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Income Tax Appellate Tribunal, DELHI BENCH: ‘B NEW DELHI
Before: SHRI SATBEER SINGH GODARA & SHRI S. RIFAUR RAHMAN
Date of hearing 23.06.2025 Date of pronouncement 09.07.2025 ORDER
PER SATBEER SINGH GODARA, JM
This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2023-24/1058117909(1), dated 21.11.2023 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused.
This assessee’s appeal raises the following substantive grounds:
1.
1. That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred both in law and on facts in upholding a disallowance of a sum of Rs. 58,53,195/- representing interest paid by the appellant company to non-banking finance company / securitization trust by invoking section 40(a)(ia) of the Act. 1.1 That in any case since the payee had paid the taxes on the interest paid by the appellant company, no disallowance was warranted in view of second proviso to section 40(a)(ia) of the Act. 1.2 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that once assessee had bonafide reason to believe TDS was not deductible, section 40(a)(ia) of the Act is inapplicable as has been held by the judgment of Hon'ble Bombay High Court in the case of CIT v. Kotak Securities Ltd. reported in 340 ITR 333 1.3 That various adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are factually incorrect, legally misconceived and wholly untenable. It is therefore, prayed that, disallowance made and sustained by the learned Commissioner of Income Tax (Appeals) be deleted and appeal of the appellant company be allowed.
3. Suffice to say, both the learned lower authorities have disallowed the assessee’s interest paid of Rs.58,53,195/- for the sole reason of its failure to deduct TDS thereupon; in the course of assessment framed on 28.12.2019 and upheld in the lower appellate discussion.
4. Faced with this situation, learned counsel has invited our attention to the assessee’s application dated 22nd May, 2025 seeking to admit it’s additional evidence under Rule 29 of Income Tax (Appellate Tribunal) Rules, 1963 which contains all the 2 | P a g e relevant details of it’s payees concerned having got assessed qua the very interest income(s) in light of section 40(a)(ia) 2nd proviso.
The Revenue’s case on the other hand is that the assessee’s above additional evidence deserves to be restored back to the learned Assessing Officer for his afresh factual verification. We find merit in the Revenue’s instant technical objection as the assessee’s foregoing additional evidence has seen light of day for the first time in tribunal only. We thus accept the assessee’s sole issue of section 40(a)(ia) disallowance back to the learned Assessing Officer for his afresh appropriate adjudication and factual verification as per law. Orders accordingly.