RAGHUBIR BHUWALKA,HOWRAH vs. ITO, WARD - 46(2) , KOLKATA

The first ground of appeal of the assessee is against the action of the Ld. CIT(A) in sustaining the addition of a sum of Rs.3,92,964/- made by the AO on account of interest and remuneration received from partnership Firm.

Brief facts of the case as noted by the AO are that during the course of assessment proceedings it came to his notice that assessee is the partner of the Firm named M/s. Uttam Engineers from where the assessee has derived income from remuneration of Rs.1,65,898/- and interest on capital which he has invested to the tune of Rs.2,26,944/-. However, according to AO, this total amount of Rs.3,92,842/- had not been disclosed by the assessee in his total income for the year under consideration. So, he issued show cause to the assessee as to why the said undisclosed receipt should not be included in the total income of the assessee. According to AO, the assessee had replied in writing that it was omitted from the accounts due to clerical error. So, the Assessment Year: 2013-14 Raghubir Bhuwalka. AO not satisfied with the explanation of the assessee in respect of the undisclosed receipt as a partner from M/s. Uttam Engineers totalling Rs.3,92,842/- was added back to the total income of the assessee. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) and contended that he has duly disclosed the amount in the return of income and offered the amount of Rs.3,92,842/- as his income. However, the Ld. CIT(A) observed that the assessee has produced only photo copy of the computation of taxable income which does not even mention the relevant assessment year and since the assessee has not provided full computation statement (only a single sheet was provided before the Ld. CIT(A) according to him does not even mention the assessment year), therefore, the Ld. CIT(A) rejected the claim of the assessee that the assessee had duly offered in its return of income the said amount received from his partnership Firm. Moreover according to Ld. CIT(A), since the assessee did not file the entire return of income, he could not verify the veracity of the contention of the assessee that he had disclosed the amount in the return of income. Therefore, he sustained the order of the AO. Aggrieved, assessee is before us.

Having heard both the parties and after perusal of the records, we note that the AO had added the remuneration of Rs.1,65,898/- and interest on capital of Rs.2,26,944/- received by the assessee from M/s. Uttam Engineers totalling Rs.3,92,842/- since according to him, the assessee had not disclosed the total amount of Rs.3,92,842/- in his books. According to assessee/Ld. AR, the assessee had filed the balance sheet of the proprietary concern and the amount received from the partnership was not routed through the P&L Account of the assessee. According to assessee he infact had shown the amount in its computation of taxable income and drew our attention to the computation of taxable income where we note that the assessee had in fact shown interest on capital from M/s. Uttam Engineers at Rs.2,26,944/- and partner’s remuneration from M/s. Uttam Engineers of Rs.1,65,898/- . Our attention was also drawn to page no. 10 of the paper book, wherein column 23 the assessee had shown the income of Rs.3,92,842/- in its return of income which is placed from pages 1 to 24 of the paper book. Thus, it has been contended that the assessee has duly disclosed the amount, which the AO has added again which action

Brief facts of the case as noted by the AO are that from a perusal of the consolidated P&L Account of the assessee it revealed that assessee had made payments without deduction of TDS in respect of interest paid to the tune of Rs.1,24,411/-. After issuing show cause to the assessee the AO noticed that the assessee could not offer any explanation regarding the expenditure incurred on account of interest paid of Rs.1,24,411/- and since he paid interest without deducting tax at source, the AO disallowed the same for violation of provision of section 40(a)(ia) of the Act and added back to the total income of the assessee. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who was pleased to sustain the same. Aggrieved, the assessee is before us.

Having heard both the parties and after perusal of the records, we note that the contention of the assessee is that assessee has paid Rs.1,24,411/- to M/s. Angel Broking Ltd. on account of interest and the AO has disallowed the same interest expenditure for non-deduction of TDS while making the payment. The limited prayer of the assessee is that as per the amendment made in the Finance Act w.e.f. 01.04.2015 in respect of section 40(a)(ia) of the Act wherein amendment has been made to the effect that the disallowance should be computed at 30% of the total amount on which tax has not been deducted and therefore, according to him, 100% disallowance should be restricted to 30%, since the Tribunal has held that this amendment is retrospective in nature and relied on the order of the Kolkata Tribunal in M/s. Imax Infrastructure Pvt. Ltd., IT(SS) A No. 23/Kol/2017 & CO No. 77/Kol/2017 vice versa dated 16.01.2019 wherein it has been held that said amendment to section 40(a)(ia) of the Act brought with effect from 01.04.2015 is curative in nature and so retrospective in operation and cited several other decisions and, therefore, the limited prayer is that the 100% disallowance made by the AO should be restricted to 30% which works out to Rs.37,323/- in place of the addition of Rs.1,24,411/- made by the AO. We find substantial force in the contention of the assessee that 30% of the disallowance only may be sustained in view of the amendment brought into Finance Act No. 2 w.e.f. 2015.

We also note that in the case of M/s. Imax Infrastructure Pvt. Ltd. (supra) the Tribunal has observed as under in a similar case:

Respectfully following the ratio we set aside the order of Ld. CIT(A) and restrict the disallowance at 30% of the disallowed amount i.e. Rs.1,24,441/- and the balance disallowance is deleted. Appeal of assessee is partly allowed.