TMI Blog2018 (5) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... the above provision and since the assessee has not been treated as an “assessee in default” u/s 201(1) of the Act, we hold that no disallowance u/s 40a(ia) can be made. Disallowance u/s 43B of the payments made towards APGST, VAT, ESI, Professional Tax Payable - Held that:- The amounts disallowed by the AO are the statutory provisions made by the assessee. The assessee’s contention that these amounts have not been debited to the P&L A/c needs verification. Therefore, we deem it fit and proper to remit this issue to the file of the AO for verification of the assessee’s claim and if the assessee has not debited the same to the P&L A/c, then no disallowance should be made u/s 43B of the Act. This ground of appeal is treated as allowed for statistical purposes. - ITA No.1504/Hyd/2012 And ITA No.1654/Hyd/2012 - - - Dated:- 27-4-2018 - Smt. P. Madhavi Devi, Judicial Member And Shri S.Rifaur Rahman, Accountant Member For The Assessee : Shri P. Murali Mohan Rao For The Revenue : Dr. K. Srinivas Reddy, DR ORDER Per Smt. P. Madhavi Devi, J.M. Both are cross appeals for the A.Y 2008-09 by the assessee as well as the Revenue against the order of the CIT (A)-II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions, the expenditure has already been paid by the Appellant and hence the disallowance under the provisions of S. 40(a)(ia) of the Income Tax Act, 1961 are not applicable to the case of the Appellant and hence the same may please be allowed to the Appellant. 6. This view has been followed in the number of decisions of various Tribunals 1 Courts: ( a) M/s. Merilyn Shipping and Transport, Visakhapatnam vs. ACIT vide ITA No. 477/Viz/2008. ( b) Teja Constructions, Hyderabad vs. ACIT vide ITA No. 308/H/2009. (c) Jaipur Vidyut Vitran Nigam Ltd. Vs DCIT vide ITA No. 132/JP/2009. 7. That on facts and in law, the CIT (A) erred in upholding the disallowance made u/s. 43B of ₹ 25,35,314/- towards APGST, VAT, ESI, Professional Tax Payable without considering the facts of the case which is not correct and not justified. Hence, the disallowance may please be deleted. 8. That the Appellant craves leave to add, to alter, or amend any of the aforementioned Grounds of appeal . 2. Further, vide letter dated 8.9.2017, the assessee has raised the following additional grounds of appeal and prayed for their admission and adjudication: 9. As per the ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts made of ₹ 3,57,069/- towards Programme Expenses Payable. 22. The Ld AO ought to have appreciated that the provisions of section 194J are not applicable to payments made of ₹ 3,00,000/ - towards Audit fee. 23. The Ld AO erred in provoking the provisions of section 40(a)(ia) without appreciating the fact that payments made are not covered by provisions of chapter XVII - B of the Act. 24. The AO ought to have appreciated the fact that the receiver of the interest i.e. payee, who is resident has offered the same as income in its return of income for the respective financial year and therefore, the assessee cannot be treated as assessee in default. 25. The AO ought to have appreciated the fact that second proviso to section 40(a)(ia) is curative in nature and has retrospective effect from 01.04.2005 from the date in which sub-clause i.e., 40(a) was inserted by Finance Act . 3. However, at the time of hearing, the learned Counsel for the assessee submitted that the assessee does not wish to press the additional grounds of appeal No.11 to 25. They are accordingly not admitted. That leaves us only with Grounds 9 10 raised as additional grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncurring expenditure on its behalf for business of the company, cannot be disallowed u/s 40A(3) of the Act. Therefore, we deem it fit and proper to remit the issue to the file of the AO for verification of the above contention of the assessee and on verification if it is found that the payments are to the employees for meeting the expenditure of the assessee company, the AO shall not make any disallowance u/s 40A(3) to such an extent. Thus, Ground of appeal No.2 is treated as partly allowed for statistical purposes. 8. As regards Grounds of appeal Nos.3 to 6, brief facts are that on verification of the details filed by the assessee, the AO observed that the assessee has not made TDS from various payments totaling to ₹ 5,21,75,632. He therefore, disallowed the same u/s 40(a)(ia) of the Act. On appeal, the CIT (A) has deleted the disallowance with a direction to the AO to verify whether the payment towards the expenditure, was actually paid or payable and to allow the same if it is found to have been actually paid, before 31st of March i.e. the end of the relevant accounting year. For giving such a direction, the CIT (A) followed the decision of the Special Bench of the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erring to the said proviso, he submitted that though this proviso has been inserted by the Finance Act of 2013, various Benches of the Tribunal have held this proviso to be clarificatory in nature and applicable retrospectively. He placed reliance upon the decision of the Hon'ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township reported in 61 Taxman.com 45 (Del.) in support of this contention. He therefore, submitted that since the assessee has not been treated as an Assessee in Default u/s 201(1) of the Act, it is to be presumed that the recipients have offered the said income to tax and in such circumstances, no disallowance u/s 40a(ia) is to be made. 11. The learned DR however, supported the order of the authorities below. 12. Having regard to the rival contentions and the material on record, we find that the Hon'ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township (Supra) has considered the applicability of the second proviso to section 40a(ia) and has held to be declaratory and curative and to have retrospective effect from 1.4.2005. The assessment order before us is the A.Y 2008- 09. The relevant provision is reproduced hereunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. 14., The learned DR was also heard. 15. We find that at pages 6 7 of the paper book filed by the assessee are the copies of the trial balance as on 31.03.2008 showing the outstanding expenses and provisions. The amounts disallowed by the AO are the statutory provisions made by the assessee. The assessee s contention that these amounts have not been debited to the P L A/c needs verification. Therefore, we deem it fit and proper to remit this issue to the file of the AO for verification of the assessee s claim and if the assessee has not debited the same to the P L A/c, then no disallowance should be made u/s 43B of the Act. This ground of appeal is treated as allowed for statistical purposes. 16. In the result, assessee s appeal is treated as partly allowed for statistical purposes. ITA No.1654/Hyd/2012 17. In this appeal, the Revenue is aggrieved by the order of the CIT (A) in directing the AO to verify if the assessee has paid the amounts as at the end of the financial year before making any disallowance u/s 40a(ia) of the Act. We have already decided this issue in the assessee s additional grounds of appeal Nos. 3 to 6 and additional ground of appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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