M/S. SHIVRATNA MOTORS,,SOLAPUR vs. ASSISTANT COMMISSIONER OF INCOME TAX,, SOLAPUR

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) – 7, Pune dated 12.01.2017 for the assessment year 2012-13.

Assessee is a partnership firm stated to be having dealership of Bajaj Tempo, Trading business of Oil and Spares and workshop servicing. Assessee electronically filed its return of income for A.Y. 2012-13 on 30.09.2012 declaring total income of Rs.19,14,931/-. The

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case was selected for scrutiny and thereafter assessment was framed

u/s 143(3) of the Act vide order dt.26.03.2015 and the total income was

determined at Rs.44,43,840/-. Aggrieved by the order of AO, assessee

carried the matter before Ld.CIT(A), who vide order dt.12.01.2017 (in

appeal No.PN/CIT(A)-7/Cir-1/104/2015-16) dismissed the appeal of

assessee. Aggrieved by the order of Ld.CIT(A), assessee is now in appeal

before us and has raised the following grounds :

“1. On the facts and in the circumstances of the case and in law, the Commissioner of Income Tax (Appeals) erred in sustaining the disallowance of interest paid of Rs.2,28,909/- to Vijay Gramin Patsanstha u/s 40(a)(ia) without appreciating the proviso to Section 40(a)(ia) read with proviso to Sec.201(1) w.e.f., 01.04.2013. 2. The learned assessing officer has erred in considering the facts of the assessee case and the facts of the citations. 3. The honourable CIT erred by regarding disallowances u/s 40(a)(ia) by not providing enough opportunity for submission of Form 26A. 4. The appellant prays that the addition/disallowance of Rs.25,28,909/- be deleted.”

case was adjourned to 16.10.2018 at the request of the assessee. On

16.10.2018 none appeared on behalf of the assessee nor any

adjournment application was filed and the case was adjourned to the

present date. On the date of present hearing also, none appeared on

behalf of the assessee nor any adjournment application was filed. We

therefore proceed to dispose of the appeal ex-parte qua the assessee

based on the material available on record and after hearing the Ld.D.R.

assessee had taken loan from Vijay Gramin Bigar Sahakari Patsanstha

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and had paid total interest of Rs.25,28,909/-. AO noticed that assessee

had not deducted TDS u/s 194A of the Act on the aforesaid interest

paid by the assessee. AO was therefore of the view that non-deduction

of TDS would result into attraction of provisions of Sec.40(a)(ia) of the

Act. He accordingly invoked the provisions of Sec.40(a)(ia) of the Act

and made addition of Rs.25,28,909/- for the interest on account of

non-deduction of TDS. 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 in appeal

before us.

assessee to demonstrate that the payee has already included the

interest received from assessee as its income and has paid taxes on it.

He thus, supported the order of lower authorities.

The issue in the present ground is with respect to disallowance of

expenditure u/s 40(a)(ia) of the Act. It is an undisputed fact that

assessee had paid interest of Rs.25,28,909/- to Vijay Gramin Bigar

Sheti Sahakari Patsanstha in the year under consideration, on which

TDS u/s 194A of the Act was not deducted by the assessee. It is

assessee’s submission that in the return of income filed by Vijay

Gramin Bigger Sheti Sahakari Patsanstha i.e., payee has included the

interest paid by the assessee as its income and has paid the tax on

such interest. In such a situation, we are of the view that no

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disallowance u/s 40(a)(ia) of the Act is not called for in view of 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

has held that insertion of second proviso to Sec.40(a)(ia) of the Act is

declaratory and curative in nature and has retrospective effect from

01.04.2005. It has further held that as long as payee or resident has

filed its return of income disclosing the payment received by and in

which the income earned by it is embedded and has also paid taxes on

such income, then no disallowance can be made u/s 40(a)(ia) of the Act.

However, before us, apart from the submissions made before Ld.CIT(A),

no material has been placed by assessee to demonstrate that the payee

has included the amount of interest in its income. In such a situation,

we are of the view that the aforesaid contention needs verification by

AO. We therefore restore the issue to the file of AO for verification. In

case the assessee’s contention is found correct, then in view of the

aforesaid decision of Hon’ble Delhi High Court in the case of Ansal Land

Mark Township (supra), no disallowance u/s 40(a)(ia) of the Act is

called for. Thus, the ground of the assessee is allowed for

statistical purposes.

statistical purposes.

Order pronounced on the 25th day of January, 2019.

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

पुणे Pune; �दनांक Dated : 25th January, 2019. Yamini

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आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-7, Pune. 4. Pr. CIT-6, Pune. 5 �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक सद�य” / DR, ITAT, “SMC” Pune; 6. गाड� फाईल / Guard file.

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