IT: Quantum of business disallowance under section 40(a)(ia) during a year is to be decided in view of CIT v. Sikandarkhan N. Tunvar [2013] 33 taxmann.com 133 (Guj.)
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[2013] 37 taxmann.com 122 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax - II
v.
Om Bhole Transport and Construction*
M.R. SHAH AND MS. SONIA GOKANI, JJ.
TAX APPEAL NO. 309 OF 2013†
JULY 15, 2013
Section 40(a)(ia) of the Income-tax Act, 1961 - Business disallowance - Interest etc. paid to resident without deduction of tax at source [Scope of provision] - Assessing Officer made addition of Rs. 22,18,332 and Rs. 1,68,528 on account of disallowance of expenditure under section 40(a)(ia) relying on decision of Special Bench of Visakhapatnam in case of Merilyn Shipping & Transporters v. Addl. CIT [2012] 20 taxmann.com 244 - Tribunal deleted said addition - Whether question as to whether section 40(a)(ia) can be invoked only to disallow expenditure of nature referred to therein, which is shown as payable as on date of balance sheet or it can be invoked also to disallow such expenditure which became payable at any time during relevant previous year and is actually paid within previous year, is to be decided afresh in view of CIT v. Sikandarkhan N. Tunvar [2013] 33 taxmann.com 133 (Guj.) - Held, yes [Para 6] [Matter remanded]
Manav A. Mehta for the Appellant. Tushar P. Hemani for the Respondent.
JUDGMENT
M.R. Shah, J. - Present Tax Appeal has been preferred by the Revenue challenging the impugned judgment and order passed by the Income Tax Appellate Tribunal, D Bench, Ahmedabad dated 21.9.2012.
2. At the outset, it is required to be noted that initially the revenue proposed the following questions of law.
| "(A) | Whether the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in deleting the addition of Rs. 22,18,322 and Rs. 1,68,528 made by the Assessing Officer on account of disallowance of expenditure u/s 40(a) (ia) of the Act relying the decision of the Special Bench in the case of Merilyn Shipping & Transporters v. Addl. CIT [2012] 20 taxmann.com 244 (Visakhapatman)? | |
| (B) | Whether section 40(a)(ia) of the Income Tax Act can be invoked only to disallow expenditure of the nature referred to therein, which is shown as 'payable' as on the date of the balance sheet or it can be invoked also to disallow such expenditure which became payable at any time during the relevant previous year and was actually paid within the previous year? | |
| (C) | Whether the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in deleting the addition of Rs. 3,04,257/- and Rs. 62,320/- made by the Assessing Officer on account of disallowance of Labour Charges Exp. And Repairs & Maintenance expenses? | |
| (D) | Whether the facts and circumstances of the case and in law, the Hon'ble ITAT is justified in deleting the addition made on account of Disallowance out of Diesel & Oil Expenses of Rs. 2,21,301/- made by the AO?" |
3. However, by order dated 8.4.2013 the Division Bench held the proposed question nos. C and D against the Revenue and issued notice for final disposal for considering only two questions i.e. question nos. A and B. Under the circumstances, this Court is required to consider the questions A and B only.
4. Shri Manav Mehta, learned counsel of the appellant-revenue has vehemently submitted that so far as question nos. A and B is concerned, it is squarely covered by the decision of the Division Bench of this Court in the case of CIT v. Sikandarkhan N. Tunvar [2013] 33 taxmann.com 133 and other allied appeals and the Division Bench has remanded the matter to the Appellate Tribunal to consider the aforesaid two questions afresh.
5. Ms. Vaibhavi Parikh, learned advocate for the respondent assessee is not disputing the above.
6. Having heard Shri Mehta, learned counsel for the Revenue and Ms. Vaibhavi Parikh, learned counsel for the assessee and considering the decision of this Court in Sikandarkhan N. Tunvar (Supra) and other allied Tax Appeals and for the reasons stated in the said judgment and order, the impugned judgment and order passed by the ITAT dated 21.9.2012 is hereby quashed and set aside so far as aforesaid questions no. A and B is concerned and the matter is remanded to the ITAT to consider the aforesaid two questions afresh in accordance with law and on merits. Present appeal is allowed to the aforesaid extent.
SBRegards
Prarthana Jalan
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