TMI Blog2020 (8) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... section 38(2) of the I. T. Act. During the course of appellate proceedings before us the ld. counsel has failed to refer any specific material to demonstrate any infirmity in the decision of the lower authority. Therefore, we do not find any merit in this ground of appeal of the assessee and the same stands dismissed. TDS u/s 194A - Disallowance u/s. 40(a)(ia) - disallowance of interest on car loan and amount paid to M/s. Naveen Trade Link Pvt. Ltd. as handling charges on which no TDS was deducted - HELD THAT:- Ld. counsel has neither demonstrated how the financial charges paid for car loan are not covered u/s. 194A nor pointed out any specific exception prescribed in section 194(3) of the Act under which the payer of the interest on car loan was covered. Alternative contention of the ld. counsel that no TDS to be made if the payee has paid tax as per proviso to section 40(a)(ia) and the judicial pronouncements referred in his submission and the claim that payment made to Navin Tradelink Pvt. Ltd. was towards reimbursement of expenses are required to be considered after examination and verification of the relevant material. Therefore, we restore both the issues as supra to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of depreciation on Motor Cars amounting to Rs.l,98,672/-made by the A.O. 2.2 It is submitted and contended that the Ld. C.I.T. (A) ought not to have dismissed the above referred ground of appeal but ought to have allowed the appeal of the Appellant in view of detailed facts and submission made before him. 3. The Ld. C.I.T. (A) has erred in dismissing the appeal preferred by the Appellant against the disallowance made by the A.O. u/s 40(a)(ia) amounting to ₹ 7,34,456/-. 3.1 It is submitted and contended that the Ld. C.I.T. (A) ought not to have dismissed the above referred ground of appeal but ought to have allowed the appeal of the Appellant in view of detailed facts and submission made before him. 4. The Ld. C.I.T. (A) has erred in dismissing the appeal preferred by the Appellant against the disallowance made by the A.O. u/s 36(1)(iii) amounting to ₹ 3,49,216/-. 4.1 It is submitted and contended that the Ld. C.I.T. (A) ought not to have dismissed the above referred ground of appeal but ought to have allowed the appeal of the Appellant in view of detailed facts and submission made before him. Under the facts and circumstances of the case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assesse has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal stating that assessee could not substantiate that motor car has been exclusively used for business purposes. Ground No. 3 ( Disallowance of ₹ 7,34,456/- u/s. 40(a)(ia) of the Act) 8. During the course of assessment, the assessing officer asked the assessee to furnish detail of interest paid on car loan and TDS deducted thereupon and further to explain if TDS has not been deducted on such interest paid then why the said interest should not be disallowed u/s. 40(a)(ia) of the Act. The assessee explained that no TDS on interest paid of ₹ 5,51,159/- on car loan was deducted since the amount of monthly EMI determined by the car loan provider was inclusive of principal + interest amount secured by way of post dated cheque presented every month for a clearance on stipulated date. The assessing officer has not accepted the explanation of the assessee and disallowed interest of ₹ 5,51,159/- paid on car loan u/s. 40(a)(ia) of the Act. The assessing officer has also noticed that the assessee has paid sum of ₹ 3,54,746/- on account of handling expenses to Mr. Naveen Trade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2799410 The assessing officer has also noticed that part of the loan and advances were given for acquisition of capital asset. It is also pointed out that assessee has failed to prove by demonstrative evidences that on the date of making the advances, the assessee was having interest free funds and there was no diversion of interest free funds for non-business purposes/capital purposes. The assessee has failed to submit any fund flow statement to demonstrate that there was no diversion of interest bearing funds. Therefore, the assessing officer has made proportionate disallowance of interest u/s. 36(1)9iii) of ₹ 3,49,216/- and added to the total income of the assessee. 11. Aggrieved assesse has filed appeal before the ld. CIT(A) . The ld. CIT(A) has dismissed the appeal of the assessee reiterating the facts reported by the assessing officer. 12. During the course of appellate proceedings before us, in respect of disallowance u/s. 14A, the ld. counsel contended that assessee has earned dividend income to the amount of ₹ 2,10,249/- whereas assessing officer had made disallowance to the amount of ₹ 5,13, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustained the disallowance holding that assessee has failed to furnish any day to day fund flow analysis to prove that no expenditure has been incurred towards earning exempt income. In this regard, we have gone through the copy of balance sheet furnished by the assessee -partnership firm as on 31st March, 2010 and it is noticed that as on 31st March, 2010, the total capital of the partners were only ₹ 3,70,849/- whereas assessee has obtained sarafi deposit to the amount for ₹ 3,89,48,473/- and other secured loan and unsecured loan to the amount of ₹ 38,17,183/- and total investment made was reflected at ₹ 61,34,107/-. In the balance sheet of the assessee firm of the preceding year, as on 31st March, 2009 the total capital of the partners were in the negative as on 31st March, 2009 at Rs. -81,05,598/- whereas the sarafi deposit shown at ₹ 3,78,52,532/- and secured loan and unsecured loan was to the amount of ₹ 77,29,181/- and total investments was reflected at ₹ 1,12,44,492/-. No other information i.e. break-up of investment or schedules of the balance sheet were submitted to substantiate that no expenses were incurred towards earning exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid as reimbursement of expenses which were not liable to TDS as held in the case of the CIT Vs. Shah investors Home Ltd., Tax Appeal No. 281 of 2017 dated 4th May, 2017. We have perused the provisions of section 194A of the Act pertaining of deduction of tax on payment of interest other than interest on securities. The Ld. counsel has neither demonstrated how the financial charges paid for car loan are not covered u/s. 194A of the Act , nor pointed out any specific exception prescribed in section194(3) of the Act under which the payer of the interest on car loan was covered. However, the alternative contention of the ld. counsel that no TDS to be made if the payee has paid tax as per proviso to section 40(a)(ia) and the judicial pronouncements referred in his submission and the claim that payment made to Navin Tradelink Pvt. Ltd. was towards reimbursement of expenses are required to be considered after examination and verification of the relevant material. Therefore, we restore both the issues as supra to the file of the assessing officer for deciding afresh after examination/verification of the relevant material to be furnished by the assessee at the time of set aside p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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