TMI Blog2018 (8) TMI 1714X X X X Extracts X X X X X X X X Extracts X X X X ..... which has been held to have a retrospective effect by the Hon'ble High Court of Delhi in the case of Ansal Landmark Township Pvt. Ltd.[2015 (9) TMI 79 - DELHI HIGH COURT] - in the interest of justice and fair play, we restore this issue to the files of the A.O. The assessee is directed to furnish necessary evidences to show that the payee has filed returns and offered the sum received to tax. The A.O is directed to verify the same and decide the issue - I.T.A. No. 3461/Ahd/2015 - - - Dated:- 27-8-2018 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER For The Revenue : Shri V. K. Singh, Sr. D.R. For The Assesse : Shri Bi ren Shah, A.R. ORDER PER PRADIP KUMAR KEDIA - AM: The captioned appeal has been filed at the instance of the Revenue against the order of the CIT(A)-1, Ahmedabad ( CIT(A) in short), dated 22.09.2015 arising in the assessment order dated 27.03.2014 passed by the Assessing Officer (AO) u/s. 143(3) of the Income Tax Act, 1961; (the Act) concerning assessment year 2011-12. The assessee has also filed cross-objection in the Revenue s appeal supporting the action of the CIT(A). 2. The grounds of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer has rejected the alternate claim of appellant that payment of ₹ 3,77,74,260/- was paid before due date of filing return of income hence disallowance u/s 40(a)(i) cannot be made on the ground that provision of Royalty is made for payment to Non-resident persons and the same is not credited to Government Account within the time allowed u/s 200(1) of the Act. On the other hand, appellant has argued that provision of Royalty for ₹ 4,59,71,927/- is pertaining to the year under consideration in terms of the respective agreements with the non-resident parties in question. It was also argued that royalty had yet not become payable to them hence the provision was made debiting it to the Profit and Loss Account. The appellant further argued that the Royalty in question became due for payment to the respective non-resident parties in as per agreements entered with them, the appellant had deducted the applicable amount of tax deductible at source and duly paid it to the credit of the Government and made payment of the balance amount to the respective parties. In alternate submission, the appellant further argued that if disallowance made by Assessing Officer is upheld i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es - Whether assessee having admitted its default under section 40(a)(i) and section 40(a)(ia) could not in proceedings under section 201(1)/(1A) argue no default under chapter XVII-B - Held, yes - Whether statutory provisions of withholding tax clearly envisage deduction of tax at source de hors charge under section 4(1), hence assessee was liable to deduct tax on provision for expenses created in books of account - Held, yes [Paras 27, 30 32] [Partly in favour of revenue] Thus, addition made by Assessing Officer on the ground of nondeduction of TDS is upheld. However, it is observed that appellant has duly deducted TDS on royalty payment at the time of payment to nonresident hence Assessing Officer is directed to verify the above contention of appellant and allow the expenditure as deduction in subsequent assessment year if same is not claimed by appellant as deduction or not already allowed in any proceedings in subsequent assessment years. This ground of appeal is partly allowed. 6. Aggrieved, the Revenue is in appeal before the Tribunal. 7. We have carefully considered the rival submissions on the issue of maintainability towards claim on account of royalty ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also taken Car loan from Kotak Mahindra Ltd. The A.O further noticed that the assessee has made interest payment to these parties without making any deduction of tax at source. Assessee was asked to explain on the disallowance of interest expenditure should not be made u/s. 40(a)(ia) of the Act. 5. Assessee filed a detailed reply claiming that if the payees have offered the income for tax and has paid taxes thereon provisions of Section 40(a)(ia) are not applicable because of the amendment brought in the explanation. However, this claim of the assessee did not find favour with the A.O, who was of the firm belief that the amendment is applicable from A.Y. 2013-14 onwards and accordingly made the disallowance of interest. 6. Assessee carried the matter before the ld. CIT(A) but without any success. Before us, the ld. counsel for the assessee stated that the issue is no more res integra as the Hon'ble High Court of Delhi has held that applicability of second proviso to Section 40(a)(ia) has retrospective effect. Per contra, the ld. D.R. drew our attention to the Departmental view of CBDT vide Circular No. 10/DV/2013 dated 16.12.2013. It is the say of the ld. D.R. that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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