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2016 (2) TMI 463 - ITAT CHENNAI

2016 (2) TMI 463 - ITAT CHENNAI - TMI - Disallowance on interest expenses u/s.40(a)(ia) - assessee had not deducted/remitted any TDS on these expenses - Held that:- In the absence of any material to suggest that the amount is outstanding at the end of the close of the previous year relevant to the assessment year, then impugned amount cannot be disallowed u/s. 40(a)(ia) of the Act. Similar view has been taken by the Co-ordinate Bench of Chennai Tribunal in the case of Shri N. Palanivelu Vs. ITO, .....

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e assessee paid the TDS before the returns filed u/s.139(1) of the Act, that expenses cannot be disallowed. The ld. Assessing Officer has to decide the issue after giving an opportunity to the assessee for producing necessary evidence. - Decided in favour of assessee for statistical purposes. - ITA Nos. 87 & 88 /Mds./2015 - Dated:- 20-1-2016 - Chandra Poojari, AM And G. Pavan Kumar, JM For the Appellant : Mr A V Sreekanth, JCIT, DR For the Respondent : Mr K Balasubramanian, Adv ORDER Per Chandra .....

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,75,25,075/-(A.Y 2010- 11) & ₹ 4,43,04,063/- (A.Y 2011-12) on the interest expenses u/s.40(a)(ia) of the Act. 3. The brief facts of the case are that the assessee filed its return of income on 24.02.2011 and 04.10.2011 declaring an incomes of ₹ 29,04,328/- ₹ 1,13,69,615/- for assessment years 2010-11 & 2011- 12 respectively. During the course of assessment proceedings, the ld. Assessing Officer found that the assessee had debited the interest expenses of ₹ 3,75,25 .....

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f Income Tax(Appeals). 4. On appeal, the Ld. Commissioner of Income Tax(Appeals) placed reliance on the decision of the Special Bench of the Tribunal in the case of Merilyn Shipping and Transports Vs. ACIT (2012) 136 ITD 23 (Visakhapatnam) and observed that the words 'paid' and 'payable', for the purpose of section 40(a)(ia) have been deliberated by various Tribunals and High Courts. The Special Bench of ITAT (Vizag Bench), in the case of Merilyn Shipping and Transporters vs. Add .....

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been deducted, the amount should be payable and not which has been paid by the end of the year. The head note of the decision is as under: "Section 40(a)(ia), read with section 192, of the Income-tax Act, 1961 - Business disallowance - Interest, etc., paid to resident without deduction of tax at source - Assessment year 2009-10 - Whether for disallowing expenses from business and profession on ground that TDS has not been deducted, amount should be payable and not which has been paid by end .....

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her Tribunal was justified in deleting disallowance - Held, yes [Para 10]" The Commissioner of Income Tax(Appeals) further observed that on the contrary, the High Courts of Kolkata and Gujarat, in the cases of CIT Vs.Crescent Exports Syndicate (216 Taxman 258)(Kol.) and CIT vs. Sikandar Khan N. Tanvar (357 ITR 312)(Guj.) respectively, have held that the provisions of section 40(a)(ia) can be invoked even if the expenses are already paid and not outstanding as on 31st March of the relevant f .....

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is in favour of the assessee. At the same time, we find that the orders of the Calcutta High Court and the Gujarat High Court are against the assessee. In such circumstances the rule of Judicial Precedence demands that the view favourable to the assessee must be adopted, as held by the Hon'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd., 88 ITR 192. Following the above fundamental rule declared by the Hon'ble Supreme Court, we have to follow the judgment of the Hon' .....

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y dismissing the SLP filed by the Revenue. Accordingly, the Commissioner of Income Tax(Appeals) considering the decisions of the Allahabad High Court in the case of Vector Shipping Services P. Ltd. (357 ITR 642) (All.), which has also been upheld by the Apex Court, and also the jurisdictional ITAT in the case of ITO vs. M/s. Theekathir Press Madurai (ITA No.2076(Mds)/2012 dated 18.09.2013), hold that the provisions of section 40(a)(ia) are applicable only if the amounts are "payable" a .....

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tions in the A.Ys.2010-11 and 2011-12. Aggrieved of this, the Revenue is in appeal before us. 5. We have heard both the parties and perused the material on record. In these cases, the CIT(A) placed reliance on the decision of the Special Bench of ITAT (Vizag Bench), in the case of Merilyn Shipping and Transporters cited above and also on the judgement of the Gujarat High Court in the case of Vector Shipping Services P. Ltd., cited supra wherein it was held that provisions of the section 40(a)(ia .....

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