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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
Before: SHRI S. S. GODARA & SHRI INTURI RAMA RAO
ORDER
PER INTURI RAMA RAO, AM:
This is an appeal filed by the Revenue directed against the order of ld. Commissioner of Income Tax (Appeals)- 1, Pune dated 28.01.2019 for the assessment year 2012-13.
When the appeal was called on, none appeared on behalf of the respondent-assessee despite due service of notice of hearing. Therefore, after hearing the ld. Sr. DR, we proceed to dispose of this matter on merits. 3. The Revenue raised the following grounds of appeal :-
“1. The order of the Ld. CIT(A) is contrary to law and to the facts and circumstances of the case.
2. On the facts of the case the Ld. CIT(A) has erred in deleting the disallowance made by AO u/s. 40(a)(ia) by relying upon 2nd proviso to the said section even though the said proviso was inserted by the Finance Act, 2012 w.e.f. 01/04/2013 and not retrospective in nature and hence not applicable for A.Y. 2012-13.
The appellant craves to add, amend, alter or delete any of the above ground of appeal
during the course of appellate proceedings before the Hon’ble Tribunal.”
4. Briefly, the facts of the case are that the appellant is a company incorporated under the provisions of the Companies Act, 1956. The return of income for the assessment year 2012-13 was filed on 13.09.2012 declaring loss of Rs.1,06,55,146/-. There was no scrutiny assessment. Subsequently, the Assessing Officer had come to know that the respondent-assessee had paid interest on loan taken from non-banking financial corporation without deduction of tax at source u/s 194A of the Income Tax Act, 1961 (‘the Act’). Accordingly, the Assessing Officer formed an opinion that the income escaped assessment to tax within the meaning of section 147 of the Act and after obtaining necessary approval from the Addl. Commissioner of Income Tax, the notice u/s 148 dated 24.06.2016 was issued to the respondent-assessee. On receipt of the notice u/s 148, the respondent-assessee filed a letter stating that the return filed u/s 139 be treated as return in 148 of the Act. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-1 (3), Pune (‘the Assessing Officer’) vide order dated 22.12.2017 passed u/s 143(3) r.w.s. 147 of the Act after making addition of Rs.2,85,69,000/- being interest paid to non-banking financial corporation for reason that no deduction of tax at source on payment of interest to the above mentioned parties.
5. Being aggrieved by the above addition, an appeal was filed before the ld. CIT(A), who vide impugned order directed to the Assessing Officer to delete the addition of Rs.2,85,69,000/- placing reliance on the second proviso to section 40(a)(ia) of the Act.
6. Being aggrieved by the above decision of the ld. CIT(A), the Revenue is in appeal before us with the above extracted grounds of appeal.
7. It is contended that the provisions of second proviso to section 40(a)(ia) were not retrospective effect in nature, therefore, cannot be applied. It submitted that the second proviso to section 40(a)(ia) was inserted by the Finance Act, 2012 w.e.f. 1.4.2013. Therefore, the ld. CIT(A) had grossly erred in applying the second proviso to