TMI Blog2017 (1) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid cases. In view of above, we are inclined to reverse the order of authorities below. Hence the ground of appeal of the assessee is allowed. - ITA No. 1076/Kol /2013 - - - Dated:- 18-1-2017 - Shri N.V.Vasudevan, Judicial Member And Shri Waseem Ahmed, Accountant Member By Appellant : Shri K.K. Khemka, Advocate By Respondent : None ORDER Per Waseem Ahmed, Accountant Member This appeal by the assessee against the order of Commissioner of Income Tax (Appeals)-Durgapur dated 20.03.2013. Assessment was framed by ITO Ward-1(4), Asansol u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 30.12.2010 for assessment year 2008-09. 2. At the outset it was noticed that the Revenue has neither appeared before us nor moved any adjournment petition. In such situation, we decided to proceed to adjudicate the matter after hearing Shri K.K. Khemka, Ld. Advocate appeared on behalf of assessee. 3. The assessee has filed the revised grounds of appeal vide letter dated 28.06.2014 which we find relevant and pertinent to the issues. No new issue has been raised in the revised grounds of appeal. All the issues are emana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case the AO made the addition of loan of ₹ 4 lacs from CCP on the ground that such loan was received in cash, violating the provisions of section 269SS of the Act. However on perusal of the records we find that the loan was obtained through banking channel vide cheque number 313760 of dated 17.04.2007. The amount of loan is reflecting in the bank statement of the assessee which is placed on page 10 of the paper book. Similarly the addition was made by the AO for the loan taken from Smt. Manmit Kaur and Simran Prit Singh Saluja for ₹ 2.50 lacs and ₹ 4 lacs respectively by observing that the opening and closing account balance of both the parties was very low. However, on perusal of the records we find that the lower authorities have taken only into consideration the opening and closing balance of the assessee ignoring the transactions took place in the banks of both the parties in intervening period. We find that the loan transactions were through banking Channel. The ld AR in support of his claim has submitted the identity proof, confirmation, bank details, cash flow statements of both the parties which are placed on pages from 1 to 51 of the paper book. The lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpeet Kour and Cyrillic Consultancy Service were placed along with the copy of challan for TDS. For other payments of interest to Bansal Motor Corporation and Rudra Motor, Ld. AR submitted that the interest was paid in the course of business transactions with the aforesaid parties. He in support of his filed ledger copy of both parties which are placed on pages 53 to 71 of the paper book. 12. We have gone through the submissions made by ld. AR and order of the lower authorities as well as perused the materials available on record. In the present case, the AO made the addition of interest expenses claimed by the assessee on account of non-deduction of TDS under section 40(a)(ia) of the Act. However, on perusal of the submission of the assessee we find that TDS was duly deducted by the assessee on the payment of interest to Harpreet Kaur and Cyrillic Consultancy Services Limited for ₹ 47,378.00 and ₹ 1,20,764/- respectively. The evidence for deduction of TDS along with the copy of challan for the payment TDS is placed on page 52 of the paper book. The TDS was deposited within the due date of filing of income tax returns and the deduction is allowable in terms of judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with any debt, with a payment having connection with the borrowings. A payment having no nexus with a deposit, loan or borrowing is out of the ambit of the definition of interest as per s. 2(28A).-Ghaziabad Development Authority vs. Dr. N.K. Gupta (2002) 258 ITR 337 (NCDRC) relied on. The term interest used in s. 194A relates to and in connection of a debt or a loan or a deposit. The circumstances under which the assessee is required to deduct the tax have also been narrated. Therefore, a conclusion can be drawn that if a payment is compensatory in nature and not related to any deposit/debt/loan, then such a payment is out of the ambit of the provisions of s. 194A.-Nirma Industries Ltd. vs Dy. CIT (2006) 202 CTR (Guj) 198 : (2006) 283 ITR 402 (Guj), CIT vs. Indo Matsushita Carbon Co. Ltd. (2006) 205 CTR (Mad) 493 : (2006) 286 ITR 201 (Mad) and Phatela Cotgin Industries (P) Ltd. vs. CIT (2008) 303 ITR 411 (P H) relied on. An another interesting feature involved to resolve this controversy is that the Revenue otherwise cannot allow the claim of payment under s. 36(1)(iii) because as per this section, the deduction is provided in respect of the amount of interest paid in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory of interest as defined in section 2(28A) of the Act. the payment made by the assessee in the present al being of similar nature also cannot be termed as interest as defined us. 2(28A) of the Act. Even without entering into the controversy as to whether the payment made on overdue bills will come within the ambit of interest as defined in section 2(28A), the assessee is also bound to succeed on its alternative argument that the entire payment having been made during the previous year relevant to the assessment year under dispute no disallowance could be made u/s. 40(a)(ia) in view of the ITAT Special Bench decision in the case of Merilyn Shipping Transports (supra). In the aforesaid vie of the matter, the disallowance of an amount of ₹ 3,12,600 made u/s 40(a)(ia) cannot be sustained. We, therefore, direct the Assessing Officer to delete the same. The ground raised by the assessee is allowed. The proposition laid down by the Hon ble courts as discussed above are very much applicable to the instant case on hand. In the present case, the interest was paid for the delayed payment of the bills which in our considered view is outside the purview of the provisions of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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