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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Ms. Annapurna Gupta & Ms. Suchitra Kamble
Appellant by : None Respondent by : Shri Shaurya S Shukla Date of hearing : 23-03-2022 Date of pronouncement : 30 -03-2022 आदेश/ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:-
The present appeal has been filed by the Revenue against the order passed by the Commissioner of Income Tax (Appeals)-10, Ahmedabad, (in short referred to as CIT(A)), dated 06-03-2020, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the “Act”) pertaining to Assessment Year (A.Y) 2012-13.
The Registry has marked the appeal as delayed by 25 days. But it is noted that the appeal was filed on 11/06/2020 When, due to the pandemic of Covid-19, the limitation prescribed for filing appeals was extended till further orders’ by the Hon’ble Supreme Court vide its order in Suo Moto Writ Petition (Civil) No Page No 2 JCIT vs. Navin Mangaldas Patel (s).3/2020 dated 23/03/2020 which ultimately was extended upto 28th February 2022 in Miscellaneous Application No.21 of 2022 dated 10th January 2022. Therefore, there is no delay as such in the filing of the appeal.
None appeared on behalf of the assessee and no application seeking adjournment was filed despite notice of hearing being duly issued and served on the assessee. We have also noted from the assessment order that the assessee has remained non- cooperative before him also having not responded to notices sent to him as detailed at para 2 of the order, forcing the Assessing Officer (A.O.) to complete the assessment on the basis of material before him. Since the assessee does not appear to be interested in prosecuting the appeal, the appeal was proceeded to be heard with.
The solitary issue in the present appeal relates to the deletion of disallowance made by the A.O. u/s. 40(a)(ia) of the Act as per ground no. 1 raised by the Revenue which reads as under: 1. The Ld.CIT(A) has erred in law and on facts in deleting the disallowances made by the Assessing Officer u/s 40(a) (ia) of the IT Act
5. The ld. D.R. pointed out that the disallowance pertained to interest payment of Rs. 9,76,050/- for non-deduction of tax at source thereon as per the provision of Section 40(a)(ia) of the Act. The ld. D.R. pointed out that the impugned interest expenses were incurred on borrowings from an NBFC namely IHFL i.e. India Housing Finance Ltd. Ld. D.R. contended that the ld. CIT(A) held that the asessee was saved from the rigorous of Section 40(a)(ia) of the Act, Since the recipient of interest i.e IHFL had disclosed the said interest in its income and the assessee therefore could not be treated as assessee in default within the meaning of Section 201 of the Act. The ld. D.R. contended that the Ld. CIT(A) had accepted the contentions of the assessee without any documentary evidence in this regard filed before him and for that matter verified by him. He drew our attention to Para 4 to 6of the order of the Ld. CIT(A) pointing out the above facts as under:
Page No 3 JCIT vs. Navin Mangaldas Patel 4. Ground no. 3 of the appellant is related to disallowance of interest payment of 9,76,050 - u/s,40(a)(ia) of the Act, which is only addition made by the Assessing Officer. The facts are given in Para 3 of the order of AO. The Appellant has incurred interest expenses on account of its borrowings from an NBFC namely IHFL. No TDS was deducted in respect of interest of interest payments to IHFL and Interest of Rs. 9,76,050/- was disallowed u/s 40(a)(ia) of the Act.
Before this office the appellant has submitted that IHFL has shown the receipts from the Appellant as its income and thus the Appellant cannot be treated as "Assessee in Default" within the meaning of S.201 of the Act and hence no disallowance can be made u/s 40(a)(ia) of the Act. He has placed reliance on the decision of Hindustan Coca Cola Beverages P Ltd Vs. ClT163 Taxman 355 and decision of Delhi High court in the case of Ansal Land Mark Township (P.) Ltd where it is held that second proviso to section 40(a)(ia) is declaratory and curative and it has retrospective effect from 1-4-2005.
I have gone through the submissions of appellant. Decision of apex court Hindustan Coca Cola Beverages P Ltd Vs. CIT 163 Taxman 355 and decision of Delhi High court in the case of Ansal Land Mark Township (P.) Ltd is directly applicable in this case. Accordingly, I am deleting the addition of Rs. 9,76,050/-made by the Assessing Officer in this case. Ground of appeal no. 3 is allowed.
Since relief is allowed on quantum, other grounds of appeal are not adjudicated.
The Ld. D.R. stated that the solitary prayer therefore was that the matter be restored back to the Ld. CIT(A) to verify the facts and thereafter to adjudicate the issue in accordance with law.
We have gone through the order of the Ld. CIT(A) and we are in agreement with the contention of the Ld. D.R. that the entire order of the ld. CIT(A) does not find mention of any document worth its while filed by the assessee before him evidencing the fact of the recipient of interest income i.e. IHFL disclosing the impugned interest Page No 4 JCIT vs. Navin Mangaldas Patel income in its return of income and paying taxes thereon . Since this is the basis on which the Ld.CIT(A) allowed assesses ground of no disallowance to be made with respect to the said payment for non deduction of tax at source as per section 40(a)(ia) of the Act, We therefore consider it fit to restore the issue back to the ld. CIT(A) with the direction to verify the contention of the assessee and thereafter adjudicate the issue in accordance with law and passing a speaking order in this regard. Needless to add the assessee be granted due opportunity of hearing. Ground of appeal raised by the Revenue is allowed for statistical purposes.
In effect appeal of the Revenue is allowed for statistical purposes.