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Before: Shri Inturi Rama Rao & Shri Duvvuru RL Reddy
O R D E R
PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-Puducherry, Puducherry, dated 31.08.2018 relevant to the assessment year 2012-13. The only effective ground raised in the appeal of the assessee is that the ld. CIT(A) erred in confirming the disallowance made under section 40(a)(ia) of the Income Tax Act, 1961 [“Act” in short].
Brief facts of the case are that the assessee is an individual and filed her return of income for the assessment year 2012-13 on 31.03.2013 admitting income of ₹.8,05,650/-. The return filed by the assessee was processed under section 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny and notice under section 143(2) of the Act was issued. After considering the details filed against statutory notices, the assessment under section 143(3) of the Act was completed by assessing total income of the assessee at ₹.23,58,303/- after making disallowance of ₹.15,52,653/- under section 40(a)(ia) of the Act. On appeal, the ld. CIT(A) confirmed the disallowance.
On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the assessee has paid interest to M/s. Hindustan petroleum Corporation Ltd. [HPCL] and the same was shown in his profit and loss account. Since the above interest receipt is an income to HPCL is liable for income tax and would have paid, disallowance of interest expenditure due to non deduction of TDS is against the natural justice and prayed for deleting the addition. On the other hand, the ld. DR supported the orders of authorities below.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In the profit and loss account, the assessee has debited ₹.9,28,673/- as interest as well as ₹.6,23,980/- as interest on instalment paid to HPCL. However, the Assessing Officer noticed that the assessee has not deducted TDS on the above payments as required under section 194A of the Act. Since the assessee has not produced any evidence of tax payment by HPCL, the Assessing Officer disallowed the entire amount of expenditure claimed by the assessee and brought to tax. On appeal, the ld. CIT(A) has observed that the assessee has not produced any evidence of deduction of TDS as well as any certificate from the recipient under section 197 of the Act for non- deduction of TDS. Therefore, in the absence of any evidence, the ld. CIT(A) has observed that the assessee is liable for disallowance under section 40(a)(ia) of the Act.
4.1 The payment of interest and interest on instalment were not in dispute, but, the assessee has not deducted the TDS on the above payments. We are of the considered opinion that the burden lies on the assessee to deduct TDS. When the assessee has not deducted the TDS, it is the duty of the assessee to obtain relevant certificates from the recipient having paid taxes on the above payments. Thus, we direct the assessee to produce necessary certificate on payment of taxes by the recipient on the above payments before the Assessing Officer and after verification of the same, he may allow the deduction in view of the decision in the case of CIT v. Ansal Land Mark Township P. Ltd. 377 ITR 635 (Del) and if the assessee fails to produce the same, the disallowance made under section 40(a)(ia) of the Act stands confirmed. Thus, the ground raised by the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced on the 19th February, 2020 in Chennai.