A lot of emphasis has been placed by the CIT(A) on this Tribunal’s decision in the case of TIL Ltd (supra). However, as we have decided the matter on merits and on the first principles, we see no need to deal with the said judicial precedent. Our reasoning could be different than the reasoning adopted by the CIT(A) and that adopted by the coordinate bench in TIL’s case (supra), but then our conclusion is the same as arrived by the CIT(A) and by the coordinate bench. It is this aspect of the matter which is material for the present purposes.
Only grievance of the Revenue is that the amendment brought in the Income Tax Act u/s. 40(a(ia) was only effective from 1.4.2010 and not retrospective in nature. However, we find that in a catena of case laws as mentioned, it has been held that the amendment in section 40(a)(ia) is remedial and curative in nature and has retrospective effect. In this case, admittedly, the TDS deducted was deposited before the date of the filing of the return and under such situation, there cannot be any disallowance u/s. 40(a)(ia). Thus we find that Ld. Commissioner of Income Tax (Appeals) has taken a correct view in the matter, which does not need any interference on our part. Accordingly, we uphold the same.
Once under the special provision of section 44AD of the IT Act exemption from maintenance of books of accounts have been provided and the presumptive tax at 8% of the gross receipts itself is the basis for determining the taxable income, the assessee was not under obligation to explain individual entry of cash deposits in the bank unless such entries had no nexus with the gross receipts. In the present case though from the details filed by assessee the ld. AO observed that no TDS has been recovered, in our opinion, since assessee has disclosed the profits more than 8% of the gross receipts and there is no dispute in receipt of the gross receipts the addition made by ld. CIT(A) u/s 40(a)(ia) of the IT Act is not sustainable. Therefore we confirm the action of ld. CIT(A) and dismiss the appeal of the revenue.
When the assessee reimburses interest payments to parent company for availing loans under its borrowing facility given by the bank, No TDS obligation arises u/s 194A.
We have perused form no. 35 i.e. memo of appeal filed by the assessee before ld. CIT(Appeals). In the grounds raised, there is neither any ground nor whisper about not providing sufficient opportunity by AO while framing the assessment. It is further evidenced from the fact that the assessment proceedings commenced on 26- 9-2008 and assessment order has been passed on 10-11-2009 indicating that sufficient time was given to assessee for compliance. Therefore, there is no justification in the averment of assessee before ld. CIT(Appeals) that sufficient opportunity was not given by AO, therefore additional evidence should be admitted. We are constrained to observe that ld. CIT(Appeals) has admitted the additional evidence in a perfunctory manner without appreciating the role of rule 46A and its requirements and verifying assessee’s averments.
Assessee filed the return of income on 23.12.2008. The due date for filing the return of income u/s. 139(1) of the Act for the assessment year under consideration in the case of the assessee is 3 1.10.2008. As such the return filed by the assessee is belated. In this the assessee claimed deduction u/s. 80IC of the Act which was disallowed by the Assessing Officer as the return of the assessee was not filed within the time as prescribed u/s. 139(1) of the Act. The assessee has given reasons for delay in filing the return of income that the assessee was preparing its accounts through computer and the computer got corrupted due to viruses and in spite of continuous efforts by the computer technical personnel to retrieve the data in time for filing the return of income, problem persisted in the system.
In the facts of the present case, the assessee had deducted tax at source out of payments made to contractor totalling Rs. 1,21,75,828 which was deposited on 8-7-2008. The due date for filing return of income of the assessee was 30-9-2008. Following the ratio laid down by the Calcutta High Court in Virgin Creations (supra) and various Benches of the Tribunal it is held that once the tax has been deducted and deposited by the assessee before the due date of filing return of income, there is no merit in disallowing the expenditure relatable to such tax deducted at source. The assessee succeeds on both the counts. Accordingly, the Assessing Officer has to be directed to allow the claim of expenditure of Rs. 1,01,33,953.
In this case Assessing officer has made disallowance u/s. 40(a)(i) on payment for hiring charges for transponder, paid to PanAmSat Limited on the ground that no tax has been deducted at source by the assessee, u/s. 195 of the Act. Argument of learned Departmental Representative that the amendment to the Finance Act, 2012 changes the position, we find that there is no change in the DTAA between India and USA. Thus, the amendments have no affect on our decision.
Under the mercantile system of accounting, deduction of expenses is allowed when liability to pay such expenses is incurred irrespective of the fact whether such an amount has been paid or remained unpaid at the end of the year. In the like manner, income, under such a method of accounting, is recognized on accrual basis. In other words, only when the assessee finally acquires a right to receive such income, that it is charged to tax. Actual receipt of such amount, whether before or after accrual, is of no consequence.
Income from ‘jeep charges’ and ‘no dues certificates’, as would be apparent from the foregoing, is clearly business income. Revenue’s stand of the same being assessable u/s. 56 is inconsistent with the facts of the case.
