GREENPECE LUXURY HOMES LLP,KANCHEEPURAM V. ITO, NON-CORPORATE WARD-22(1), CHENNAI

ITA 163/CHNY/2024

AI Insights

The case involves Greenpeace Luxury Homes LLP appealing against the order of the Commissioner of Income Tax (Appeals), which confirmed additions made by the Assessing Officer under sections 43B and 40(a)(ia) of the Income Tax Act, 1961 for the assessment year 2017-18. The primary contention was regarding the non-remittance of TDS deducted and the non-deduction of TDS on interest payments which were not actually paid but were book entries. The Tribunal found that the addition under section 40(a)(ia) was not justified as the related expenses were added to work-in-progress, neutralizing any revenue effect. However, for section 43B, the Tribunal directed a verification of whether the TDS amounts were remitted to the Government.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107543 (ITAT-CHENNAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-11-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 22-01-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R.ANITA
• Assessee Lawyers: P.M. KATHIR
• Keywords: TDS
• Section: 43B; 40(a)(ia)

Judgement Text

"आयकर अपीलीय अिधकरण, ’सी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ŵी एस.एस. िवʷनेũ रिव, Ɋाियक सद˟ एवं ŵी अिमताभ शुƑा, लेखा सद˟ क े समƗ Before Shri S.S. Viswanethra Ravi, Judicial Member & Shri Amitabh Shukla, Accountant Member आयकर अपील सं./I.T.A. No.163/Chny/2024 िनधाŊरण वषŊ/Assessment Year: 2017-18 Greenpeace Luxury Homes LLP, No. 41, Vandalur Kelambakkam Road, Pudhupakkam, Kancheepuram, Tamil Nadu 603 103. [PAN: AALFG6842P] Vs. The Income Tax Officer, Non Corporate Ward 22(1), Tambaram. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri P.M. Kathir, Advocate ŮȑथŎ की ओर से/Respondent by : Ms. R. Anita, Addl. CIT सुनवाई की तारीख/ Date of hearing : 12.11.2024 घोषणा की तारीख /Date of Pronouncement : 27.11.2024 आदेश /O R D E R PER S.S. VISWANETHRA RAVI, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order dated 09.01.2024 passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi for the assessment year 2017-18. 2. Ground No. 1 raised by the assessee is general in nature and requires no adjudication. I.T.A. No.163/Chny/24 2 3. Ground No. 2 raised by the assessee in challenging the action of the ld. CIT(A) in confirming the addition under section 43B of the Income Tax Act, 1961 [“Act” in short]. 4. The ld. AR Shri P.M. Kathir, Advocate argued that the addition made by the Assessing Officer, which was confirmed by the ld. CIT(A) is not maintainable as the provisions under section 43B of the Act does not attracted to the TDS amount deducted, but not deposited to Government account. The ld. AR drew our attention to the order of the ld. CIT(A) and argued that without considering the submissions of the assessee, which are reflected in page 9 of the impugned order, the ld. CIT(A) highhandedly confirmed the addition made by the Assessing Officer under section 43B of the Act. 5. The ld. DR Ms. R. Anita, Addl. CIT submitted that when the assessee deducted the TDS, but not credited into Government account, it becomes income of the assessee and liable for taxation. 6. We note that the Assessing Officer found from the audit report that the assessee deducted TDS, but not remitted to the Government account and the same was disallowed under section 43B of the Act. The ld. CIT(A) discussed the said issue in para 7.5 of the impugned I.T.A. No.163/Chny/24 3 order and directed the Assessing Officer to verify whether the amount of ₹.6,95,213/- was remitted into Government account and furnish TDS statement within prescribed time. Further, he directed to delete the said addition if the assessee remitted the said amount into Government account, otherwise to confirm the same. The ld. AR vehemently argued that the addition is not maintainable under section 43B of the Act and it requires to be deleted as the ld. CIT(A) directed the Assessing Officer to verify. Admittedly, the assessee deducted TDS, but not credited into Government account as rightly pointed by the DR and we are in full agreement with the ld. DR that when the said amount is not deposited into Government account, it would become the income of the assessee. Further, we find the argument of the ld. AR is not acceptable to the extent that the addition is not maintainable under section 43B of the Act when the ld. CIT(A) directed the Assessing Officer to verify the same, we, therefore, are of the opinion that in view of the directions of the ld. CIT(A), it is open to the Assessing Officer to decide the issue afresh taking into account the arguments of the ld. AR. Thus, we find no infirmity in the order of the ld. CIT(A) on this issue and the ground raised by the assessee is dismissed. I.T.A. No.163/Chny/24 4 7. Ground No. 3 raised by the assessee in challenging the action of the ld. CIT(A) in confirming the disallowance under section 40(a)(ia) of the Act. 8. The Assessing Officer found from the audit report that no TDS was deducted on interest payment. The Assessing Officer did not accept the contention of the assessee that no interest is paid as the loan with DHFL become NPA and the payment of interest for DHFL is only a notional book entry and disallowed 30% of total interest payment of ₹.2,46,01,970/- to an extent of ₹.73,80,591/- under section 40(a)(ia) of the Act. The ld. CIT(A) confirmed the same. 9. The ld. AR drew our attention to page 66 of paper book and argued that interest amount was not claimed as expenditure for the period under consideration and the same was added to the work-in- progress. Further, he drew our attention to page 53 of paper book and submits that the indirect expenses of Pudupakkam project were added to work-in-progress and vehemently argued that the revenue effect is neutral in view of adding the said expenses as work-in-progress. He argued that the order of the ld. CIT(A) is not justified in confirming the order of the Assessing Officer and prayed for deleting the addition. I.T.A. No.163/Chny/24 5 10. The ld. DR submits that the assessee debited the interest and is liable to deduct TDS. Further, she argued vehemently the contention of the assessee of reversing the same in AY 2020-21 is not acceptable for the reason that the assessee should have reversed the entry of interest paid / payable should be in the same financial year. She supported the order of the ld. CIT(A) in confirming the order of the Assessing Officer. 11. Having heard both the parties, we note that there is no dispute with regard to assessee’s account with DHFL becoming as NPA. We note that the assessee explained the Assessing Officer during the course of assessment proceedings that the interest of ₹.2,46,01,970/- payable to DHFL as shown in the indirect expenses under the head cost of project, but, no such interest was paid to DHFL since the said account on becoming NPA. We find the same explanation was offered before the ld. CIT(A). But, however, he held that the assessee is liable to deduct TDS even the said sum is paid or payable. Further, we note that no expenditure was claimed in this regard. Further, we note from the P&L account that the direct expenses and indirect expenses of Pudupakkam project were added to the work-in-progress. On perusal I.T.A. No.163/Chny/24 6 of page 53 of the paper book, it clearly shows that the expenses of interest as indirect expenses and also direct expenses were added to the Pudupakkam project. Therefore, we find force in the arguments of the ld. AR i.e., revenue effect is neutral when the direct and indirect expenses were added to the work-in-progress. Further, as it is clear from the record that no interest has been paid by the assessee to DHFL as the said account become NPA and the same was capitalized by adding it to the work-in-progress. Thus, the addition on account of disallowance for violation of non-deduction of TDS on notional book entry is not justified and the order of the ld. CIT(A) on this issue is set aside. Therefore, the addition is deleted and ground No. 3 raised by the assessee is allowed. 12. In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 27th November, 2024 at Chennai. Sd/- Sd/- (AMITABH SHUKLA) ACCOUNTANT MEMBER (S.S. VISWANETHRA RAVI) JUDICIAL MEMBER Chennai, Dated, 27.11.2024 Vm/- I.T.A. No.163/Chny/24 7 आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय Ůितिनिध/DR & 5. गाडŊ फाईल/GF. "