ITA-77-2014 [1] IN HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-77-2014 (O&M) Date of decision: 28.10.2014 Commissioner of Income Tax, Faridabad ..... Appellant VERSUS M/s Lakhani Marketing Inc., Faridabad ..... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE AMIT RAWAL Present: Mr.Tejender K.Joshi, Advocate, for appellant. ******* RAJIVE BHALLA, J. (ORAL) CM-2752-CII-2014 Allowed as prayed for. ITA-77-2014 revenue is before us challenging order dated 14.06.2013, passed by Income Tax Appellate Tribunal, Delhi Bench 'D' New Delhi, (hereinafter referred to as 'ITAT'), dismissing appeal filed by revenue to challenge order dated 29.03.2011, passed by Commissioner of Income Tax (Appeals), Faridabad (hereinafter referred to as 'CIT(A)'. Counsel for revenue submits that following substantial questions of law arise for adjudication: - 1. Whether on facts and in circumstances of case, Tribunal was correct in law in upholding ITA-77-2014 [2] decision of Ld. CIT(A) in deleting disallowance of Rs.26,50,236/- which was made by AO u/s 40(a)(ia) even when assessee voluntarily admitted during course of assessment proceedings that TDS was not deducted on these payments. 2. Whether on facts and in circumstances of case, Tribunal was correct in law in upholding decision of Ld. CIT(A) in deleting disallowance of Rs.23,46,941/- which was made by Assessing Officer by invoking section 14A of Income Tax Act, 1961 particularly when investment in shares of M/s Lakhani India Ltd. which yield dividend income are not forming part of total income by virtue of section 10(33) of Income Tax Act and hence since dividend did not form part of total income and when financial burden incurred by assessee for acquiring shares should have been proportionately disallowed by invoking section 14A of Income Tax Act? Counsel for revenue submits that as assessee did not inform assessing officer that he had deducted and deposited TDS, CIT(A) erred in allowing application for additional evidence and accepting documents adduced by assessee to prove that he had deducted and deposited TDS. As regards question No.2, it is argued that deletion of disallowance of Rs.23,46,941/- is contrary to Section 14(A) of Income Tax Act, 1961 (hereinafter referred to as 'Act') as dividend does not form integral part of assessee's income and, therefore, expenditure incurred by ITA-77-2014 [3] assessee for acquiring shares should have been proportionately disallowed under Section 14(A) of Act. We have heard counsel for appellant-revenue and perused orders passed by ITAT and CIT(A). assessing officer, passed order against respondent/assessee alleging failure to deduct and deposit TDS. assessee filed appeal and during appellate proceedings, filed application for additional evidence appending therewith evidence to prove that requisite TDS had been deducted and deposited. assessee also filed form 16-A in support of this assertion. CIT (A) accepted additional evidence and set aside order passed by assessing officer. argument that additional evidence could not have been allowed at appellate stage, disregards fact that revenue did not controvert assessee's assertion regarding deduction and deposit of TDS nor did it contest correctness of form 16-A. relevant extract from order passed by ITAT, would place aforesaid conclusion in its correct perspective: - 6. On first issue of disallowance u/s 40A(ia) Ld. Commissioner of Income Tax (Appeals) has given clear finding of fact that assessee had in fact deducted TDS from payments of commission and service charges to Shri J.C.Arora by treating same as salary and that amount has been remitted to government. On this factual findings, which are not controverted by Ld. ITA-77-2014 [4] D.R., we have no other alternative but to up hold order of First Appellate Authority and dismiss ground no.1 of revenue. Consequently, we answer first question against revenue. As regards second question, counsel for appellant is unable to distinguish judgment passed by this Court in ITA-970- 2008, Commissioner of Income Tax, Faridabad Vs. M/s Lakhani Marketing Incl., Faridabad, decided on 02.04.2014, in case of assessee where similar question has been answered against revenue. Consequently, we answer question No.2 also against revenue and dismiss appeal accordingly. [ RAJIVE BHALLA ] JUDGE 28.10.2014 [ AMIT RAWAL ] Shamsher S.Sabharwal JUDGE SHAMSHER SINGH 2014.11.04 11:09 I attest to accuracy and authenticity of this document Chandigarh Commissioner of Income-tax, Faridabad v. M/s Lakhani Marketing Inc