TAURAL INDIA PRIVATE LIMITED,PUNE vs. DY. COMM. OF INCOME TAX CIRCLE 7, PUNE

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ITA 1585/PUN/2026Status: DisposedITAT Pune13 October 2026AY 2018-199 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee had raised a specific ground before the CIT(A)/NFAC regarding the direction to allow the deduction of Rs. 36,30,301/- in the subsequent year (AY 2019-20) where TDS was deducted and paid. The CIT(A)/NFAC, while partly allowing the appeal on this issue, had only restricted the disallowance to Rs. 36,30,301/- but had not adjudicated the specific ground raised by the assessee concerning allowing the deduction in the subsequent year. The Tribunal found that the assessee's submissions before the CIT(A)/NFAC clearly explained the issue of double disallowance. Therefore, deeming it fit in the interest of justice, the Tribunal set aside the order of the CIT(A)/NFAC on the impugned issue and restored the matter back to his file with a direction to adjudicate the specific ground (Ground No. 2) raised by the assessee, after providing due opportunity of hearing. The assessee was directed to provide full support and requisite details without seeking adjournments. The grounds raised by the assessee were allowed for statistical purposes.

What were the facts?

The assessee, Taural India Private Limited, engaged in manufacturing ferrous and nonferrous castings, filed its return for AY 2018-19 declaring a loss. The Assessing Officer (AO) disallowed 30% of interest paid to BMW Financial Services (Rs. 55,892/-) under Section 40(a)(ia) for non-deduction of TDS. Additionally, the AO disallowed Rs. 55,55,168/- of interest paid to ALSU Holding AG, Switzerland, under Section 40(a)(i) for delayed TDS deduction. The CIT(A)/NFAC partly allowed the appeal, restricting the disallowance related to ALSU Holding AG to Rs. 36,30,301/- while sustaining the disallowance for BMW Financial Services. The assessee appealed to the ITAT.

What were the issues?

1. Whether the CIT(A)/NFAC ought to have considered the additional claim filed before him and allowed the additional claim for AY 2019-20, in which TDS was deducted and paid, concerning the interest paid to ALSU Holding AG, Switzerland, under Section 40(a)(i) of the Income Tax Act, 1961. The assessee argued that the disallowance should be restricted to Rs. 36,30,301/-, as TDS was deducted and paid in the subsequent year (AY 2019-20), and not claiming the allowance in AY 2019-20 leads to double disallowance. The assessee relied on CBDT Circular No. 14 of 1955. The revenue relied on the orders of the AO and CIT(A)/NFAC. 2. Whether the Learned Assessing Officer be directed to allow deduction of Rs. 36,30,301/- in the subsequent year (AY 2019-20) in which the tax was deducted and paid to the credit of the government, as the assessee has not claimed the allowance in the subsequent year, under Section 40(a)(ia) of the Income Tax Act, 1961. The assessee contended that this would avoid double disallowance. The revenue relied on the orders of the AO and CIT(A)/NFAC.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 40(a)(i)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI RAMA KANTA PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Rohit S Tapadiya
For Respondent: Shri Sandeep P Sathe, JCIT

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER

ITA No. 1585/PUN/2026 Assessment Year : 2018-19 Taural India Private Limited, Dy.Commissioner of Income Tax, Plot No. B-2/B, B-3/1, Circle-7, Village Savardari, vs. Bodhi Tower, Salisbury Park, Taluka Khed Chakan Swargate, MIDC Phase-2, Pune-411037. Pune-401501. PAN : AAECG7568A (Appellant) (Respondent) Assessee by : Shri Rohit S Tapadiya Department by : Shri Sandeep P Sathe, JCIT Date of Hearing : 28-07-2026 Date of Pronouncement : 13-10-2026 O R D E R PER ASTHA CHANDRA, J.M.:

The appeal filed by the assessee is directed against the order dated 02-01-2026 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”], u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2018-19.

2.

Briefly stated, the facts of the case are that the assessee is a company, engaged in the business of manufacturing ferrous and nonferrous castings of all kinds. For AY 2018-19, the assessee filed its return of income on 30-11-2018, declaring loss of Rs. 29,11,39,035/-. The case was selected for scrutiny under CASS. Accordingly, statutory notice(s) u/s. 143(2) and 142(1) of the Act along with questionnaire were issued and duly served upon the assessee by the Ld. Assessing Officer (“AO”) calling for some information, details and documents, in response to which the assessee submitted its reply from time to time. On verification of the details submitted by the assessee, the Ld.AO observed that during the

2 ITA No. 1585/PUN/2026 relevant AY, the assessee has paid interest of Rs. 1,86,307/- to BMW Financial Services without deducting tax at source (TDS). Though the assessee claimed that TDS was deducted and paid at the time of actual payment, no documentary evidence was furnished to substantiate the claim. Despite issuance of show cause notice, no reply was filed. Accordingly, 30% of the interest expenditure amounting to Rs. 55,892/- was disallowed by the Ld.AO u/s. 40(a)(ia) of the Act. The Ld.AO further noticed that the assessee has paid interest of Rs. 1,31,04,744/- to ALSU Holding AG, Switzerland, a foreign company, but has deducted tax at source only on a part of the payment amounting to Rs. 75,49,576/- during the relevant AY 2018-19 and on the balance of Rs. 55,55,168/-, tax was deducted at source in the subsequent AY i.e. AY 2019-20. The assessee claimed that TDS is not deducted on the provision, however, the same is deducted and paid on payment basis before filing of the return. Since the assessee failed to comply with the show cause notice issued by the Ld.AO and no evidence was furnished for deduction of TDS on the balance amount of Rs. 55,55,168/- before filing the return, the said amount was disallowed u/s. 40(a)(i) of the Act. The Ld.AO therefore, completed the assessment vide his order dt. 13-04-2021, passed u/s. 143(3) r.w.s. 143(3A) and 143(3B) of the Act determining the total assessed income of the assessee at (-) Rs. 28,55,27,975/- for AY 2018-19, thereby making the following disallowances: i. Rs. 55,892/- (30% of Rs. 1,86,307/-) towards interest paid on loan to BMW Financial Services u/s. 40(a)(ia) of the Act; and ii. Rs. 55,55,168/- towards interest paid on loan to ALSU Holding AG, Switzerland u/s. 40(a)(i) of the Act.

3 ITA No. 1585/PUN/2026 3. Aggrieved, the assessee filed appeal before the Ld.CIT(A)/NFAC, who partly allowed the appeal of the assessee, observing as under:

4 ITA No. 1585/PUN/2026

5 ITA No. 1585/PUN/2026

6 ITA No. 1585/PUN/2026 4. Dissatisfied, the assessee is in appeal before the Tribunal raising the following grounds of appeal: “1) The Ld. CIT-A ought to have considered the additional claim filed before Him and ought to have allowed the additional claim for AY 19-20, in which the TDS was deducted and paid. 2) The Learned assessing officer be directed to allow deduction of Rs. 36,30,301/- in subsequent year (in AY 19-20) in which the tax is deducted and paid to the credit of government as in subsequent year (in AY 19-20) the assessee has not claimed the allowance u/s 40(a)(ia). 3) The appellant craves its right to add to or alter the Grounds of Appeal at any time before or during the course of hearing of the case."

5.

We have heard the Ld. Representatives of the Parties and perused the material available on record as well as the paper book filed by the Ld.AR on behalf of the assessee. We find that the Ld.AO completed the assessment determining the total assessed income at Rs. (-) 28,55,27,975/- for AY 2018-19, thereby making the disallowance(s) of - (i) Rs. 55,892/- (30% of Rs. 1,86,307/-) towards interest paid on loan to BMW Financial Services u/s. 40(a)(ia) of the Act; and (ii) Rs. 55,55,168/- towards interest paid on loan to ALSU Holding AG, Switzerland u/s. 40(a)(i) of the Act. We find that the Ld.CIT(A)/NFAC partly allowed the appeal of the assessee, restricting the disallowance u/s. 40(a)(i) of the Act made by the Ld.AO to Rs. 36,30,301/- in respect of the interest paid on loan to ALSU Holding AG, Switzerland and sustaining the disallowance of Rs. 55,892/- made by the Ld.AO u/s. 40(a)(ia) of the Act in respect of the interest paid/provided to BMW Financial Services, for the reasons which we have reproduced in the preceding paragraphs. We find that during the appellate proceedings before the Ld.CIT(A)/NFAC, the assessee contended that out of the total interest of Rs. 1,31,04,744/-, tax was deducted and deposited during the relevant AY i.e. AY 2018-19 on interest amounting to Rs. 94,74,443/- and only the balance interest of Rs. 36,30,301/- was subjected to tax deduction in the subsequent AY i.e. AY 2019-20. In support of its claim, the assessee furnished certain additional evidences in the form of Form 27Q extracts, TRACES reports, TDS

7 ITA No. 1585/PUN/2026 challans u/s. 194LC, interest ledger accounts and computations, and pleaded that the disallowance u/s. 40(a)(i) of the Act, if at all, should be restricted only to Rs. 36,30,301/-. The assessee further contended that the remaining amount should not be disallowed, as tax was deducted and deposited within the relevant financial year and before the due date of filing the return. The Ld.CIT(A)/NFAC called for the remand report from the Ld.AO, a copy of which is placed at pgs. 15-19 of the paper book wherein after verifying the facts, the Ld.AO concluded that the provisions of section 40(a)(i) of the Act are attracted only in respect of interest amounting to Rs. 36,30,301/- on which the TDS was made and deposited on 06-08-2018 i.e. during FY 2018-19 relevant to AY 2019-20 and not in respect of the balance amount of Rs. 94,74,443/- on which TDS was duly deducted and paid during the FY 2017-18 relevant to AY 2018-19 under consideration. Relying on the remand report of the Ld.AO and applying the provisions of section 40(a)(i) of the Act to the verified facts, the Ld.CIT(A)/NFAC held that – i) the disallowance u/s. 40(a)(i) cannot be sustained in respect of interest amounting to Rs. 94,74,443/-, as tax was duly deducted and deposited during the relevant previous year; and ii) the disallowance u/s. 40(a)(i) is required to be sustained in respect of interest amounting to Rs. 36,30,301/- as tax was deducted and deposited only in the subsequent financial year.

6.

The Ld.AR at the outset submitted that the assessee had raised a specific ground before the Ld.CIT(A)/NFAC that “2) The Learned assessing officer be directed to allow deduction of Rs. 36,30,301/- in subsequent year in which the tax is deducted and paid to the credit of government as in subsequent year the assessee has not claimed the deduction.” (Para 3 on pg. 3 of the CIT(A)/NFAC‟s order refers). However, the Ld.CIT(A)/NFAC whilst partly allowing the appeal of the assessee on this issue, has only

8 ITA No. 1585/PUN/2026 restricted the disallowance of Rs. 55,55,168/- made by the Ld.AO to Rs. 36,30,301/- u/s. 40(a)(i) of the Act in respect of the interest paid on loan to ALSU Holding AG, Switzerland. He has not adjudicated the above stated Ground No. 2 raised by the assessee before him. He, therefore, prayed that the issue may be restored to the file of the Ld.CIT(A)/NFAC with a direction to adjudicate this ground of appeal. The Ld. DR relied on the order of the Ld.AO and the Ld.CIT(A)/NFAC. We find that the assessee had filed detailed submissions before the Ld.CIT(A)/NFAC raising its various contentions in support of the above Ground No.2, placed at pages 5-9 of the paper book, the relevant extract of which reads as under:

“Ground 2: The Learned assessing officer be directed to allow deduction of Rs. 36,30,301/- in subsequent year in which the tax is deducted and paid to the credit of government as in subsequent year the assessee has not claimed the deduction. i. As explained in submission of ground 1, the amount of disallowance comes to Rs. 36,30,301/- in AY 2018-19 ii. However, on the said amount we have duly deducted and paid TDS in FY 2018-19, but as we did not disallowed amount in AY 2018-19, we did not claim allowance in AY 2019-20 So, effectively this leads to double disallowance. As this is consequential effect of disallowance made by Ld. AO. Therefore, we pray your honor to direct AO for allowing the deduction of interest disallowed in AY 2019-20 in the year in which tax is deducted and paid. This direction may please be given in view of the principle of natural justice as well as CBDT Circular No.14 of 1955 dated 11.04.1955 which has taken a view that the officers of the department must not take advantage of ignorance of the assessee about his rights and it is their duty to assist the tax payer in every reasonable way particularly in the matter of claiming and securing reliefs.”

7.

Thus, considering the totality of facts and in the circumstances of the case enumerated above, we deem it fit, in the interest of justice, to set aside the order of the Ld.CIT(A)/NFAC on the impugned issue and restore the matter back to his file with a direction to adjudicate the specific ground (i.e. Ground No. 2) raised by the assessee before him, as per fact and law, after providing due opportunity of hearing to the assessee. Needless to say, the assessee shall provide full support in terms of filing

9 ITA No. 1585/PUN/2026 the requisite details/documents/explanation as may be called upon by the Ld.CIT(A)/NFAC on the appointed date without seeking any adjournment, unless required for a sufficient cause, failing which the Ld.CIT(A)/NFAC shall be at liberty to pass the appropriate order in accordance with law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

8.

In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.

Order pronounced in the open Court on 13-10-2026

Sd/- Sd/- (RAMA KANTA PANDA) (ASTHA CHANDRA) VICE PRESIDENT JUDICIAL MEMBER पुणे/Pune; दिन ांक/Dated : 13-10-2026 TNMM

आिेश की प्रदिदिदप अग्रेदिि / Copy of the Order is forwarded to: 1. अपीि र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, „B‟ Bench, Pune 5. ग र्ड फ ईि / Guard file. आदेशानुसार/ BY ORDER, Sunil Kumar Digitally signed by Sunil Kumar More // True Copy // More Date: 2026.10.24 12:57:23 +05'30' Assistant Registrar आयकर अपीिीय अदिकरण ,पुणे / ITAT, Pune

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