M/S KAPOOR GLASS (INDIA) P LTD.,MUMBAI vs. ITO WARD 10 (1)(3), MUMBAI

Assessment year: 2015-16 M/s Kapoor Glass (India) P. Ltd., ……………….………Appellant A- 37, Kapoor House, Road No.2, MIDC, Andheri (E), Mumbai 400 0093 [PAN No. AAACD1725E] Vs Income Tax Officer, Ward 10(1)(3) Mumbai ……………………Respondent Appearances by Renu Kapoor for the appellant T. Sankar for the respondent Date of concluding the hearing : December 29, 2021 Date of pronouncement of order : December 29, 2021 O R D E R Per Pramod Kumar, VP:

1. 1. By way of this appeal, the assessee-appellant has challenged the correctness of the order dated 5th December 2019, passed by the learned CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act 1961, for the assessment year 2015-16.

2. The short point requiring by implication in this case is whether the provisions of section 40 (a) (ia) will also apply in situation in which even though the assessee has duly deducted and paid the taxes at source but he has not discharged his obligations in respect of interest levy u/s. 201(1A) for delay in deposit the tax deducted at source. The related ground of appeal as set out in the memorandum of appeal is as follow:-

1. The learned CIT (Appeals) has erred in law and on the facts of the case in sustaining the order of the assessing officer disallowing Rs. 73,85,553/- u/s. 40(a)(ia) of the Income Tax Act.

Page 2 of 3 3. To adjudicate of this appeal only a few material facts needs to be taken in to account. The assessee before me is a company of manufacturing of glass, ampoules and vials. In the course of the scrutiny assessment proceedings of the relevant previous year, the Assessing Office noticed that the assessee company has made a payment of Rs. 73,85,553/- in respect of payment to contractor, but the tax deducted at source from this payments were paid late and that the assessee has not discharge the liability to pay interest on delay deposit of tax at source from the tax deducted. It was for this reason that the Assessing Officer invoked u/s. 40(a)(ia) and disallowed the payments in question. The Assessing Officer thus proceeded to disallowed of Rs. 73,85,553/-, and , while doing so the observed as follows:- 4.10 The assessee has paid an amount of Rs. 1,65,047/- as its liability towards TDS deducted but not paid and interest chargeable u/s. 201(1A) of the Act. The interest payable u/s. 201(1A)(i) and (ii) of the Income Tax Act, 1961, on the amount of TDS deducted but not paid i.e. on Rs. 1,65,047/- exceeds the amount paid by the assessee during the FY 2014-15. In view of this, I hereby treat the amount paid by the assessee during the FY 2014-15 as paid towards interest u/s 201(1A) of the Income tax Act, 1961. 1 also hold that the assessee has not discharged the liability of TDS deducted by it in the FY 2006-07 till date for the payments claimed as deduction under the proviso of section 40(a) of the Income Tax Act, 1961 in its computation of income for the AY 2015-16. The assessee is therefore not liable to deduction as per the provisions of the proviso of section 40(a) (la) or the Income Tax Act, 1961. The amount of Rs. 73,85,553/- claimed by the assessee as deduction u/s 40(a) (ia) is hereby rejected and added to its total income for the year. Penalty proceedings u/s 271(1)(c) are hereby initiated for furnishing inaccurate particulars of income.

Page 3 of 3 uphold the plea of the assessee and direct the Assessing Officer to delete the impugned disallowance of Rs. 73,85,553/-. The assessee gets the relief accordingly.