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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA & SHRI LALIET KUMAR
O R D E R
Per Shri Laliet Kumar, Judicial Member
The present appeal is being filed by the revenue on the following grounds . “1. The Order of the Ld. CIT (A), in so far as it is prejudicial to the interest of the Revenue, is opposed to law and the fact and circumstances of the case.
2. On facts of the case, whether the Ld CIT (A) is right in allowing the appeal of the assessee easing the provisions of section 40(a)(ia) in favour of the assessee, wherein no where it was held that the assessee is at his liberty whether to deduct the TDS or not, which is against the intent and purpose of the statute.
3. Whether the Ld CIT(A) is right in allowing the appeal of the assessee, wherein the learned appellate authority himself is stating that the assessee is a chronic defaulter of TDS.
4. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT (A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
Page 2 of 4 5. The appellant craves leave to add, alter, amend and / or delete any of the grounds that may be urged.”
The Assessing Officer in paragraph 3 have mentioned as under. “03. It is seen from the Note-18 under the head, "Finance Costs" attached to Profit and Loss Account that assessee has debited an amount of Rs.2,99,13,398/- towards expenses. When the AR was asked to explain the same, he has produced the details as per which it has been found that the following amounts relate to the interest payments to Non-Banking Financial Corporations and TDS was not affected on the said expenditure. (1) Cholamandalam Finance Rs. 3,44,516/- (2) India Bulls Finance Rs. 9,36,518/- (3) Larsen & Toubro Finance Rs. 34,01,977/- (4) Magma Finance Rs. 4,12,914/- (5) Reliance Capital Rs. 6,15,359/- (6) Religare Finance Rs. 6,07,245/- (7) SREI Finance Rs. 53,43,393/- (8) TATA Finance Rs. 8,88,901/- TOTAL Rs. 1,25,50,823/- After examining the same and after discussions with the AR, the said expenses of Rs. 1,25,50,823/- have been disallowed u/s 40(a)(ia) of IT Act and brought to tax since the same are not allowable expenditure as per the IT Act. (Addition - Rs. 1,25,50,823/-)”
Feeling aggrieved by the order and disallowance made by the Assessing Officer as mentioned in para 3, the assessee filed the appeal before CIT(A). The CIT(A) has granted relief to the assessee on the basis of the conclusion mentioned at paras 6(iii) and iv on pages 7 and 8 to the following effect. “6 (iii) The assessee during the appeal-proceedings has submitted as set of interest certificates from the deductees to the effect that the impugned receipts were duly offered for tax in the respective return of income. However, the CA's certificates are filed in respect of only few of the entities. It is seen that, on basis of similar interest certificates, proportional allowances have been made by the AO (and allowed by the undersigned) in respect of the same entities, in the AY: 2013-14, which is simultaneously under adjudication. In the appeal for the (A Y 2011-12), no such interest certificates have been filed either before the AO or the undersigned, and the same has been therefore disallowed. In view of the facts & circumstances of the present case and in the interest of fairness and consistency, the disallowance made u/s 40(a)(ia) made by the AO is therefore directed to be deleted.
Page 3 of 4 (iv) While allowing the assessee's appeal, it is necessary to take into account the persistent, TDS default committed by the appellant from year to year. The judicial precedents on the subject having been duly perused. With due reverence to the findings therein, it is necessary to place the issue into perspective. The central logic and reasoning for the judicial decisions allowing the paid amount during the year / relevant period, is mainly to avoid genuine hardship of double taxation in certain cases, where TDS(otherwise deductible) could not be affected for explicable reasons or where the recipient has duly paid taxes However, the intent and purpose of these judicial pronouncements is not to completely off-set the requirement of TDS - on payments, as a matter of routine. It is to be appreciated in light of these observations coupled with the findings of the AO, that, no deduction was made, despite there being no dispute on applicability of TDS provisions on the impugned payment. In these facts and circumstances, the AO remains at liberty to ascertain the position of TDS compliance by the assessee from year to year and if the violation is found to be chronic occurrence, necessary action as per law and / or by reference to the TDS Wing, as deemed necessary may be taken.”
Now the revenue is in appeal on the grounds mentioned above.
The ld. DR for the revenue had submitted that the assessee is habitual defaulter and in previous, subsequent and the present year the assessee has not complied the provision of law.
None was present on behalf of the assessee, therefore we are constrained to apply our mind in the absence of any assistance from the assessee. We have heard the rival contentions of the parties and perused the record. The conclusion drawn by ld. CIT(A) is based on the submission made by the assessee which was aptly mentioned in paragraph 6(iii) and (iv) (supra) and we do not find any error in the order passed by the CIT(A) as the same is in accordance with law. Moreover, we have mentioned that once the payee had already shown the interest income in the computation and in the return of income, then there is no loss to the revenue as the taxes has already been paid on the interest income. In view of the above, the appeal of the revenue is dismissed.
Page 4 of 4 7. In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on the date mentioned on the caption page.