M/S VIVEK BHOLE ARCHITECTS PVT LTD,MUMBAI vs. DCIT 13(3)(2), MUMBAI

The present appeal has been filed by the assessee challenging the impugned order dated 05/06/2017, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals)–21, Mumbai, [“learned CIT(A)”], for the assessment year 2012–13.

M/s. Vivek Bhole Architects Pvt. Ltd. ITA no.1981/Mum./2022 the physical copy of the impugned order. It is further submitted that it is on the appointment of another Chartered Accountant, the assessee was advised that the impugned order is available on the Income Tax portal. Pursuant thereto, the assessee immediately filed the appeal on 10/08/2022 against the impugned order and thus the aforesaid circumstances resulted in the delay in filing the present appeal. The assessee further submitted that 1862 days includes 807 days of Covid period, which is to be excluded for computation of the limitation period in view of the order passed by the Hon’ble Supreme Court. The assessee has also filed the affidavit of the Authorised Representative who appeared on behalf of the assessee before the learned CIT(A). In the said affidavit, it has been submitted that he had attended the proceedings before the learned CIT(A) on the date fixed for the hearing and he did not follow up with the learned CIT(A) for the order and assumed that the same will be received. In view of the above, the assessee has requested to condone the delay as the same is unintentional and due to circumstances beyond the control of the assessee. On the other hand, the learned Departmental Representative (“learned DR”) opposed the application seeking condonation of delay and submitted that the assessee did not get its address updated in the PAN database nor the change in address was intimated to the learned CIT(A).

“The Grounds of Appeal mentioned hereunder are without prejudice to one another:-

1. On the Facts and in the circumstance of the case, the disallowance of Rs.40,42,961/-being the interest component of the EMI paid to Tata Capital, Kotak Mahindra Private Limited, Reliance Capital and Shagun Corporation, who also offered for taxation in their return, in terms of section 40(a)(ia) of the IT Act, is arbitrary, unjust and bad in law.

M/s. Vivek Bhole Architects Pvt. Ltd. ITA no.1981/Mum./2022

The Appellant Company craves the leave to add, amend, alter and/or delete any of the above grounds of appeal at/or before the time of hearing.”

5. The only dispute raised by the assessee, in the present appeal, is against the disallowance of interest component on EMI paid to Non-Banking Financial Companies (“NBFCs”) under section 40(a)(ia) of the Act.

6. The brief facts of the case as emanating from the record are: The assessee is a private limited company and is engaged in the profession of providing architectural services. For the year under consideration, the assessee e-filed its return of income on 29/09/2012 declaring a total income of Rs.46,00,720. 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 alongwith a questionnaire was issued and served on the assessee. During the assessment proceedings, on perusal of the details of interest expenses furnished by the assessee, it was observed that the assessee has claimed interest on vehicle loans/other loans of Rs.40,42,961 as interest expenses. It was further observed that the aforesaid interest has been paid to Tata Capital, Kotak Mahindra P. Ltd., Reliance Capital Ltd., and Shagun Corporation without deduction of tax at source. Accordingly, the Assessing Officer vide order dated 31/03/2015 passed under section 143(3) of the Act disallowed the interest on vehicle loans/other loans of Rs.40,42,961 under section 40(a)(ia) of the Act for non-deduction of tax at source. The learned CIT(A) vide impugned order dismissed the appeal filed by the assessee. Being aggrieved, the assessee is in appeal before us.

M/s. Vivek Bhole Architects Pvt. Ltd. ITA no.1981/Mum./2022

M/s. Vivek Bhole Architects Pvt. Ltd. ITA no.1981/Mum./2022 it appropriate to admit the additional evidence filed by the assessee before us. We are further of the view that in the interest of justice, this issue be remanded to the Assessing Officer for de novo adjudication as per law after necessary verification of details as submitted by way of additional evidence before us. Before concluding on this issue, we may add that in respect of interest paid to the other NBFCs, i.e, Tata Capital, Kotak Mahindra P. Ltd., and Shagun Corporation, if the assessee is able to furnish similar details before the Assessing Officer, same shall be taken into consideration while deciding the issue as per law. Accordingly, ground no.1 raised in assessee’s appeal is allowed for statistical purposes.

“On the facts and circumstances of the case, the disallowance if any has to be restricted to 30% of the amount on which TDS has not been deducted due to amendment made in section 40(a)(ia), which has been introduced to avoid undue hardship and therefore is applicable retrospectively.”

“(ia) thirty per cent of any sum payable to a resident, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted Page | 6

M/s. Vivek Bhole Architects Pvt. Ltd. ITA no.1981/Mum./2022 or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139 :”