SRM PHARMACEUTICAL DISTRIBUTORS,TIRUCHIRAPALLI vs. ITO, WARD-3(2), TIRUCHIRAPALLI

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ITA 328/CHNY/2019Status: DisposedITAT Chennai29 May 2020AY 2012-133 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) did not properly examine the assessee's claims regarding Form 15G/15H and the retrospective nature of the second proviso to Section 40(a)(ia). Therefore, the issue was remitted back to the AO for fresh examination.

What were the facts?

The assessee claimed interest deductions on unsecured loans without deducting TDS. The AO disallowed this deduction under Section 40(a)(ia). The CIT(A) partly allowed the assessee's appeal.

What were the issues?

Whether interest paid to unsecured creditors is disallowable under Section 40(a)(ia) for non-deduction of TDS, considering the applicability of Form 15G/15H and the retrospective nature of the second proviso.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘ B’ BENCH : CHENNAI

Before: SHRI DUVVURU RL REDDY & SHRI S.JAYARAMAN

आदेश / O R D E R PER S.JAYARAMAN, ACCOUNTANT MEMBER The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-1, Trichy in 1/Trichy, dated 18.12.2018 for the assessment year 2012-13.

2.

M/s.S.R.M.Pharmaceutical Distributors, the assessee is engaged in the business of wholesale and retail sales of medicines. While completing the assessment for the impugned assessment year, the A.O. held that assessee claimed interest deductions in respect of unsecured creditors without deducting TDS on such payments.

1.

Therefore, the A.O disallowed the assessee’s interest claim under Section 40(a)(ia) of the Act. Aggrieved against the order of Ld. A.O., the assessee preferred an appeal before the learned CIT(A). On appeal, learned CIT(A) partly allowed the appeal. Aggrieved against that order, the assessee filed this appeal before the Tribunal.

3.

Before us, the Ld. A.R. submitted that creditors were either assessed to tax or had income below the taxable minimum. The deductor had obtained Form 15G/15H. Further, the assessee submitted before the learned CIT(A) that second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 is retrospective with the main provision since 2005 and that such interpretation was upheld by certain Courts, although all such pleas were put forth before the learned CIT(A), the learned CIT(A) without considering the assessee’s plea, upheld the disallowance made by the A.O. to an extent of ₹.9,35,007/- under section 40(a)(ia) of the Act. Therefore, Ld. A.R pleaded to allow the assessee’s appeal.

4.

Per contra, Ld. D.R. supported the order of the learned CIT(A).

5.

We have heard the rival submissions and perused the material available on record. When the assessee has pleaded before the learned CIT(A) that it has obtained Form No.15G/15H and pleaded that second proviso to section 40(a)(ia) of the Act inserted by the Finance Act, 2012 is retrospective, the learned CIT(A) should have examined the assessee’s claim in a proper perspective. Since it was not made, we deem it fit to remit this issue back to the file of A.O for a fresh examination. The assessee shall place relevant materials in support of its contentions before the A.O. and comply with the requirements of the A.O. in accordance with law. The A.O after affording effective opportunity to the assessee and due examination, shall decide the matter on merits.

6.

In the result, the appeal of assessee is partly allowed for statistical purposes.

Order pronounced on 29th May, 2020 at Chennai.

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