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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]
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.
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
Sd/- Sd/- (S. S. VISWANETHRA RAVI) (WASEEM AHMED) �याियक सद�य �याियक सद�य/JUDICIAL MEMBER लेखा सद�य �याियक सद�य �याियक सद�य लेखा सद�य लेखा सद�य/ACCOUNTANT MEMBER लेखा सद�य
पुणे / Pune; �दनांक / Dated : 15th February, 2021. Dragon
आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत अपीलाथ� / The Appellant. 1. 2. ��यथ� / The Respondent. 3. The CIT(Appeals)-3, Pune. 4. The Pr.CCIT, Pune. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER,
// True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.