BBR PROJECTS PRIVATE LIMITED ,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX , CIRCLE-1(2), HYDERABAD

Brief facts of the case are that the assessee company, engaged in the business of construction, e-filed its return of income for the A.Y 2014-15 on 30.09.2014, admitting a loss of Rs.1,23,24,356/- under the normal provisions and book loss of Rs.1,05,87,705/- under the provisions of section 115JB of the Act. The return was initially processed u/s 143(1) and thereafter, the case was selected for scrutiny under CASS. During the assessment proceedings u/s 143(3), the Assessing Officer noticed that the assessee has made an investment of Rs.21,35,42,678/- in the equities of various entities, from which it has earned

The Assessing Officer further noticed that the assessee has paid an interest of Rs.1,60,59,588/- on loans from financial institutions but the assessee has not deducted the TDS from such payments. When the assessee was asked to explain, the assessee merely furnished Form 26A. Observing that the assessee has failed to provide any confirmation/certificate from the financial institutions to the effect that they have offered the interest income to tax in their returns of income for the relevant A.Y, the Assessing Officer applied the provisions of section 40(a)(ia) of the Act and brought the sum of Rs.1,60,59,588/- to tax. A

Aggrieved, the assessee preferred an appeal before the CIT (A) who confirmed the order of the Assessing Officer. Aggrieved, the assessee is in second appeal before the Tribunal by raising the following grounds of appeal: Page 2 of 5

The learned Counsel for the assessee, Shri P. Murali Mohan Rao, submitted that the assessee has not claimed any dividend income as exempt from tax during the relevant A.Y and that the assessee has offered the said income to tax. Therefore, according to him, no disallowance u/s 14A is called for. In evidence thereof, he has drawn our attention to Page 45 of the Paper Book filed by the assessee which is the statement of P&L

As regards Grounds 5 & 6, the learned Counsel for the assessee submitted that the recipients of the interest have offered the said income to tax. However, the assessee has not filed copies of the certificates issued by the Chartered Accountant of the recipients to this effect and as per the second proviso to section 40(a)(ia), since the assessee has not been treated as “an assessee in default” u/s 201(1) of the Act, no disallowance u/s 40(a)(ia) can be made. The learned Counsel for the assessee therefore, prayed for an opportunity to submit such details before the Assessing Officer. In view of the same, we deem it fit and proper to remand this issue also to the file of the Assessing Officer with a direction to the assessee to file all the relevant details before the Assessing Officer and if the assessee furnishes such details to the effect that the recipients have offered the income to tax, then no disallowance u/s 40(a)(ia) shall be made. Therefore, these grounds are treated as allowed for statistical purposes.