ITO, JAIPUR vs. OM PRAKASH DANGAYACH, JAIPUR

PER SHRI KUL BHARAT, JM.

These two cross appeals by the assessee and revenue are directed against

the order of ld. CIT (A)-5, Jaipur dated 19.01.2016 pertaining to assessment year

2009-10. First, we take up the assessee’s appeal in ITA No. 140/JP/2016. The

assessee has raised the following grounds of appeal :

2 ITA No. 140 & 279/JP/2016 Shri Om Prakash Dangayach, Jaipur.

opened for assessment and the assessment under section 143(3) read with section

148 of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed

vide order dated 06.12.2012. While framing the assessment, the AO found that the

assessee had made interest payment to M/s. Indiabulls of Rs. 65,65,047/- and M/s.

Reliance capital Ltd. of Rs. 77,37,237/- and the assessee has not deducted tax as

per section 194A of the Act thereby he made disallowance of expenditure by

invoking the provisions of section 40(a)(ia) of the Act and added a sum of Rs.

1,43,02,284/-. Aggrieved by this, the assessee preferred an appeal before ld. CIT

(A), who after considering the submissions partly allowed the appeal. He, therefore,

made deletion of addition made on account of non-deduction of tax in respect of

3 ITA No. 140 & 279/JP/2016 Shri Om Prakash Dangayach, Jaipur.

interest paid to M/s. Indiabulls and in the absence of requisite certificate in respect

of interest paid to M/s. Reliance Capital Ltd. the disallowance of Rs. 77,37,237/-

was confirmed. Against this order, now the assessee is in appeal before us.

not wish to press ground nos. 1 to 3, therefore, the same are dismissed as not

pressed.

of interest paid to M/s. Reliance Capital Ltd. by invoking the provisions of section

40(a)(ia) of the Act. The ld. Counsel for the assessee reiterated the submissions as

made in the written submission. He submitted that in view of additional evidence by

way of issuing certificate by Shri Jitendra B. Sanghavi, CA of M/s. Reliance Capital

Ltd. remaining disallowance deserves to be deleted.

4.1. On the contrary, the ld. D/R relied on the orders of the Assessing Officer.

4.2. We have heard rival contentions, perused the material on record and gone

through the orders of the authorities below. After considering the totality of facts

and the decision of Hon’ble Delhi High Court rendered in the case of CIT vs. Ansal

Landmark Township (P) Ltd. 377 ITR 635 (Delhi), we restore the issue to the file of

the Assessing Officer for verification with regard to the Certificate as furnished by

the assessee. The AO after verifying the same from M/s. Reliance Capital Ltd. would

delete the disallowance in case the Certificate is found in order. The appeal of the

assessee is allowed for statistical purposes.

case are identical to ITA No. 140/JP/2016, except that in this case the ld. CIT (A)

4 ITA No. 140 & 279/JP/2016 Shri Om Prakash Dangayach, Jaipur.

has deleted the disallowance of Rs. 65,65,047/- in respect of the interest paid to

M/s. Indiabulls.

65,65,047/- as against the disallowance of Rs. 1,43,02,284/- made by the AO by

invoking the provisions of section 40(a)(ia) of the Act. The ld. D/R supported the

order of the AO and submitted that the ld. CIT (A) was not justified in deleting the

disallowance.

6.1. Per contra, the ld. Counsel for the assessee supported the order of the ld. CIT

(A) and submitted that the ld. CIT (A) has following the binding precedent.

6.2. We have heard rival contentions and perused the material on record. The ld.

CIT (A) has decided the issue in para 3.4 of his order as under :-

“ 3.4. In the case of Sh. Girdhari Lal Bargoti (supra) it was further indicated that once the I.T. Returns are filed by the recipient NBFC, including therein the interest receipts from the assessee then the assessee would not be deemed to be in default. It is seen that the corresponding provisions are in 1st proviso to section 201(1) which provides that the assessee shall not be deem3ed to be in default if the recipient or liable deductee has filed his Return taking into account the amounts on which TDS was not deducted by the assessee and pays due taxes and the assessee furnishes the report of C.A. in the specified format to the above effect. If the assessee furnishes such report of C.A., the assessee shall be deemed to have deducted and paid the tax on the date of furnishing of Return by the abovestated recipient, in terms of 2nd Proviso to sec. 40(a)(ia). The said proviso is inserted by Finance Act, 2012 w.e.f. 1.4.2013. However, several courts have held the same to be retrospective in operation. In the case CIT vs. Ansal

5 ITA No. 140 & 279/JP/2016 Shri Om Prakash Dangayach, Jaipur.

Land Mark Township P. Ltd. (2015) 377 ITR 635 (Del.), Hon’ble Delhi High Court has held that the insertion of second Proviso to sec. 40(a)(ia) is declaratory and curative in nature and has retrospective affect from 1.4.2005. The appellant has furnished the certificate of C.a. in terms of 1st Proviso to section 201(1) only in respect of M/s. Indiabulls. Therefore, respectfully following the judgement of Hon’ble Delhi High Court (supra) deduction for amount of Rs. 65,65,047 being interest paid to M/s. Indiabulls is hereby allowed to the appellant since the Return filed by M/s. Indiabulls showing such income is within time allowed u/s 139(1). However, in the absence of any such certificate from M/s. Reliance Capital Ltd., the disallowance of Rs. 77,37,237/- is confirmed. This ground is therefore partly allowed.”

We do not find any infirmity in the above finding of ld. CIT (A) as the ld. CIT (A) has

followed the judgment of Hon’ble Delhi High Court in the case of CIT vs. Ansal Land

Mark Township P. Ltd. (supra). The Revenue has not brought any contrary binding

precedent, therefore, we do not see any reason to interfere in the order of ld. CIT

(A), the same is hereby affirmed.

purposes whereas appeal of the revenue is dismissed.

Order is pronounced in the open court on 24.10.2017.

Sd/- Sd/- ( HkkxpUn ½ ( dqy Hkkjr) ( BHAGCHAND) ( KUL BHARAT ) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Jaipur Dated:- 24/10/2017. Das/

6 ITA No. 140 & 279/JP/2016 Shri Om Prakash Dangayach, Jaipur.

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सहायक पंजीकार@ Aेेपेजंदज त्महपेजतंत

7 ITA No. 140 & 279/JP/2016 Shri Om Prakash Dangayach, Jaipur.