SHRI GENGAVA NAIDU JEYAKUMAR, CHENNAI V. DCIT, NCC-10, CHENNAI

ITA 212/CHNY/2020

AI Insights

This case involves an appeal by Shri Gengava Naidu Jeyakumar against the order of the Commissioner of Income Tax (Appeals)-12, Chennai, which confirmed the disallowance of certain expenses by the A.O under Section 40(a)(ia) of the Income Tax Act, 1961. The disputed expenses included interest paid to non-banking financial companies and market loans, parking expenses, and the cost of improvement of a flat. The Tribunal considered the provisions of Section 40(a)(ia), particularly in light of the second proviso added by the Finance Act, 2013, which allows for non-disallowance if the recipient has included the income in their returns and paid taxes. The Tribunal also addressed issues related to transit losses in the assessee's transport business, remanding this issue back to the A.O for a detailed examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135006 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-08-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 09-08-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 27-01-2020
• Other Referred Cases: CIT vs. Ansal Land Mark Township (P) Ltd., [2015] 377 ITR 635
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Additional evidence; Question of law; TDS; Set aside
• Section: 143(3); 40(a)(ia)

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ ᭠यायपीठ, चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मंजुनाथ. जी, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANJUNATHA. G, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.212/Chny/2020 िनधाŊरण वषŊ /Assessment Year: 2013-14 Shri Gengava Naidu Jeyakumar, D-13, CMDA Truck Terminal Complex, Madhavaram, Chennai – 600 010. [PAN: ACUPJ-1992-N] Vs. The Dy. Commissioner of Income Tax, Non Corporate Circle-10, Chennai. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/ Appellant by : Shri N.V. Narayanan, Advocate ᮧ᭜यथᱮ कᳱ ओर से /Respondent by : Shri D. Hema Bhupal, JCIT सुनवाई कᳱ तारीख/Date of Hearing : 10.08.2023 घोषणा कᳱ तारीख /Date of Pronouncement : 16.08.2023 आदेश / O R D E R Per Mahavir Singh, Vice President : This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-12, Chennai [hereinafter “CIT(A)”] in ITA No.62/CIT(A)-12/16-17 dated 27.11.2019. The Assessment was framed by Income Tax Officer, Non Corporate Circle- 10, Chennai for the relevant A.Y. 2013-14 vide order dated 21.03.2016 u/s. 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’). ITA No.212/Chny/2020 :- 2 -: 2. The first issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the A.O in disallowing the expenses in relation to interest paid to non banking financial companies amounting to Rs. 41,847/- and interest on market loans Sedan amounting to Rs. 11,39,772/- by invoking the provisions of Section 40(a)(ia) of the Act on account of non deduction of TDS. 3. We have heard the rival contentions and gone through the facts and circumstances of the case. Before us, the Ld. counsel for the assessee filed copy of auditor certificate under first proviso to Section 201(1) of the Act and enclosed the same in assessee’s paper book at Pages 15-16. The Ld. counsel for the assessee stated that the recipient has included the income in the respective returns of income and paid taxes, in view of the second proviso to Section 40(a)(ia) of the Act, no disallowance can be resolved to. The Ld. counsel further stated that the relevant certificate was produced before A.O as well as before CIT(A) but none of them has considered the same. We noted that this issue now stands covered by the decision of Hon’ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township (P) Ltd., [2015] 377 ITR 635, wherein the Hon’ble Delhi Court has considered the issue of disallowance made by AO u/s.40(a)(ia) of the Act for ITA No.212/Chny/2020 :- 3 -: failure to deduct TDS on payments and in case, if payee has offered this amount to tax, the second proviso to section 40(a)(ia) of the Act as inserted by Finance Act, 2013 w.e.f. 01.04.2013 should be treated as curative and to have retrospective effect from 01.04.2005. 4. Hence, we direct the A.O to verify the auditor certificate issued in term of second proviso to Section 40(a)(ia) of the Act and accordingly, allow the claim of assessee after verification. This issue of the assessee’s appeal is partly allowed for statistical purposes. 5. The next issue in this appeal of assessee is as regards to the order of CIT(A) in confirming the disallowance of parking expenses of Rs. 8,86,218/-. 6. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that even before us the assessee could not substantiate nor could file any reconciliation or any evidence to prove his claim. Hence, this ground of assessee’s appeal is dismissed. ITA No.212/Chny/2020 :- 4 -: 7. The next issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the A.O in disallowing the expenditure of Rs. 33,48,250/- claimed being cost of improvement of flat. For this the assessee has raised the following ground No.4: “4. The appellant is deprived of opportunity of being heard, The order of the CIT Appeals, have confirmed the addition of Expenditure of Rs. 33.48.250/- incurred on the capital asset sold, before the assessee provide the supporting documents in support of the expenditure claimed.” 8. The brief facts are that the assessee purchased one residential flat on 23.01.2012, which was sold on 09.11.2012 for a sum of Rs. 2,46,75,000/-. The assessee claimed that it has made addition and incurred cost of improvement during Financial Year 2012-13 relevant to this A.Y 2013-14 for a sum of Rs. 33,48,250/- and claimed the same while computing short term capital gain. The A.O disallowed the claim as no evidence was filed before the A.O. Aggrieved, the assessee preferred appeal before CIT(A). 9. The CIT(A) also confirmed the same in the absence of any evidence by disallowing as under: “In appeal, the appellant stated that since the asset is sold off during the year, the asset is not reflected in the balance sheet. He stated that he engaged a contractor to carry out the improvement work and payments were made periodically to contractor. Though the expenses for improvement cannot find a place in balance sheet since ITA No.212/Chny/2020 :- 5 -: the asset was sold within the financial year, the appellant did not give any documentary evidence for the expenditure incurred for improvement work. In the absence of the above, the expenditure has to be treated as not genuine. The addition is sustained on the above ground. The addition of Rs 33,48,250/- is confirmed.” Aggrieved, the assessee is in appeal before the Tribunal. 10. Now, before us the assessee filed some ledger account copy and one certificate from builder dated 29.06.2012 and dated 14.05.2012 depicting the expenditure of Rs.24.63 lakhs and Rs. 8,85,250/-, respectively. When a query was put to Ld. AR that why this evidence was not produced before the A.O nor CIT(A), he stated that these are being filed now as additional evidence. He filed petition for additional evidence, but he could not substantiate his petition that as to why he could not file these evidences before the A.O or before the CIT(A), when it was available to him on the date 29.06.2018 and 14.05.2012, he could not reply anything. Once, these evidences were available with the assessee before the completion of the assessment and no reasons is cited, we refuse to admit the additional evidence. This ground of assessee’s appeal is dismissed. 11. The next issue in this appeal of assessee is as regards to the order of CIT(A) conforming the addition made in respect of transit losses. For this, the assessee has raised the following ground No.5: ITA No.212/Chny/2020 :- 6 -: “5. The order of the CIT Appeals, have confirmed the addition made in respect of transit shortages, the Ld.AO has erred in question of law and on facts” 12. We have heard the rival contentions and gone through the facts and circumstances of the case. We noted that the A.O as well as CIT(A) has gone into wrong facts that the shortage is in transit on account of fuel shortage of Rs. 30,76,622/-. Now before us the Ld. Counsel for the assessee argued that the assessee is in the business of transport and the shortage is on account of material loss and shortage of transport receipts which is not been verified. The assessee’s council drew our attention to the plea taken before A.O and CIT(A), which are as under: a. Variation in weightage from starting point of loading to ending point of unloading of goods at clients place. i.e., Transit losses, pilferage, petty thefts. b. Delay in delivering the goods on time. c. Charges levied by the corporate clients for not achieving targets given to the transporters d. Periodical rate variations e. Rounding off of the final transport payment 13. We noted that neither CIT(A) nor A.O has gone into these details hence, we are of the view that let this issue be examined by A.O afresh. Hence, we set aside the order of CIT(A) as well as that of the A.O and remand the matter back to the file of the A.O for fresh ITA No.212/Chny/2020 :- 7 -: consideration of this issue. This issue of assessee’s appeal is allowed for statistical purposes. 14. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced on 16 th August, 2023. Sd/- Sd/- (मंजुनाथ. जी) (Manjunatha. G) लेखा सद᭭य /Accountant Member (महावीर िसंह) (Mahavir Singh) उपाȯƗ / Vice President चे᳖ई/Chennai, ᳰदनांक/Dated: 16 th August, 2023. EDN/- आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकर आयुƅ/CIT 4. िवभागीय Ůितिनिध/DR 5. गाडŊ फाईल/GF