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Income Tax Appellate Tribunal, AHMEDABAD “C” BENCH
Before: Shri Waseem Ahmed & Shri T.R. Senthil Kumar
Appellant by : Shri Atul Pandey, Sr. D.R. Respondent by : Shri P.F. Jain, C.A. Date of hearing : 17-08-2022 Date of pronouncement : 24-08-2022 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
The present appeal has been filed by the Revenue against the order dated 22.01.2019 passed by the Commissioner of Income Tax (Appeals)-3, Ahmedabad, as against the Assessment order passed under section 154 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2009-10.
Page No 2 ACIT vs. Shri Manish Raichand Shah
The brief facts of the case is that the assessee is an individual and engaged in the business of trading in shares. For the Assessment Year 2009-10, the assessee filed its Return of Income declaring total income of Rs. 7,74,280/- and the assessment was completed u/s 143(3) of the Act on 30/12/2011 determining the total income of Rs. 7,96,661/-. Thereafter the case was reopened u/s 147 of the Act, the assessee did not comply to notice u/s. 148. The assessee was served with 143(2) and 142(1) notices however the assessee has not responded to the same. Hence an ex parte assessment order was passed making the disallowance u/s. 40(a)(ia) of Rs. 86,47,000/-, on container charges paid to Container Corporation of India without making deduction u/s. 194C of the Act. It is thereafter a rectification u/s 154 was made by the Assessing Officer by disallowing depreciation and RTO tax & insurance expenses of Rs. 23,20,000/- and 40(a)(ia) disallowance on interest expense of Rs. 14,95,961/- paid to NBFCs without making deduction as required u/s. 194A of the Act. Thus, the income of the assessee is determined as Rs. 1,32,59,620/-.
Aggrieved against the rectification order, the assessee filed an appeal before the ld. CIT(A). During the appellate proceedings, the Ld. CIT(A) called for Remand Report from the Assessing Officer and thereafter passed this impugned order allowing the assessee appeal as follows: 3.7. I have gone through the facts and the submission of the appellant carefully. Keeping in view the purpose behind the proviso inserted by the Finance Act, 2012 in section 40(a)(ia) of the Act, it can be said to be declaratory and curative in nature and therefore, should be given retrospective effect from 1-4-2005, being the date Page No 3 ACIT vs. Shri Manish Raichand Shah
from which sub-clause (la) of section 40(a) was inserted by the Finance (No. 2) Act, 2004 as held in the case of Ansal Landmark Township P. Ltd. [ITA 160/2015 Delhi High Court. Hon'ble Ahmedabad ITAT in the case of Forhberg Reality Pvt. Ltd. (ITA No. 2066/Ahd/2014) vide its order dated 12/12/2014 has directed A.O. to decide the issue as per decision of Hon'ble Delhi High court in the case of Ansal Landmark Township P. Ltd. (ITA 160/2015 Delhi High Court). Considering the above decisions, it is held that disallowance u/s 40(a)(ia) cannot be made if recipient has offered payment made by assessee as income in their hands. The Assessing Officer is directed to verify above facts and if it is found that payee has already offered above amount as income in their return of income, disallowance u/s.40(a)(ia) made by Assessing Officer would not survive. However, the A.O. is free to take action in the case of the appellant u/s 201(1A)(i) of the Act for the payment of interest for the period from the date on which such tax was deductible on the above amount to the date of furnishing of the return of the income by the Deductee. While giving the appeal effect, the A.O. is directed to verify the Form No. 26A as submitted by the appellant and delete the addition of Rs. 14,95,961/-. The appellant ground of appeal is allowed and addition stands deleted.
Aggrieved against the same, the Revenue is before us raising the following Grounds of Appeal:
1. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 14,95,961/- made by Assessing Officer on account of disallowance made u/s 40(a)(ia) of the Act.
2. On the facts and circumstances- of the case, Ld.CIT(A) ought to have upheld the order of the Assessing Officer.
3. It is, therefore, prayed that the order of Ld.CIT(A) may be set aside and that of the Assessing Officer be restored.
4.1. The limited argument of the Ld. D.R. is that the Ld. CIT(A) ought not to have deleted the addition made u/s. 40(a)(ia) of Rs. 14,95,961/-, when he has directed the A.O. to take action in the case of the assessee u/s 201 (1A) of the Act for the payment of Page No 4 ACIT vs. Shri Manish Raichand Shah interest for the period from the date on which such tax was deductible on the above amount to the date of furnishing of the Return of Income by the Deductee. Further more, the Ld. CIT(A) directed the Assessing Officer to verify the above facts that payee has already offered the above amount as income in the Return of income, then the disallowance made u/s. 40(a)(ia) does not survive.
Per contra the ld. Authorized Representative appearing for the assessee could not produce before us the giving effect order passed by the Assessing Officer and status of the directions given by the ld. CIT(A). Further he has no objection in remanding the matter back to the Assessing Officer for the verification of the payee having offered that amount as income in the Return of income filed by the parties.
Heard both the parties and perused the materials available on record. We find that the ld. CIT(A) directed the assessing officer to verify whether the payee has already offered the amount as income in the Return of income. However concluded that the addition made by the A.O. is deleted, which is self-contrary to the findings made by the ld. CIT(A). Therefore it is appropriate to remit the case back to the file of the Assessing Officer for limited purpose of verification, whether the payee has already offered the amount as income in the Return of Income and make appropriate disallowance pursuant to the verification thereon.
Page No 5 ACIT vs. Shri Manish Raichand Shah
In the result, the appeal filed by the Revenue is allowed for statistical purpose.