TMI Blog2022 (3) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... wcasing the income accounted and due discharge of taxes paid thereon by one of the resident payee. Consequently, for the said amount of certificate the assessee cannot be held as the assessee-in-default within the meaning of Section 201(1) and resultantly, such amount shall distant from application of provisions of section 40(a)(ia). Thus, in the light of aforesaid observations, the ground number 1 2 are partly allowed in terms of above. Disallowance in case of travelling vehicle maintenance - allowable business expenditure u/s 37(1) - HELD THAT:- Neither of the lower tax authorities had pointed any such voucher, the genuineness of the expenditure therein claimed to have been incurred by the assessee wholly and exclusively for the purpose of its business did not inspire any confidence, nor it was the case of the revenue that any part of the expenditure in question was either found to be bogus or fictitious, nor was found to have not been incurred by the assessee wholly and exclusively for the purpose of his business. Indeed, it showcased an exercise of running around the circle by both the lower tax authorities while dealing with the present case. We neither could com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and the law, the learned Commissioner of Income Tax (Appeals) erred in maintaining the disallowance of ₹4,43,330/- out of ₹4,84,974/- made by the learned Assessing Officer u/s 40(a)(ia) for non-deduction of tax u/s 194A being finance charges paid to NBFCs namely M/s Shriram Transport Finance Co. Ltd ₹2,32,274/- and M/s Tata Finance Limited ₹2,11,046/-, rejecting the explanations filed . Prayed that the deductees are national repute NBFCs and paying taxes and that no amount is outstanding as payable as at the end of the year. Prayed that the disallowance of ₹4,43,330/- be deleted. 2.That under the facts and the law, the learned Commissioner of Income Tax (Appeals) further erred in not considering the Certificate of Chartered Accountant filed certifying that the finance charges paid by the appellant had been considered by deductees in Return of Income, have paid the taxes and filed the Return of Income. Prayed, the disallowance u/s 40(a)(ia) be deleted. 3.That under the facts and the law, the learned Commissioner of Income Tax (Appeals) further erred in maintaining the adhoc disallowance out of Spare parts repairs ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing of certificates obtained from a Chartered Accountant and NBFC in terms of first proviso to section 201(1) and which were filed during the course of first appellate proceedings before the Ld CIT(A) u/r 46A of the Income Tax Rules, 1962 however same were not dealt with. 6.2. Per contra, the learned departmental representative [for short DR ] did not raise any objection to the admission of the aforesaid additional evidence. 6.3. After a thoughtful consideration, we are of the considered view, that the additional evidence would have a substantial bearing on the adjudication of the issue before us, therefore, the same merits to be admitted, thus, in terms of our aforesaid observations we admit the additional evidence placed on our record u/r 29 of the ITAT Rules, 1963 6.4. Admittedly, it is a matter of fact borne from the records that, following amount of interest / finance charges were debited without TDS u/s 194A and was subjected to 40(a)(ia) disallowances by the Ld AO, against which certificate in Annexure-A to form 26A , from a Chartered Accountant is placed on record in terms of first proviso to section 201(1) of the Act r.w.s. 31ACB; Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clause (i) of the Explanation to section 194H; (ii) fees for technical services shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9; (iii) professional services shall have the same meaning as in clause (a) of the Explanation to section 194J; (iv) work shall have the same meaning as in Explanation III to section 194C; 37[(v) rent shall have the same meaning as in clause (i) to the Explanation to section 194-I; (vi) royalty shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;] (Empasis supplied) 6.7. The conjunctive constructive interpretation first proviso to Section 201(1) and second provision to section 40(a)(ia) of the Act reveals that, these have been inserted to benefit the Assessee, to provide that where a person fails to deduct tax at source (TDS) on the sum paid or credited to a resident payee under certain contingencies, such person; a. Shall first be excluded from holding as the assessee in default, subject to placing on records the certificate from a chartered accountant and b. Shall then be deemed that, such person has deducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 302 1% 8,373 2 Tyre, Tube Expenses 10,76,283 1% 5,000 3 Office Expenses 99,801 10% 9,980 4 Telephone Expenses 1,23,437 10% 12,344 5 Depreciation 55,929 20% 11,186 6 Travelling Vehicle Maintenance 72,670 20% 14,534 7 Pump Maintenance 1,67,475 5% 8,374 Total 24,32,897 69,791 7.2. During the course of hearing, Ld AR claimed that, the solitary basis for making and sustaining the aforesaid disallowance of expenditure by the lower tax authorities was that, the some of the aforementioned expenditure were supported only by self-made vouchers in the absence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh its genuineness. Without doing so, making an adhoc disallowance by not specifically assigning any reason to a voucher or bunch of vouchers is not legally tenable. (Empasis supplied) 7.6. Considering the entire conspectus of case, we, do not find favour with the view taken by the lower tax authorities, consequently we set-aside the impugned order of CIT(A) on this score and vacate the ad-hoc disallowance in its entirety and thereby allow the ground number 3 of the appeal. 8. As regards to appeal of ITA No 261/RPR/2016 (AY 2011-2012) 8.1. We find that as the facts and the issue involved in the present appeal remains the same as were there before us in the appeal of the assessee in his own case for AY 2010-2011 in ITA No 260/RPR/2017, except with variations spelt out herein after. 8.2. As regards to ground number 1 2 relating to disallowance of interest u/s 40(a)(ia) Sr NBFC Payee Amt of Interest/finance charge Debited / Claimed as Exps disallowed CA Certificate Details Date Certified Amount 1 Shree Ram Transport Finan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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