facts noted hereinabove, it is apparent that the term loan, on which deduction of interest was sought, .....

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tion of funds. It is in these circumstances, that the Tribunal has recorded a concurrent finding of fact to the effect that it could not be said that interest bearing funds were diverted for non-business purpose. 7. Having regard to the fact that the conclusion arrived at by the Tribunal is based upon concurrent findings of fact recorded by it after appreciation of the evidence on record, in the absence of any perversity being pointed out in the findings of fact recorded by the Tribunal, the sam .....

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for his work. Before the Assessing Officer the assessee submitted that the part of the clearing and forwarding expenses, which forms reimbursement of expenses, does not attract the TDS provisions. The nature of such expenses was also pointed out to the Assessing Officer. It was submitted that the C & F agent raises a debit note for the expenses to be reimbursed by the company along with necessary bills/receipts/supporting evidence. He also raises an invoice for the services rendered by him w .....

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l before the Commissioner (Appeals), who deleted the disallowance. The revenue carried the matter before the Tribunal, but did not succeed. 10. Mrs. Mauna Bhatt, learned senior standing counsel, submitted that the Tribunal has failed to appreciate that the Assessing Officer had recorded a finding that the assessee had entered into a contract for carrying out work as per the requirement of the assessee. Therefore, for the payment made for carrying out any work, TDS is liable to be deducted as per .....

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passed by the Commissioner (Appeals) reveals that he has taken note of the fact that the assessee did not deduct TDS on reimbursements made to C & F agent on separate bills of reimbursement on account of freight and other payments made on behalf of the assessee. The Commissioner (Appeals) placed reliance upon the decision of the Tribunal in the case of M/s Om Satya Exim Private Ltd. rendered on 13.05.2011 in ITA No.1335/Ahd/2010 wherein, the Tribunal had considered the circular issued by th .....

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nd hence, section 40(a)(ia) of the Act is not applicable with regard to such payments. The Commissioner (Appeals) noted that the jurisdictional Tribunal in case of payment to Customs House Agent held that no TDS is required to be deducted in the case where reimbursement bills were separately raised. The assessee had also made payment to clearing and forwarding agents and separate bills were raised in respect of reimbursement of expenses incurred by the agents on behalf of the assessee. The fact .....

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