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Income Tax Appellate Tribunal, “SMC” BENCH, PUNE
Before: SHRI R.S. SYAL & SHRI VIKAS AWASTHY, JM
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.
The brief facts of the case as emanating from records are: The assessee is engaged in the business of trading in chemicals and transport.
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.
Shri P.S. Shingte appearing on behalf of the assessee submitted that
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
On the other hand Shri Rajesh Gawali representing the Department
vehemently defended the order of Commissioner of Income Tax (Appeals) in
confirming the addition.
We have heard the submissions made by representatives of rival
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.”
Though the said proviso has been inserted w.e.f. 01-04-2013, the
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.
In the result, the appeal of assessee is allowed for statistical purpose.
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