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Income Tax Appellate Tribunal, DELHI BENCH ‘D’ NEW DLEHI
Before: SHRI PRASHANT MAHARISHI & SHRI K. NARASIMHA CHARY
PER K. NARASIMHA CHARY, J.M. Aggrieved by the order dated 21.05.2015 passed by the learned Commissioner of Income Tax (Appeals)-4, New Delhi (“Ld. CIT(A)”) for the assessment year 2012-13, M/s. Haldiram Snacks Pvt. Ltd.(“the assessee”), preferred this appeal.
Brief facts of the case are that the assessee is engaged in the business of manufacturing of sweets, Namkeens, Syrup, Fruits Crushes, Papad and running restaurants. For the assessment year 2012-13, they have filed their return of income on 30.09.2012 declaring total income of Rs.29,08,98,420/-, but the Assessing Officer by order dated 07.05.2014 passed u/s. 143(3) of the Income Tax Act, 1961 (for short “the Act”) made several additions and assessed the income at Rs.30,40,25,380/- and such additions include disallowance of lease rent paid to Noida Authority to the tune of Rs.55,91,212/- which is the subject matter of this appeal.
Even during the appeal also, ld. CIT(A) held that the assessee was required to pay lease rental annually in advances; that the said lease rent was liable to be enhanced after every 10 years; that in case of default, pecuniary interest was chargeable; that even though the said lease was perpetual in nature, the ownership of the land rests with the Greater Noida Authority and does not get transferred to the assessee; and that even though the lease rental remains constant for 10 years, the same is subject to further revision every 10 years. According to the authorities below, Greater Noida Authority does not fall within the scope of section 196 of the Act, which covers payment of interest or dividend or other sums to the Government, RBI, Mutual Fund specified in section 10(23D) of the Act and to corporations established by or under Central laws, which under any law provide for exemption from income Tax; and that Greater Noida Authority cannot be equated with a local authority within the meaning of section 10(20) of the Act and therefore, the disallowance made by the Assessing Officer u/s. 40(a)(ia) was justified.
Aggrieved by such findings of the ld. CIT(A), assessee preferred this appeal and by way of additional grounds, the assessee has taken the plea that second proviso to section 40(a)(ia) of the Act is retrospective in nature and applies squarely to the facts of this case and therefore, no disallowance u/s. 40(a)(ia) of the Act can be called for. Alternative plea taken by the assessee by way of additional grounds is that the amendment to section 40(a)(ia) of the Act which restricts the disallowance to the extent of 30% of the expenditure incurred, is retrospective in nature and therefore, applies to the facts of the present case. Therefore, the disallowance, if at all, has to be restricted to 30% of the amount of Rs.55,91,212/-.
Since this is a legal plea, after hearing the ld. DR, we are of the opinion that the additional ground can be admitted and the parties can be allowed to argue on these grounds also in view of the decision of Hon’ble Apex Court in NTPC vs. CIT, 229 ITR 383 (SC).
Learned AR places reliance on the decision of Hon’ble jurisdictional High Court in the case of CIT vs. Ansal Landmark Township (P) Ltd., 377 ITR 635 in support of his contention that the second proviso to section 40(a)(ia), which was introduced by the Finance Act, 2012 w.e.f. 01.04.2013, is curative and retrospective in nature. In so far as this legal position is concerned, there cannot be any dispute. According to the ld. AR, Noida Authority was paying entire taxes due on lease rent received by it and it is also a fact that the assessee has not been held to be an assessee in default by the Assessing Officer and therefore, provisions of section 40(a)(ia) of the Act would not apply in its case.
Learned AR submitted that it is a verifiable fact that the Noida Authority has furnished the return of income u/s. 139 by taking into account the sums received from the assessee and paid the taxes thereon and therefore, under proviso to section 201 of the Act, the same has to be verified when the assessee furnishes a certificate to that effect from an Accountant in the prescribed form.
Having regard to this fact situation, we are of the opinion that if the Noida Authority had already declared this receipt in their return of income and paid the taxes due thereon, on the assessee furnishing a certificate to such an effect from an Accountant, no disallowance could be made u/s. 40(a)(ia) of the Act. Since it is a verifiable fact, we set aside the impugned order and restore the issue to the file of Assessing Officer to verify the compliance with the proviso to section 201 of the Act and in case such requirement is complied with, not to make any disallowance. In view of our this finding, second additional ground becomes academic. With this direction, we allow the appeal for statistical purposes.
In the result, the appeal is allowed for statistical purposes.