SRI JAYANTA KUMAR JENA,CUTTACK vs. DCIT, CIRCLE- 1(1), CUTTACK

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI P.M. JAGTAP, VICE PRESIDENT AND C.M. GARG, JUDICIAL MEMBER

ITA No.98/CTK/2020 Assessment Year : 2011-12

Sri Jayant Kumar Jena, Vs. DCIT, Circle-1(1), Kusupur, Mahanga, Cuttack Cuttack PAN/GIR No.ACRPJ 9329 E (Appellant) .. ( Respondent)

Assessee by : Shri ,S.N.Sahu/Somnath Sahoo, ARs Revenue by : Shri M.K.Gautam, CIT DR

Date of Hearing : 20 /1/ 2021 Date of Pronouncement : 28 /1/2021

O R D E R Per Bench This is an appeal filed by the assessee against the order of the

CIT(A), Cuttack dated 14.11.2019 for the assessment year 2011-12.

CIT(A) was not justified in confirming the addition of Rs.18,61,933/-

u/s.40(a)(ia) of the Act for the interest paid to NBFC without deduction of

TDS.

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proceedings, the Assessing Officer noticed that the assessee has debited an

amount of Rs.18,61,933/- under the head interest paid to NBFCs in the

profit and loss account. He also noticed that the assessee has not made

any TDS out of interest paid. Therefore, the AO required the assessee to

explain as to why interest amount of Rs.18,61,933/- paid to NBFCs will not

be disallowed and added to the total income of the assessee u/s.40(a)(ia)

of the Act. In response, the assessee submitted that NBFCs company have

financed the lorries to M/s. J.K. Jena for transportation business and in

order to avoid irregular payments, they always obtain postdated cheques

covering the principal and interest instalments payable from the assessee.

The assessee also in order to avail the finance facility, the had no option but

to issue the post dates and also paid the instalments. The assessee also

submitted that the finance companies have furnished the interest

certificates. On verification of the interest certificates issued by NBFCs, the

AO opined that it simply confirms the interest portion of instalments but no

where it is clarified that the interest amount has been included in the total

income of the payee. Since the assessee failed to establish that the interest

of Rs.18,61,933/- has been offered to tax, the AO disallowed interest

amount of Rs.18,61,933/- and added the same to the total income of the

assessee.

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Officer on the ground that no submissions were furnished before him to

dispose of the appeal despite several opportunities granted to the assessee.

cryptic order without considering the submissions made before him in Form

No.35. Ld AR also submitted that the Assessing Officer has wrongly

presumed that interest amount of Rs.18,61,933/- has been debited in the

profit and loss account without deduction of TDS but actually the assessee

has not debited the same amount in the profit and loss account, which can

be emanated from the audited profit and loss account and balance sheet

filed before the AO. He submitted that on this ground also, the appeal is

liable to be allowed. He submitted that the return income disclosed by the

assessee as noted by the AO is Rs.38,18,930/- and the interest amount of

Rs.16,61,933/- is reduced therefrom, then the return income will be

Rs.19,56,997/- (Rs.38,18,930 – Rs.18,61,933/-)

‘D’ Bench in the case of ACIT vs Smt. Champa Nandi in ITA

No.2517/Kol/2017 and submitted that on similar facts and circumstances,

the interest amount disallowed by the AO was deleted by the ld CIT(A) and

on further appeal, the Tribunal confirmed the action of the ld CIT(A). He

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also further relied on the decision of ITAT Bangalore in the case of Shri

Azmath Ulla vs ACIT in ITA No.144/Bang/2017 order dated 7.6.2017 and

submitted that on similar facts also, although the interest certificates

received from NBFCs were furnished before the AO, the Tribunal has

restored the matter to the file of the AO to verify of the fact that the

recipient NBFCs have already into account the amount of interest for

computing the income in their return of income.

authorities.

case. The issue before us for adjudication is as to whether the interest

amount paid by the assessee to NBFC have been included in the certificates

or not. It is the contention of the assessee that the interest amount has

been paid to NBFC and the NBFC have furnished interest certificate in

support of this. In view of above, we are of the considered opinion that if

the certificates filed by NBFCs is inclusive of interest amount and offered to

tax, then the compliance of section 40(a)(ia) is deemed to have been made

and no disallowance is called for. We also find that the second proviso to

section 40(a)(ia) shall have retrospective effect. Therefore, we set aside

the orders of lower authorities and restored to the file of the AO for

verification of the fact that the receipient NBFCs have already taken into

account the amount of interest received by them for computing the income

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in their return oncome and if after verification, the AO is satisfied that

NBFCs have considered this interest amount, no disallowance is called for.

For this limited purpose, the issue is restored to the file of the AO.

purposes.

Order pronounced on 28/1/2021.

Sd/- sd/- (C.M. Garg) (P.M. Jagtap) JUDICIAL MEMBER VICE PRESIDENT

Cuttack; Dated 28 /1/2021 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Sri Jayant Kumar Jena, Kusupur, Mahanga, Cuttack

By order

Sr.Pvt.secretary ITAT, Cuttack

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