TMI Blog2017 (12) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... en respect of earlier assessment year has been approved by Hon’ble Delhi High Court in the case of Commissioner of Income Tax Vs. Ansal Land Mark Township P. Ltd. [2015 (9) TMI 79 - DELHI HIGH COURT ]. Therefore, in view of above we deem it appropriate to restore this issue back to the file of Assessing Officer with a direction to assessee to furnish all the relevant documents before the Assessing Officer evidencing that interest paid by assessee has been offered to tax by recipients in their respective return of income Disallowance u/s 14A - Held that:- The assessee has not demonstrated before the Tribunal that interest free funds of assessee are sufficient to cover the investments. However, It is made clear that while computing disallowance u/s. 14A r.w.r. 8D(2)(iii) only those investments should be taken into consideration on which the assessee has earned interest free income. Accordingly, ground No. 3 raised in the appeal by assessee is allowed for statistical purpose. Disallowance u/s. 40A(3) on account of cash payments made for purchase of land - Held that:- after perusal of the impugned order it is not evident whether the authorities below have examined the fact regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lay in filing of appeal is not intentional or deliberate but has been caused due to bonafide reasons as stated in the affidavit. Thus, the delay in filing of appeal is condoned and the appeal is admitted to be heard and disposed of on merits. 3. The brief facts of the case as emanating from records are: The assessee is an individual and is engaged in the business of trading in land and real estate. The assessee is also deriving income from House Property, Capital Gains and Income from Other Sources. The assessee filed his return of income for the assessment year 2008-09 on 06-11-2008 declaring total income of ₹ 49,48,920/-. During the course of scrutiny assessment proceedings the Assessing Officer observed that the assessee has paid interest to India Bulls Ltd., a Non-Banking Finance Company and Dadasahen Vaman Vishnu Shinkar Nagari Sahkari Patsanstha Ltd. The assessee while making payment of interest to the aforesaid entities has not complied with TDS provisions. Hence, the Assessing Officer made disallowance of ₹ 25,34,373/- u/s. 40(a)(ia) of the Income Tax Act, 1961 (hereinafter referred to as the Act ). Further, the Assessing Officer observed that the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscrepancies. However, the assessee failed to furnish any reconciliation either in remand proceedings or during First Appellate Proceedings. The Commissioner of Income Tax (Appeals) issued enhancement notice. In the absence of any explanation or reconciliation the Commissioner of Income Tax (Appeals) made addition of ₹ 11,49,970/-. The Commissioner of Income Tax (Appeals) further made disallowance of ₹ 60,871/- u/s. 14A r.w.r. 8D and confirmed disallowance of ₹ 10,93,702/- u/s. 40(a)(ia) of the Act. 4. Aggrieved by the order passed by Commissioner of Income Tax (Appeals), the assessee raised following grounds of appeal : 1) The Ld. CIT(Appeals) erred in making enhancement of income by ₹ 11,49,970/-. 2) The Ld. CIT(Appeals) erred in retaining disallowance u/s. 40(a)(ia) of the Act to the extent of ₹ 10,93,707/- especially when the entire amount of ₹ 10,93,707/- was actually paid as interest on various loans and nothing was remaining to be actually paid out of this amount as on 31-03-2008. 3) The Ld. CIT(Appeals) erred in enhancing the income by making a disallowance u/s. 14A of ₹ 60,871/-. 5. Shri Abhay Avchat appearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest expenditure claimed. Even before us the ld. AR has failed to explain the difference in interest expenditure as claimed in P L account and the statement of interest furnished before the Commissioner of Income Tax (Appeals). In P L account the assessee has claimed interest expenditure ₹ 31,20,483/- as against actual payment of interest ₹ 19,70,509/-. In the absence of any explanation, we find no reason to interfere with the findings of Commissioner of Income Tax (Appeals) qua the addition of ₹ 11,49,970/-. Accordingly, ground No. 1 raised in the appeal by assessee is dismissed. the addition of ₹ 11,49,970/-. Accordingly, ground No. 1 raised in the appeal by assessee is dismissed. 8. In respect of ground No. 2 relating to disallowance u/s. 40(a)(ia) the ld. AR has prayed for remitting the issue back to the file of Assessing Officer in the light of newly inserted second proviso to section 40(a)(ia) of the Act. The second proviso to section 40(a)(ia) inserted by Finance Act, 2012 w.e.f. 01-04-2013 reads as under : Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14 (A.Y. 2009-10) 10. This appeal has been filed with the delay of 07 days. The assessee has filed an application seeking condonation of delay in filing of the appeal supported by an affidavit. After perusal of the same, we are satisfied that the delay in filing of the appeal is not intentional or deliberate but has been caused due to bonafide reasons as stated in the affidavit. Thus, the delay in filing of appeal is condoned and the appeal is admitted to be heard and disposed of on merits. 11. The assessee in present appeal has assailed the findings of Commissioner of Income Tax (Appeals) by raising following grounds : On facts and circumstances of the case and in law, 1. The learned Assistant Commissioner of Income Tax, Circle - 2, Nasik has erred in making disallowance of ₹ 17,13,786 in respect of interest paid to India Bull Finance Ltd. under Section 40(a)(ia) of the Income tax Act, 1961 and the learned Commissioner of Income tax (Appeals)- 11, Nashik has erred in confirming the same. 2. The learned Assistant Commissioner of Income Tax, Circle - 2, Nasik has erred in making disallowance of ₹ 7,34,621 in respect of interest paid to CITI Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy. In the business of purchase and sale of land, the token amount has to be paid immediately to confirm the transaction. Since, the assessee wanted to seal the transaction immediately the assessee paid token amount in cash out of business expediency. The ld. AR contended that the payments fall within the exceptions provided under Rule 6DD of the Income Tax Rules. The ld. AR further submitted that the aforesaid two parcel of land were purchased by the assessee in July, 2008 and has shown the same as stock-in-trade as on 31-03-2009. No deduction was claimed by the assessee on account of purchase of said lands, as they remained unsold at the end of year. Since, no deduction is claimed in respect of such expenditure the same cannot be disallowed by invoking the provisions of section 40A(3) of the Act. 14. In respect of ground No. 5, the ld. AR submitted that the Assessing Officer has made disallowance of ₹ 25,000/- paid as professional fees u/s. 40(a)(ia) of the Act. The ld. AR submitted that the authorities below have erred in making disallowance in respect of aforesaid amount as the assessee had complied with the provisions of TDS. The assessee had deducted and had paid th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is not evident whether the authorities below have examined the fact regarding claim of deduction by assessee during the period relevant to the assessment year under appeal. We deem it appropriate to restore this issue back to the file of Assessing Officer for verification. If the assessee has not claimed the amount of ₹ 5,50,000/- as deduction during assessment year under appeal, no disallowance u/s. 40A(3) is warranted. Accordingly, ground No. 4 raised in the appeal by assessee is allowed for statistical purpose. 18. In ground No. 5 the assessee has assailed disallowance of ₹ 25,000/- u/s. 40(a)(ia) of the Act. The contention of the assessee is that he has deducted tax at source while making the aforesaid payments as professional fees. A perusal of the impugned order shows that there is no findings by the Commissioner of Income Tax (Appeals) on the aforesaid disallowance. Therefore, we deem it appropriate to remit this issue back to the file of Assessing Officer for verification. If the assessee has deducted tax at source on the payment of professional fees and has deposited the TDS to the Government exchequer, no disallowance u/s. 40(a)(ia) is to be made. The as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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