SUBHASH CHANDRA BOSE HANUMARA, HYDERABAD,HYDERABAD vs. DCIT, CIRCLE-14(1), HYDERABAD, HYDERABAD

Coming to the assessee’s first and foremost substantive ground that both the lower authorities have erred in law and on facts in invoking Section 40(a)(ia) r.w.s.194A disallowance of interest claimed to the tune of Rs.1,43,22,348/-. We notice during the course of hearing that he had pleaded before the CIT(A) that second proviso to Section 40(a)(ia) was squarely applicable stipulating that if an assessee is not an assessee in default u/s.201(1) first proviso, the impugned disallowance is not sustainable. The CIT(A) holds in his order vide para 5.4 that even if the said proviso is held as carrying retrospective effect, the assessee had failed to place on record the corresponding computation of income of its four payees M/s.Cholamandalam Finance, Reliance Capital, India Bulls, Religare Finance and L&T Finance so as to get the necessary relief. It is noticed in this factual backdrop that the assessee has sought to delete the impugned disallowance.

We have given our thoughtful consideration to rival pleadings against and in support of the impugned disallowance. There is no dispute on the clinching fact that the assessee had indeed not deducted any TDS on the impugned interest payments on vehicle loan finances. Next is the hon’ble Delhi high court’s decision in CIT Vs. Ansal Landmark Townships (P) Ltd., (2015) [377 ITR 635] (Del) holds that the above proviso carries retrospective effect being curative in nature. Faced with this situation, we deem it appropriate to restore the instant former issue back to the Assessing Officer for his necessary factual verification as per law in light of Section 40(a)(ia), 2nd proviso as to whether assessee payees stand assessed qua the impugned financial charges or not? This first substantive ground is treated as allowed for statistical purposes.

Learned authorised representative next stated at the bar that the assessee does not wish to press for disallowance of Rs.1 lakh under the head ‘other’ expenditure keeping in mind smallness thereof. The same is declined as prayed for.

This appeal of assessee is treated as partly allowed for statistical purposes in above terms.