M/S. SHILLONG LOJONG FOOTBALL CLUB (P) LTD.,SHILLONG vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - SHILLONG, SHILLONG

It transpires at the outset that the assessee has raised twin substantive grounds in challenging correctness of both the lower authorities action disallowing interest on loans and donation involving sums of ₹2.80,214/- and

Learned counsel is very fair at the outset in informing us that the assessee no more wishes to press for its later substantive ground on donation issue. We therefore proceed to adjudicate upon the assessee’s former grievance seeking to interest disallowance on loans to the tune of ₹2,80,214/-.

Relevant facts qua the instant sole surviving issue are in a very narrow compass. There is no dispute that the assessee had raised loans from one Mrs. Lalparliani and paid interest of ₹2,80,214/- in the relevant previous year without deducting TDS thereupon. Both the lower authorities are of the view that the assessee’s failure in deducting the said TDS invites disallowance u/s 40(a)(ia) of the Act. The assessee’s argument is that if payee/recipient of interest amount enjoys u/s 10(26) exemption as per her certificate forming part of record. The Revenue places heavy reliance on CIT(A)’s order quoting hon'ble Agartala high court’s Sri Chandra Mohan Sinku vs. Union of India (2015) 55 taman.com 383 (Tripura) [Full Bench] declining said petitioner exempt assessee’s plea and forming the contest of sec. 197 proceedings.

After giving our thoughtful consideration to rival contentions, we find no merit in the Revenue’s stand. We make it clear that the Assessing Officer himself has not disputed the assessee’s basis assertion that its payee / recipient is not assessable u/s 10(26) of the Act. We notice in this backdrop that the tribunal’s co-ordinate bench in ITA No.100/Gau/2016 in Komorrah Limestone Mining Co. Ltd. vs. ACIT Circle(AO), Shillong decided on 08.03.2018 holds that the impugned disallowance does not apply in case of the payees/recipients enjoying exemption u/s. 10(26) of the Act. Learned co- ordinate bench quotes in GE India Technology Centre (P) Ltd. vs. Commissioner of Income-tax (2010) 327 ITR 456 (SC) holding long back that liability to deduct TDS is attracted only if the amount in question is income of

Coming to the Revenue’s argument placing reliance upon hon'ble Tripura high court’s decision in Chandra Mohan Sinku and Ors. (supra) we find that the said lis involved altogether a different question. The said assessee had claimed to be exempt u/s 10(26) and for consequential relief u/s 197 of the Act as well. Their lordship settled the law that the same would be admissible to them subject to fulfilment of the statutory terms and conditions only. We conclude in these facts that this judicial precedent quoted at the Revenue’s behest is altogether on a different issue. We accordingly hold that both the lower authorities have erred in confirming the assessee’s interest payment amounting to ₹2,80,214/- on account of its failure in deducting TDS thereupon. This former substantive is accepted therefore.

This assessee’s appeal is partly allowed in above terms. Order pronounced in accordance with Rule 34(3) of the ITAT Rules by putting on Notice Board 25/09/2019 Sd/- Sd/- (लेखा सद#य) (%या&यक सद#य) ( A.L.Saini) (S.S.Godara) (Accountant Member) (Judicial Member) Guwahati, *Dkp 'दनांकः- 25/09/2019 गूवाहाठ� ।