M/S RMC SERVICES,CHANDIGARH vs. JCIT, RANGE IV, CHANDIARH

The present appeal has been preferred by the assessee against the order dated 14.08.2019 of the Commissioner of Income Tax (Appeals)-1, Chandigarh [hereinafter referred to as ‘CIT(A)’] .

The sole issue raised by the assessee is regarding the confirmation of disallowance by the CIT(A) which was made by the Assessing Officer u/s 40(a)(ia) of the Income Tax Act, 1961 (in short 'the Act') as the assessee did not deduct tax at source (TDS) on -c-2019 M/s RMC Services, Chandigarh 2 interest payment to Non-Banking Finance Companies (NBFC).

At the outset, the Ld. Counsel for the assessee has invited our attention to the amended provisions of section 201(1) and section 40(a)(ia) of the Act to state that as per the amendment made vide Finance Act, 2012, an assessee will not be treated as assessee in default u/s 201(1) of the Act on account of non-deduction of TDS on payment made to a resident, if he has furnished his return of income and has taken into account such sum for commuting income in such return of income and has paid the due taxes on the income declared by him in such return and further the assessee furnishes a certificate to this effect from an accountant. The assessee, before us, has taken the plea that though the assessee had not deducted the tax at source, however, recipients have offered the income in the computation in their returns of income and, therefore, the addition is not attracted in the case of the assessee as per the second proviso to Section 40(a)(ia) of the Act. He, in this respect has relied upon the decision of the Hon’ble Delhi High Court in the case of “CIT vs. Ansal Land Mark Township (P) Ltd.” (2015) 61 taxman.com 45 (Delhi) wherein it has been held that the second proviso to section 40(a)(ia) is declaratory and curative and it has a retrospective effect from 01.04.2005. The Ld. Counsel has further submitted that the case of the assessee is covered by the decision of Hon'ble Apex Court in the case of Hindustan Coca Cola Beverages (P) -c-2019 M/s RMC Services, Chandigarh 3 Ltd. The Ld. counsel, therefore, has submitted that the matter may be restored to the file of the Assessing Officer to produce the relevant evidence in this respect.

The Ld. DR has not objected to the same.

In view of the above, the impugned order of the CIT(A) is set aside and the matter is restored to the file of the Assessing Officer for verification of the contentions of the assessee that the interest paid to the Non-Banking Finance Companies have been taken into account by the said payee in their returns of income and due taxed paid as per the return of income and further a certificate to this effect be furnished before the Assessing Officer as per the requirement of the section. The Assessing Officer after consideration of the matter will decide the issue in accordance with law.