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

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.

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.

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.

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

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.

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