M/S. B.R. DUTTA,RAMPURHAT, BIRBHUM vs. I.T.O., WARD - 3(1), SURI

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, KOLKATA

BEFORE SHRI DUVVURU RL REDDY, VICE PRESIDENT
M/s B R Dutta
Shibtalla Para,
Rampurhat, Birbhum-731224
Vs ITO, Ward-3(1), Suri-731101

PAN No. :AAHFB 7626 E

(अपीलधर्थी /Appellant)
..
(प्रत्यर्थी / Respondent)

निर्धाररती की ओर से /Assessee by : Shri A.K.Tibrewal, AR
रधजस्व की ओर से /Revenue by : Shri Kallol Mistry, JCIT, Sr.DR
सुनवाई की तारीख / Date of Hearing
:
23/04/2025
घोषणा की तारीख/Date of Pronouncement
:
13/06/2025
आदेश / O R D E R

The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless
Appeal Centre (NFAC), Delhi dated 08.11.2024 passed for Assessment
Year 2014-15, on the following grounds of appeal :-
1. That the Ld. Commissioner of Income Tax (Appeals), NFAC erred in confirming the disallowance of Rs. 13,60,796 made by Ld. Income Tax Officer, Ward 3(1), Suri invoking the provisions of section 40(a)(ia) of the Income Tax Act, 1961 for failure of the Assessee to deduct tax at source on the payments made to Tata Capital Financial Services Limited although the said Tata Capital Financial Services Limited had declared the receipt of income in their return of income and paid taxes thereon.

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interest to the TATA Capital for short term finance for purchase of fertilizers
& pesticides from TATA Chemical. The Assessing Officer found that Tata
Capital provides short term finance for the fertilizers & Pesticides purchased from Tata Chemical. It was also asked by the Assessing Officer as to whether tax was deducted on source, the assessee said that no TDS had been made on payment of interest of Rs.13,60,796/-. Accordingly, the Assessing Officer disallowed the said amount u/s.40(a)(ia) of the Act.
Against the said disallowance, the assessee preferred appeal before the ld.
CIT(A) and the ld. CIT(A) dismissed the appeal of the assessee affirming the disallowance made by the Assessing Officer u/s.40(a)(ia) of the Act.
3. Now, the assessee is in further appeal before the Tribunal.
4. Ld. Counsel for the assessee submitted that during the year under assessment the assessee Firm paid a sum of Rs.13,60,796.00 by way of Interest for the said channel finance and debited the said interest in its Profit
& Loss Account and claimed as expenses without deducting Tax at Source there from as per section 194A of the Income Tax Act 1961. It was submitted by the ld. Counsel that as per the proviso to section 201(1) inserted with effect from 1st July 2012, the assessee Firm obtained a Certificate dtd. 23/03/2017 from the Accountant of Tata Capital Financial
Services Ltd. at a much latter date and by the time the appellant could collect the Certificate from the Accountant of Tata Capital Financial
Services Ltd., however, the Assessing Officer framed the assessment u/s 143(3) of the Act, disallowing the expense towards Interest payment of Rs.13,60,796.00. It was also submitted by the ld. Counsel that in view of the second proviso to section 40(a)(ia) read with proviso to section 201(1)

ITANo.29/KOL/2025

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of the Income Tax Act no disallowance of expense u/s 40(a)(ia) can be made unless the assessee has been treated as assessee in default u/s.201(1) of the Act for its failure to deduct tax at source from the payment made on account of interest. Thus, the ld. Counsel pleaded that on furnishing of Certificate from an Accountant) as prescribed under proviso to section 201(1) read with rule 31ACB of the I.T. Rules, no disallowance u/s 40(a)(ia) can be made. It was further submission of the assessee that the recipient offered this said amount and paid taxes on the receipt of income and filed Form 26A. Therefore, he pleaded to remit the matter back to the file of Assessing Officer to examine AS 26A and pass appropriate order.
5. On the other hand, ld. Departmental Representative vehemently supported the orders of the lower authorities and submitted that the assessee was unable to furnish the details as called for during the course of appellate proceedings as well as during the course of assessment proceedings. Thus, he pleaded to uphold the orders of both the authorities below.
6. I have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee has not deducted tax at source, however, he filed proof to show that the recipient shows receipt as income and offered for tax and also filed AS 26A. He also relied on the decision of the Hon’ble Delhi High Court in the case of Ansal Land Mark
Township (P) Ltd., reported in 377 ITR 635 (Delhi-HC), wherein it was held that once the recipient offered the same for taxation, then it is allowable expenditure u/s.40(a)(ia) of the Act. Considering the facts and circumstances of the case, I am of the view that it is a fit to remit the matter

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back to the file of ld. Assessing Officer to examine this issue afresh and pass appropriate speaking order after providing sufficient opportunity of being heard to the assessee. At the same breath, I also hereby caution the assessee to promptly co-operate with the proceedings before the ld. AO, failing which the ld. AO shall be at liberty to pass appropriate order in accordance with law and merits based on the materials available on record.
Thus, the grounds raised by the assessee are allowed for statistical purposes.
7. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 13/06/2025. (DUVVURU RL REDDY)
उपाध्यक्ष / VICE PRESIDENT
कोलकाता Kolkata; दिनाांक Dated 13/06/2025
Prakash Kumar Mishra, Sr.P.S.
आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to :

आदेशधिुसधर/ BY ORDER,

(