TMI Blog2021 (11) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... ict the disallowance 10% of the cash portion of labour payments and the AO is directed accordingly. Thus, this ground is partly allowed. Disallowance of interest on delay in remittance of TDS to the Govt. Treasury - AO noticed that the assessee claimed expenditure of interest on TDS - HELD THAT:- We observe that before the authorities the assessee submitted that the delay was caused in payment of TDS on account of paucity of funds whereas the revenue's grievance is that the assessee paid the interest for non-remittance of TDS to Govt. Account. Therefore, taking into consideration the request of the assessee that the issue may be remitted to AO for further verification, we remit the issue to the file of AO with a direction to verify whether the amount paid by the assessee towards delay or for non-remittance and decide the issue in accordance with law after providing reasonable opportunity of being heard to the assessee. The assessee is directed to substantiate its claim. Accordingly, this ground is treated as allowed for statistical purposes. Deduction u/s 80IA - additional ground raised by the assessee - HELD THAT:- Hon ble Bombay High Court in the case of CIT vs. Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2. The CIT (A) further erred in law, confirming the disallowance of ₹ 35,28,444/_ represents cash payments to labour workers in remote places in different locations as the appellant executing national highway works, expenditure covered with rules 6DD, therefore the disallowance is totally unjustified as per settled case laws in the cases of (2007)ITD-104, Pg:-537, Vishal infrastructure Ltd Vs ACIT.(Hyd), (2016) ITD-156, Pg:- 34, ITO Vs Shanti Comrn odities. (Pune). 3. The CIT (A) furthererred in law in disallowing amount of ₹ 5,77,052/- represents interest in remittance of delay in TDS where the law itself allows under the relevant provisions to pay TDS with interest at a _ prescribed rate and therefore it is not a violative and prohibitive under explanation 1 of 37(1) and as per settled case law 2016-TT]-175, Pg:-81, Gillco developers Builders (P) Ltd Vs DCIT(Chd). 2. The assessee also filed the following additional ground relying on the decision of National Thermal Power Co. Ltd. Vs. CIT, [1998] 229 ITR 383: Appellant being exclusively in the construction of National Highways, is eligible to claim deduction U/s 80IA of the Income Tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance made by the AO. 7.3 Before us, the ld. AR of the assessee besides reiterating the submissions made before the CIT(A), submitted that it has been paid to the commercial taxes department of Govt. of AP being the difference in VAT for the period from 4/2005 to 05/2007 for under declared tax and the Audit raised a penalty demand of ₹ 4,10,288/-, which is no way connected to the payment as penalty and, therefore, it is an allowable expenditure. He further stated that though it is mentioned as sales penalty it is a sales tax adjustment. He relied on the decision in the case of ITO Vs. Shanti Commodities, [2016] 156 ITD 34 (Pune). 7.4 The ld. DR relied on the orders of revenue authorities and submitted that the penalty was raised by the commercial taxes department for under declared tax and not for delay in payment of sales tax and, therefore the same cannot be allowed u/s 37(1) as held by the revenue authorities. He, therefore, submitted that the order of the CIT(A) may be upheld. 7.5 We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. We observe that it is payment raised for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. From the facts found by the Tribunal, it is evident that the payment of ₹ 2,150 was as a result of infraction of law and not in discharge of a civil liability. The question is answered accordingly. Therefore, we do not find any infirmity in the action of CIT(A) in confirming the disallowance made by the AO on this account and accordingly, upholding the order of CIT(A), we dismiss the ground raised by the assessee on this issue. 8. As regards ground No. 2 relating to Disallowance of ₹ 35,28,444/- towards cash payments to labour, during the assessment proceedings, the AO noticed from the books of account and bills/vouchers that some of the labour payments were made in cash. The AO, therefore, proposed to disallow 15% of cash payments to labour. The AR of the assessee company stated that the projects sites were in remote areas and the labour procured from respective localities where bank facility is not available. Further, he also stated that labour were illiterate, hence, the company was forced to make cash payments to labour. The assessee was, therefore, requested to confine the disallowance to the extent of 10%. Rejecting the submissions of the assessee, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case, we restrict the disallowance 10% of the cash portion of labour payments and the AO is directed accordingly. Thus, this ground is partly allowed. 9. As regards ground No. 3 relating to disallowance of interest on delay in remittance of TDS of ₹ 55,77,052/- to the Govt. Treasury, during the assessment proceedings, the AO noticed that the assessee claimed expenditure of interest on TDS amounting to ₹ 55,77,052/-. When the AO asked the assessee as to why it should not be disallowed and the AO noted that the AR of the assessee stated no objection for addition. Therefore, the AO disallowed the aforementioned amount. 9.1 Before the CIT(A), the assessee submitted that the delay was caused in payment of TDS was on account of paucity of funds and the TDS is nothing but withholding amount of the respective parties from whom services/materials/goods procured which is allowable deduction in its hands and the credit goes to the respective parties. Further, it was submitted that according to the provisions of section 2(43) rws 40(A)(ii) of the Act, any interest relatable to the tax payable by the assessee which inclusive of self-assessment. It was also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see with regard to claim of deduction u/s 80IA, the ld. AR of the assessee submitted that the assessee erroneously omitted to claim for deduction u/s 80IA before the AO as well as before CIT(A) though the assessee is eligible to claim deduction u/s 80IA. He, therefore, requested the Bench to remit this issue to the file of AO for further allowable of deduction u/s 80IA. 10.1 The ld. DR on the other hand submitted that the additional ground of appeal may not be admitted for the reasons stated in the written submissions filed before us, the contents of which are as under: 10.2 We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The Hon ble Bombay High Court in the case of CIT vs. Pruthvi Brokers and Shareholders Pvt. Ltd. (2012) 349 ITR 336 (Bom.) has observed that the assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional clams before them. The appellate authorities have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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