DEEPAK RAJARAM PATIL,KOLHAPUR vs. INCOME-TAX OFFICER, WARD - 1(2), KOLHAPUR

आदेश / ORDER आदेश / ORDER

PER VIKAS AWASTHY, JM :

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-1, Kolhapur dated 09-04-2018 for the assessment year 2006-07.

ITA No.1040/PUN/2018, A.Y. 2006-07

Consequent to revision proceedings u/s. 263 of the Income Tax Act, 1961

(hereinafter referred to as “the Act”), the Assessing Officer passed order

dated 11-07-2011 u/s. 143(3) r.w.s. 263 of the Act. The Assessing Officer

made addition of Rs.2,14,480/- u/s. 40(a)(ia) of the Act in respect of

interest paid by the assessee to Shri Venkatesh Nagri Sahakari Pat

Sanshtha Ltd. without deducting tax at source, as envisaged u/s. 194A of

the Act. Against the aforesaid assessment order the assessee filed appeal

before the Commissioner of Income Tax (Appeals). The Commissioner of

Income Tax (Appeals) upheld the findings of Assessing Officer. Now, the

assessee is in second appeal assailing the order of Commissioner of Income

Tax (Appeals) in confirming the disallowance.

admittedly the assessee paid interest to Shri Venkatesh Nagri Sahakari Pat

Sanshtha Ltd. against the loan, without deducting any tax at source. The

assessee was under bonafide belief that on payment of interest to Shri

Venkatesh Nagri Sahakari Pat Sanshtha Ltd. the provisions of TDS does

not apply. The ld. AR submitted that the assessee is now filing Form 26A

as additional evidence. The provisions of section 40(a)(ia) have been

amended by the Finance Act, 2012 w.e.f. 01-04-2013 with the insertion of

second proviso. The ld. AR submitted that the proviso to section 40(a)(ia)

inserted by Finance Act, 2012 is curative in nature and is operative

retrospectively. In support of his submissions the ld. AR placed reliance

on the decision of Hon’ble Supreme Court of India in the case of

Commissioner of Income Tax Vs. Calcutta Export Company reported as 93

taxmann.com 51. The ld. AR submitted that additional evidence filed by

the assessee may kindly be admitted and thereafter remitted to the

Assessing Officer for verification.

ITA No.1040/PUN/2018, A.Y. 2006-07

vehemently defended the order of Commissioner of Income Tax (Appeals) in

confirming the addition.

sides and have perused the orders of authorities below. The solitary issue

raised in the present appeal is with respect to disallowance of interest

payment Rs.2,14,480/- under the provisions of section 40(a)(ia) of the Act.

Undisputedly, the assessee has paid interest to Shri Venkatesh Nagri

Sahakari Pat Sanshtha Ltd., a Co-operative Society engaged in providing

credit facilities to its members. It is not the case of assessee that Shri

Venkatesh Nagri Sahakari Pat Sanshtha Ltd. is engaged in Banking

business. The Finance Act, 2012 has inserted second proviso to section

40(a)(ia) of the Act which reads as under :

Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso.”

Hon’ble Delhi High Court in the case of Commissioner of Income Tax Vs.

Ansal Land Mark Township (P) Ltd. reported as 377 ITR 635 and

subsequently, the Hon’ble Supreme Court of India in the case of

Commissioner of Income Tax Vs. Calcutta Export Company (supra) has

held that the amendment by Finance Act, 2010 to the provisions of section

40(a)(ia) are curative in nature and hence applies retrospectively from the

date of insertion of said provision i.e. from the assessment year 2005-06.

4 ITA No.1040/PUN/2018, A.Y. 2006-07

The assessee has filed Form 26A as additional evidence to contend that the recipient of the interest has offered the amount to tax. Thus, in view of retrospective applicability of second proviso to section 40(a)(ia), we deem it appropriate to restore this issue back to the file of Assessing Officer for verification. The Assessing Officer shall decide this issue de-novo after affording reasonable opportunity of hearing and considering the documents furnished by the assessee, in accordance with law.

Order pronounced on Wednesday, the 09th day of January, 2019.

Sd/- Sd/- (R.S. Syal) (Vikas Awasthy) VICE PRESIDENT JUDICIAL MEMBER पुणे/ Pune; �दनांक/ Dated : 09th January, 2019 RK आदेश क� ��त�ल�प अ�े�षत/ Copy of the Order forwarded to : अपीलाथ�/ The Appellant. 1. ��यथ�/ The Respondent. 2. आयकर आयु�त (अपील) / The CIT(A)-1, Kolhapur 3. 4. The Pr. Commissioner of Income Tax-1, Kolhapur �वभागीय ��त�न�धआयकर अपील�य अ�धकरण �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य मामला” ब�च, एक-सद�य मामलाब�च 5. पुणे/ DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल/ Guard File. 6. //स�या�पत ��त// True Copy// // True Copy// आदेशानुसार/ BY ORDER,

�नजी स�चव / Private Secretary, �नजी स�चव / Private Secretary, आयकर अपील�य अ�धकरण, पुणे/ ITAT, Pune