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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI WASEEM AHMED, AM & SHRI S. S. VISWANETHRA RAVI, JM
आदेश / ORDER
PER WASEEM AHMED, AM:
The appeal filed by the assessee was directed against the order passed by the learned Commissioner of Income Tax (Appeals) – 3, Pune dated 29.05.2017 for the assessment year 2009-10.
The assessee has filed the following modified /revised grounds of appeal:
“1. It is a well settled law that the second proviso to Section 40(ia) of the I.T. Act 1961 is retrospective in operation and therefore since the appellant assessee has produced on records the certificates issued under first proviso to Section 201[1] of the 1. T. Act 1961 by the payees namely
M/s SREI equipment Finance Ltd and M/s. L & T Finance Ltd, the interest payments referred to in both the aforesaid certificates amounting to Rs.74,44,472.39 [Rs. Rs.65,07,000.00 plus Rs.9,37,472.39] be allowed as deduction to the appellant assessee under second proviso to section 40[a]ia] out of total disallowance of Rs.1,25,26,093.00 made u/s 40(a)(ia) of the I.T. Act 1961 by the learned Assessing Officer and as confirmed by the learned CIT [A]
2. In the facts and circumstances of the case and in law, it may please be held that out of the total disallowance of Rs.1,25,26,093.00 made u/ s 40(a)(ia) of the I. T. Act 1 961 by the learned Assessing Officer and as confirmed by the learned CIT[E] above an amount of disallowance of Rs.50,81,621.00 [Total disallowance of Rs.1,25,26,093.00 minus reduction of disallowance of Rs.74,44,472.39.00 as per Ground of appeal No1. above] be directed to be taxed @30% as per provisions of Section 40(a)(ia) of the I.'T. Act 1961.
3. The only issue raised by the assessee is that the ld.CIT(A) erred in confirming the disallowance made by the Assessing Officer for Rs. 1,25,26,093/- on account of non-deduction of TDS under section 194A r.w.s. 40(a)(ia) of the Act.
The assessee during the year under consideration has incurred interest expenses amounting to Rs. 1,25,26,093/- without deducting the TDS as provided under section 194A of the Act. The details of the interest expenses claimed by the assessee stand as under:
Sl.No. Party Name Amount 1 L & T Finance Rs.9,37,472.49 2 ESRI Infrastructure Rs.1,15,88,620.94
As per the Assessing Officer, the interest expenses incurred by the assessee without deducting the TDS are not allowable under the provisions of Sec.40(a)(ia) of the Act. Accordingly, the Assessing Officer sought an explanation from the assessee. However, the Assessing Officer failed to make any reply. Accordingly, the Assessing Officer disallowed the interest expenses amounting to Rs.1,25,26,093/- and added to the total income of the assessee.
Aggrieved by the order of Assessing Officer, assessee preferred appeal before the ld.CIT(A) who also confirmed the order of Assessing Officer by observing as under :
“6.3.1. The ld. AR of the appellant relied on the Delhi High Court & Pune ITAT judgments in the case of [CIT vs. Ansal Land Mark Township (P) Ltd., (279 CTR 384) (Delhi High Court), Smt. Prema Pradipkumar Potdar Vs. ITO, Wd-3(3), Latur (ITA NO.1850/PN/2014) (Pune ITAT), in support of his contention that if the payee has paid the tax on the said income in his return of income then it shall be deemed that the assessee had deducted and paid the tax on such income. However, the appellant has failed to furnish before the undersigned any evidence to prove that the deductee has paid the tax on the amount paid by the appellant. In the absence of any evidence in this regard the appellant’s contention is not found acceptable and no interference is called for in the AO’s order. In view of above facts, the ground No.1 is dismissed.”
Being aggrieved by the order of ld.CIT(A), the assessee is in appeal before us.
The Ld.A.R. before us submitted that the parties to whom the interest was paid by the assessee, have shown the interest income in their respective return of income. Therefore, the disallowance under section 40(a)(ia) of the Act on account of non-deduction is not warranted. The Ld.A.R. in support of his claim filed certain additional evidences along with the application dated 16.03.2020 for the admission of such additional evidences. The evidences are the certificate issued by the Chartered Accountant under the provisions of Sec. 201 of the Act justifying that the parties have included the interest income in their respective returns of income. The Ld.A.R. further requested to admit the additional evidences and requested to restore the issue to the file of Assessing Officer for necessary verification as per the provisions of law.
On the other hand, the ld. D.R. vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. There is no ambiguity to the fact that the second proviso to section 40(a)(ia) of the Act requires not make any disallowance of the interest expenses, though the TDS was not deducted, provided the recipients of interest income have included the same in their respective returns of income. In this regard the assessee filed the certificate from the Chartered Accountant to justify that the recipients of the interest income have included the interest income in their respective returns of income. Admittedly, these details were not filed before the authorities below. Accordingly, the learned AR has requested to admit the additional evidences in terms of rule 18 (4) of ITAT Rules 1963. It was pointed out that these additional evidences were not available during the relevant point of time and therefore these have been filed for the first time before the Tribunal.
Undeniably, these additional evidences filed by the assessee go the root of the matter. These additional evidences were collected from the third party. Therefore, we hold that there was the reasonable cause which prevented the assessee to furnish the necessary details before the authorities below. Accordingly, in the interests of justice and fair play, we admit the same. Thus, we set aside the issue to the file of the Assessing Officer for fresh adjudication after considering the fresh evidences filed by the assessee and necessary verification as per the provisions of law.
Hence, the ground of appeal of the assessee is allowed for the statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on this the 15th day of February, 2021