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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI G.S. PANNU, & SHRI SANDEEP SINGH KARHAIL
The present appeal has been filed by the assessee challenging the impugned order dated 16/02/2023, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”] for the assessment year 2014–15.
When this appeal was called for hearing neither anyone appeared on behalf of the assessee nor was any application seeking adjournment filed. From the perusal of the record, we find that the notice of hearing sent to the assessee at the address mentioned in Form no.36 has been returned unserved by the postal authorities with the remark „unclaimed’. We also find that notice
M/s. R.R. Roadways Pvt. Ltd. ITA no.1269/Mum./2023 of hearing was also sent to the assessee through email on 09/06/2023 at the email address mentioned in Form no.36. Therefore, in view of the above, we proceed to dispose off the present appeal ex–parte, qua the assessee after hearing the learned Departmental Representative (“learned DR”) and based on the material available on record.
In its appeal, the assessee has raised the following grounds:– “1. The Hon'ble Commissioner erred in disallowing Interest of Rs.64,22,108/- paid to NBFCs on vehicle loans, U/s.40(a)(ia), without appreciating the facts and circumstances of the case.
2. The Hon'ble Commissioner erred in disallowing Interest U/s.40(a) (ia) without appreciating all the details as required were submitted to decide the case in favour of Appellant.
3. The Hon'ble Commissioner erred in disallowing Interest U/s. 40(a)(ia)without appreciating the Appellant had paid the installments of Loan in predetermined EMI which included principal as well as interest.
4. The Hon'ble Commissioner erred in disallowing Interest U/s.40(a)(ia) without appreciating the fact that all the said NBFC's were assessed to Tax and had declared the said Interest Income in their Returns.”
4. The only dispute raised by the assessee is against the disallowance of payment of interest under section 40(a)(ia) of the Act.
The brief facts of the case as emanating from the record are: The assessee is a company and is engaged in the business of transporter. For the year under consideration, the assessee filed its return of income on 15/05/2015 declaring a total income at Rs. Nil. The return filed by the assessee was selected for scrutiny and statutory notices under section 143(2) as well as section 142(1) of the Act were issued and served on the assessee. During the assessment proceedings, from the perusal of the profit and loss
M/s. R.R. Roadways Pvt. Ltd. ITA no.1269/Mum./2023 account, it was observed that the assessee has paid interest charges. On going through such details, it was noticed that the interest incurred during the year includes interest on vehicle loans obtained from the following NBFCs:-
Name of the Loan Creditor Interest (Rs.) India Bulls 31,76,046 L&T Finance Ltd 18,74,927 Magma Fincorp Ltd 6,11,750 Reliance Capital 3,36,019 Sunderam Finance 4,23,366 Total 64,22,108
During the assessment proceedings, the assessee was asked to produce the details of the TDS deducted under section 194A on the interest payment. As per the assessee, it has paid EMIs through post-dated cheques, and quantification of the interest payable and TDS deductible thereon does not arise. The Assessing Officer (“AO”) vide order dated 28/12/2016 passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that the assessee is liable to deduct TDS under section 194A of the Act at the time of making interest payment to NBFCs. Accordingly, the AO disallowed the interest amounting to Rs. 64,22,108 under section 40(a)(ia) of the Act as no TDS was deducted under section 194A of the Act.
Before the learned CIT(A), the assessee filed certain documents in support of its submission that the NBFCs have filed their return for the assessment year 2014-15 and have included interest received on the loans advanced to the assessee in their return of income. The learned CIT(A), vide
M/s. R.R. Roadways Pvt. Ltd. ITA no.1269/Mum./2023 impugned order, held that the assessee has not submitted copy of returns filed by the above NBFCs for the assessment year 2014-15. Further, the assessee has not submitted copies of certificate in Form No. 15G from an accountant in these NBFCs except in the case of Sundaram Finance. Accordingly, the learned CIT(A), vide impugned order, dismissed the appeal filed by the assessee observing as under:-
“I find that as per the 1st proviso to section 201 of the Act, a person is not considered to be an assessee in default when the following conditions are simultaneously satisfied; The deductee has furnished return u/s 139 of the Act for the relevant year; The amount (on which tax has not been deducted) has been included while computing total income of the deductee for the relevant year; The deductee has paid tax due on the income declared in such return; And the duductee has furnished a certificate in Form No.15G from an accountant certifying above facts. On perusal of the documents submitted by the Appellant, I find that the Appellant has not submitted copy of returns filed by the above NBFCs for AY 2014-15. The Appellant has not submitted copies of certificate in Form No. 15G from an accountant in these NBFCs except in the case of M/s Sundram Finance Ltd. In the remaining cases, no certificate in the prescribed format (Form 15G) has been submitted by the Appellant. In view of these facts, I hold that the Appellant has failed to meet the conditions as laid down u/s 201(1) of the Act in respect of the NBFCs as shown in the table above. Therefore, the Appellant is not covered by 1st proviso to section 201(1) and therefore, is deemed to be an assessee in default. Further, I uphold the action of the AO in disallowing the interest of Rs.64,22,108/- u/s 40(a)(ia) paid to the above NBFCs without deductions of tax at source as is mandated u/s 194A of the Act. The ground is dismissed.”
Being aggrieved, the assessee is in appeal before us.
During the hearing, the learned DR explained the facts of the case and vehemently relied upon the order of the lower authorities.
M/s. R.R. Roadways Pvt. Ltd. ITA no.1269/Mum./2023
Having heard the learned DR and perused the material available on record, we find that in the impugned order, the learned CIT(A) after considering the submissions and additional evidence filed by the assessee and findings of the AO has dismissed the appeal filed by the assessee. In the absence of any contradictory material being available on record, we are of the considered view that the impugned order passed by the learned CIT(A) requires no interference and, therefore, is upheld. Accordingly, grounds raised by the assessee in this appeal are dismissed.
In the result, the appeal by the assessee is dismissed. Order pronounced in the open Court on 27/07/2023