ZENITH ERECTORS PVT. LTD., ,HALDIA vs. ACIT, CIRCLE - 27, HALDIA , HALDIA

The assessee’s first substantive ground challenges both the lower authorities’ action disallowing various payments amounting to ₹2,07,27,715/- u/s 40(a)(ia) of the Act on account of its failure in deducting TDS thereupon.

Zenith Erectors Pvt. Ltd. Vs. ACIT, Cir-27, Haldia Page 2 We make it clear at the outset that there is no dispute about the non-deduction of TDS on the above payments. The assessee is fair enough to this effect. It files before us a copy of lists of payees details their PAN, total bill and TDS details during the course of hearing. Learned counsel quotes u/s. 40(a)(ia) 2nd proviso stipulating non application of impugned statutory provision in case of the payees concerned having assessed to tax not making it as the assessee in default u/s 201(1) of the Act. Hon'ble Delhi high court’s decision in the case of CIT vs. Ansal Land Mark Township Pvt. Ltd. (2015) 377 ITR 635 (Del) holds that sec. 40(a)(ia) 2nd proviso inserted by the Finance Act, 2012 w.e.f. 01.04.2013 applies with retrospective effect being curative in nature. We draw support therefrom and restore the instant first issue back to the Assessing Officer for factual verification of the payees in issue as to whether they have duly recorded payments in issue as income followed by assessment thereof as per law as stipulated in sec. 40(a)(ia) 2nd proviso r.w.s. 201(1) 1st proviso of the Act. The assessee is directed to file all the necessary details within three effective opportunities of hearing before the Assessing Officer. This first substantive ground is accepted for statistical purposes in above terms.

Next comes assessee’s second substantive ground seeking to delete second disallowance of interest payment amounting to ₹13,42,902/- paid to M/s Indian Oil Co. Ltd without deducting TDS. There is no issue herein as well that assessee has not deducted any TDS regarding the impugned interest payment. Hon'ble Delhi high court’s judgment in CIT vs. Trans Bharat Aviation (P) Ltd (2010) 320 ITR 671 (Del) has upheld the tribunal’s decision presuming that if the payee / deductee is a Government of India undertaking, it cannot be presumed to have not paid tax on the receipts in issue. Learned Departmental Representative is fair enough in not disputing the fact that deducteee herein M/s Indian Oil Co. Ltd. is a Government of India Public Sector Undertaking. We draw support from the above legal position and delete the impugned disallowance / addition in principle. We therefore conclude that assessee’s liability to pay interest is only upto the date of filing of return at its PSU/payee’s behest as per the said case law. The Assessing Officer is accordingly directed