M/S. BIRLA STEEL CORNER,PUNE vs. INCOME-TAX OFFICER, PUNE

आदेश / ORDER PER ANIL CHATURVEDI, AM :

This appeal filed by the assessee is emanating out of the order of 1. Commissioner of Income Tax (A) – 2, Pune dated 09.12.2016 for the assessment year 2012-13.

Assessee is a Partnership firm stated to be engaged in the business of supply of cement, steel etc. Assessee electronically filed its return of income for A.Y. 2012-13 on 29.09.2012 declaring total income

at Rs.26,79,057/-. The case was selected for scrutiny and thereafter

assessment was framed u/s 143(3) of the Act vide order dt.25.03.2015

and the total income was determined at Rs.26,79,057/-. Aggrieved by

the order of AO, assessee carried the matter before Ld.CIT(A), who vide

order dt.09.12.2016 (in appeal No.PN/CIT(A)-2/ITO Wd-3(3)/PN/580/

2015-16) granted partial relief to the assessee. Aggrieved by the order of

Ld.CIT(A), assessee is now in appeal before us and has raised the

following grounds :

“1. The learned CIT (A) & AO , Pune erred in law and on facts in confirming disallowance of Rs. 19,24,469/- u/s 40(a)(ia) of ITA, 1961 on account of interest paid to various parties without deduction of tax. Assessee submits that the recipients of the interest have shown this income in their respective return of Income. Assessee submits that there is no loss to the revenue as the payee has already paid the taxes on the said income. 2. Assessee contends that the second proviso to section 40(a)(ia) read with proviso to section 201 of ITA, 1961 inserted in Finance Act 2012 are applicable with retrospective effect. Considering the fact that the payees have paid taxes on the said income received, disallowance u/s 40(a)(ia) of ITA, 1961 is uncalled for. 3. The learned CIT (A) & AO, Pune erred in law and on facts in adding Rs.2,30,746 to the income of the assessee, being amount reflected in form 26AS without considering fact that the said amount is already offered to tax in return of income.”

together.

assessee had debited Rs.25,40,270/- on account of interest paid to

several persons including NBFCs but assessee had not deducted TDS on

such interest payments. AO was of the view that on account of non-

deduction of TDS, provisions of Sec.40(a)(ia) of the Act are attracted and

accordingly he disallowed the amount of Rs.21,65,791/- on account of

non-deduction of TDS. Aggrieved by the order of AO, assessee carried

the matter before Ld.CIT(A), who granted partial relief to the assessee.

Aggrieved by the order of Ld.CIT(A), assessee is now before us.

authorities and further submitted that payees to whom assessee has

paid the interest have already accounted for the interest income

received from the assessee and therefore no disallowance u/s 40(a)(ia) of

the Act is called for in the hands of the assessee and for the aforesaid

proposition he relied on the decision of Hon’ble Delhi High Court in the

case of CIT Vs. Ansal Land Mark Township Pvt. Ltd., reported in (2015)

377 ITR 635, wherein it was held that second proviso to section

40(a)(ia) of the Act is clarificatory in nature and is applicable

retrospectively. He also placed on record additional evidence in the

form of Certificate in Form 26AS, copy of ledger extract and certificate

issued by the C.A. u/s 201(1) of the Act and interest certificates of

various parties. He pleaded that the aforesaid documents were

received after completion of proceedings before Ld.CIT(A) and therefore

could not be submitted before I.T. Authorities and therefore submitted

that the additional evidence be taken on record and the same be

considered while deciding the issue. Ld. D.R. on the other hand

supported the order of lower authorities and objected to the additional

evidences filed by the assessee.

record. The issue in the present ground is with respect to disallowance

u/s 40(a)(ia) of the Act on account of non-deduction of TDS. Before us,

assessee as an additional evidence has filed the certificates received

from various payees certifying that the amounts received from the

assessee have been offered to tax by them while computing the taxable

income. It is also a fact that the aforesaid details were not furnished by

the assessee before the lower authorities. In view of the settled law that

no disallowance is called for if the payee has declared the amount

received from the assessee as its income, we are of the view that the

issue needs verification at the end of the AO. We therefore restore the

issue back to the file of AO to verify the contentions of the assessee

about the payments made by the assessee offered to tax by the

respective payees. In case, the contention of the assessee is found

correct, then he is directed to decide the issue in accordance with the

law and in the light of the decision of Hon’ble Delhi High Court in the

case of CIT Vs. Ansal Land Mark Township (P) Ltd. (supra). Needless to

state that AO shall grant adequate opportunity of hearing to the

assessee. Assessee is also directed to cooperate with AO by promptly

furnishing all the required documents as called for by the AO. In case

assessee fails to furnish the required documents, AO shall be free to

proceed on the basis of material available on record. Thus, the

grounds 1 and 2 of the assessee are allowed for statistical purposes.

7.1. During the course of assessment proceedings, assessee firm was

asked to reconcile the receipts which were accounted by it with receipts

as per 26AS Certificate. On the basis of reconciliation statement

furnished by the assessee, it was noticed that there was a difference of

Rs.2,30,746/- which was not credited to the income by the assessee.

The submissions made by the assessee with respect to the difference

between income declared and the amount that was reflected in Form

26AS was not found acceptable to the AO. He accordingly made its

addition of the difference of income reflected in Profit and Loss account

and that was shown in Form 26AS. Aggrieved by the order of AO,

assessee carried the matter before Ld.CIT(A), who upheld the order of

AO.

Aggrieved by the order of Ld.CIT(A), assessee is now before us.

Ld.CIT(A) and further submitted that if assessee firm was given an

opportunity, it would be in a position to explain the difference. He

therefore prayed that the matter be remitted back to the file of AO. Ld.

D.R. on the other hand, supported the order of lower authorities.

record. The issue in the present ground is with respect to addition of

Rs.2,30,746/- on account of difference between income declared in the

Profit and Loss account and the amount reflected in Form 26AS.

Before us, it is Ld.A.R.’s prayer that one more opportunity be given to

reconcile the difference. We are of the view that since the issue with

respect to the disallowance of Rs.19,24,469/- u/s 40(a)(ia) of the Act is

being remitted to the file of AO by us, hereinabove, this issue may also

as well be sent back to the file of AO for verification. We therefore

restore this issue to AO with a direction to him to delete the addition

made if the assessee is in a position to reconcile the difference of

amount between income declared in the Profit and Loss account and

the amount reflected in From 26AS. Thus, ground No.3 of the assessee

is allowed for statistical purposes.

Order pronounced on 1st day of August, 2019.

Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER

पुणे Pune; �दनांक Dated : 1st August, 2019. Yamini

आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-2, Pune. 4. Pr. CIT-2, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, 5 ITAT, “B” Pune; गाड� फाईल / Guard file. 6.

आदेशानुसार/ BY ORDER

// True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune.