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Income Tax Appellate Tribunal, ‘E‘ BENCH
Before: SHRI C.N. PRASAD, JM & SHRI M.BALAGANESH, AM
आदेश / O R D E R PER M. BALAGANESH (A.M):
This appeal in A.Y.2011-12 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-6, Mumbai in appeal No.CIT(A)-6/IT-12/130/2016-17 dated 09/08/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 24/03/2014
M/s. Express Equipment Rental Logistics Pvt. Ltd., by the ld. Dy. Commissioner of Income Tax-1(1), Mumbai (hereinafter referred to as ld. AO).
Though the assessee has raised several grounds of appeal, we find that the only effective issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding the disallowance of interest made in the sum of Rs.2,70,000/- by the ld. AO (Correct figure is Rs.2,34,000/-) in the facts and circumstances of the case.
We have heard rival submissions and perused the materials available on record. We find that assessee company is engaged in the business of hiring of cranes and allied machines for industrial construction. It had filed its return of income for A.Y.2011-12 on 26/09/2011 declaring total income of Rs.1,35,26,250/-. In the assessment, the ld. AO made disallowance of interest paid on unsecured loans in the sum of Rs.2,70,000/- among other additions/disallowances. We find that assessee had stated that it had borrowed funds from the relatives of the shareholders of the assessee company for meeting its working capital requirements on which interest @12% per annum was paid. It was duly submitted that the funds raised in the earlier year and utilised for the purpose of business. In the year in which the borrowings were raised and utilised, the same were accepted by the Revenue in scrutiny assessment proceedings for A.Y.2010-11. During this year interest was paid on such loans. The assessee also pleaded that the correct amount of interest paid on unsecured loans was Rs.2,34,000/- and not Rs.2,70,000/- as disallowed by the ld. AO. The details of interest paid on loans by the assessee are as under:-
M/s. Express Equipment Rental Logistics Pvt. Ltd.,
S.No. Name of Person Interest Paid 1 Sudha Jitendra Shah 30,000/- 2. Lata Suresh Shah 42,000/- 3. Gokuldas Shah (HUF) 54,000/- 4. Jitendra Shah(HUF) 54,000/- 5. Suresh Shah (HUF) 54,000/- Total: 2,34,000/- 3.1. The assessee pleaded that the aforesaid interest was paid to five parties without deduction of tax at source and those parties had also furnished Form Nos.15H & 15G before the assessee. However, the same were not submitted by the assessee before the ld. AO since no questions were raised regarding the same in the assessment proceedings. Accordingly, the same were submitted by the assessee before the ld. CIT(A) as additional evidences under Rule 46A of the Rules. The ld. CIT(A) refused to admit those additional evidences on the ground that assessee was given sufficient opportunity before the ld. AO to make all the submissions and accordingly, denied the admission of additional evidences. It was also pleaded by the assessee before the ld. CIT(A) that in view to second proviso to Section 40(a)(ia) r.w.s. 201, the payees had duly paid taxes including the interest income received from the assessee and hence, no disallowance of interest u/s.40(a)(ia) of the Act could be made in the hands of the assessee. This submission of the assessee was rejected by the ld. CIT(A) by stating that the said second proviso to Section 40(a)(ia) was introduced only w.e.f. 01/07//2012 and cannot be made applicable for A.Y.2011-12. We find that the additional evidences
M/s. Express Equipment Rental Logistics Pvt. Ltd., filed by the assessee containing Form15G & 15H ought to have been admitted by the ld. CIT(A) as assessee was genuinely prevented from filing the same before the ld. AO as no questions were received by the ld. AO regarding the same. Once Form No. 15G & 15H are duly submitted by the assessee before the department, then assessee cannot be fastened with the disallowance u/s.40(a)(ia) of the Act for non-deduction of tax at source. However, these forms i.e. Form 15G & 15H have not been subjected to verification by the ld. AO. Hence, in the interest of justice and fair play, we deem it fit and appropriate to remand this issue to the file of the ld. AO for examining the Form 15G & 15H submitted by the assessee and decide the issue of disallowance of interest on unsecured loans afresh in accordance with law. The ld. AO is also directed to give a specific finding with regard to applicability of second proviso of Section 40(a)(ia) r.w.s. 201(1) of the Act while deciding the issue. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced on 24/03/2021 by way of proper mentioning in the notice board.