TMI Blog2017 (3) TMI 1838X X X X Extracts X X X X X X X X Extracts X X X X ..... vailed by it from MMFSL. In view of the same the amount paid to MMFSL, we hold, was in nature of interest as defined under section 2 (28A) of the Act, which clearly states that interest includes any service, fee or other charge in respect of monies borrowed or debt incurred or in respect of any credit facility which has not been utilised. The assessee having not deducted tax at source on the same has contravened the provisions of section 194A of the Act and therefore the expenditure did not qualify for deduction as per the provisions of section 40(a)(ia) of the Act. We have therefore no hesitation in upholding the order of the Ld. CIT(Appeals) and confirming the disallowance made of interest expenditure on which no tax was deducted at source under section 194A . Disallowance of advertisement and publicity expenses under section 40(a)(ia) on account of non-deduction of tax at source on the same - HELD THAT:- The fact that the payment was made on account of purchase of XYLO kits is not disputed. Merely because the bill date and date of making payment is different or for the reason that the figure mentioned in the bill and the amount of actual payment made do not tally the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with respect to the addition made on account of renovation expenses amounting to ₹ 4,50,000/- in ground No.1(c) was not pressed before us and the same is therefore treated as dismissed. 4. As for the rest of the additions made, taken up in ground No. 1(a) and 1(b), the facts relating to the same are as follows: 5. On the issue of disallowance made on account of non-deduction of tax u/s section 194A of the Act on interest paid to Mahindra and Mahindra Financial Services Ltd, the facts are that the assessee had shown expenses on account of interest and bank charges amounting to ₹ 62,09,286/- in its Profit and Loss Account. Out of this an amount of ₹ 13,17,961/- was credited to Mahindra and Mahindra Financial Services Ltd(hereinafter referred to as MMFSL). On being asked to explain why tax had not been deducted on the payments made to MMFSL the assessee made the following submissions during assessment proceedings; At the month end to meet the sales target since 1997, the vehicles are billed by the Mahindra and Mahindra Ltd. While exceeding our credits with Mahindra and Mahindra Ltd. Excessive billing is on account of Mahindra and Mahindra Financial Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and stated that that the payment made clearly qualified as interest as per the definition of the same provided in section 2 (28A) of the Act and was liable to tax deduction at source under section 194A of the Act. Ld. DR therefore stated that the Ld. CIT(Appeals) had correctly upheld the disallowance made by the AO on account of non-deduction of tax at source on the same. 10. We have heard the contentions of both the parties. The facts which emerge in the present case are that the assessee is a dealer of Mahindra vehicles and as per the mode of its operations which was explained to the authorities below and even before us and which has remained uncontroverted and unrebutted is that M/s Mahindra and Mahindra Ltd billed vehicles to the assessee at the month end to meet their sales target. The payment on account of the vehicles billed was made by Mahindra and Mahindra Financial Services, which is the group company of Mahindra and Mahindra Ltd. and till the vehicles were actually sold by the assessee and money collected from the buyers of the vehicles and repaid to Mahindra and Mahindra Financial Services Ltd, the servicing charges were collected by Mahindra and Mahindra Financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the assessee is therefore dismissed. 13. In ground No.1(b) the assessee has contested the disallowance of advertisement and publicity expenses under section 40(a)(ia) on account of non-deduction of tax at source on the same . 14. Brief facts relating to the same are that it was found during assessment proceedings that the assessee had made payments to three parties amounting to ₹ 1,14,958/- under the head advertisement and publicity expenses. The assessee submitted that the work executed by the parties at one time was less than ₹ 20,000/- and the payments also made to them at one time were less than ₹ 20,000/-. The AO held that the payment credited at one time into the account of the above parties exceeded ₹ 20,000/- therefore the assessee was liable to deduct tax at source at the time of payment of these amounts. Accordingly the entire expenditure of ₹ 1,14,958/- was disallowed under section 40(a)(ia) of the Act. 15. During appellate proceedings the assessee submitted that it had made payment to M/s Almats Branding Solutions Pvt. Ltd. for purchase of XYLO kits which was wrongly booked under the head advertisement and publicity expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l payment made by the assessee of ₹ 47,808/- and also that the bill is dated 08/01/2009 while the payment has been made on 18-02-09. Thus the assessee has failed to substantiate its claim. 19. We find no merit in the above contention of the Revenue. The fact that the payment was made on account of purchase of XYLO kits is not disputed. Merely because the bill date and date of making payment is different or for the reason that the figure mentioned in the bill and the amount of actual payment made do not tally the contention of the assessee cannot be rejected. Nor can it be said that the assessee has failed to substantiate its claim. There is nothing untoward or unusual in making payments after the bills are raised or for that matter payments made not tallying actually with the amount raised in the bills. The fact remains that the assessee had make payments on account of purchase of XYLO kits, which has remained unrebutted before us. On account of this fact are we find merit in the contention of the Ld. Counsel for the assessee that the payment made did not qualify as advertisement and publicity expenses and therefore there was no need to deduct tax at source on the same .In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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