ROYAL INDIA GEMS & JEWELS PVT LTD.,CHENNAI vs. ITO CORPORATE WARD 5(3), CHENNAI

आदेश / O R D E R

PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:

In this appeal filed by the assessee, it assails a disallowance of

�9,20,853/- made by the ld. Assessing Officer u/s.40(a)(ia) of the

Income Tax Act, 1961 (herein after referred to as ‘the Act’) for want

of deduction of tax at source.

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Assessee has filed this appeal with a delay of thirty four 2.

days. Condonation petition has been filed. Reasons shown for the

delay seems to be justified. Ld. Departmental Representative did not

raise any serious objection. Delay is condoned. Appeal is admitted.

wholesaler trader of gems & jewel. As per the ld. Authorised

Representative, assessee had paid interest of �61,16,283/- during the

relevant previous year which included a sum of �9,20,853/- paid to

M/s. Reliance Capital Ltd. Further, as per the ld. Authorised

Representative, assessee could not furnish form 26A declaration from

M/s. Reliance Capital Ltd to the ld. Assessing Officer. Nevertheless, as

per the ld. Authorised Representative, assessee had addressed a letter

to M/s. Reliance Capital Ltd on 18.03.2016 requesting it to furnish

Form 26A. However, as per the ld. Authorised Representative, ld.

Assessing Officer took a view that assessee had failed to deduct tax at

source on such payments, and made a disallowance of �9,20,853/-

u/s.40(a) (i) of the Act. Further, as per the ld. Authorised

Representative, assessee’s appeal before ld. Commissioner of Income

Tax (Appeals) did not meet with any success.

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that assessee had done everything what was possible for obtaining the

necessary confirmation from M/s. Reliance Capital Ltd for having

included the interest in its returned income. According to the ld.

Authorised Representative, if given one more opportunity assessee

would be able to bring in corroborative evidence to show that M/s.

Reliance Capital Ltd had included the interest which was received by

them from the assessee in their return of income. According to him,

by virtue of first proviso to Section 201(1) of the Act, once the payee

had computed its income taking into account the interest received by it

and filed its return after paying the dues taxes, the payer cannot be

deemed to be an assessee in default. Further, according to him, by

virtue of proviso to Section 40(a)(i) of the Act, assessee could not be

deemed as one in default, once the payee had paid due taxes and

returned the interest income. The proviso as per the ld. Authorised

Representative had to be construed retrospectively by virtue of the

judgment of Hon’ble Delhi High Court in the case of CIT vs. Ansal

Land Mark Township P. Ltd (2015) 377 ITR 635.

Per contra, ld. Departmental Representative strongly 5.

supported the orders of the lower authorities.

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orders of the authorities below. Disallowance u/s.40(a)(i) of the Act

was fastened on the assessee for its failure to furnish Form 26A for the

interest paid by it to M/s. Reliance Capital Ltd. As per the ld.

Authorised Representative, assessee had addressed a letter on

18.03.2016 to M/s. Reliance Capital Ltd for getting Form 26A, but the

said company had not responded. Where the payee had included the

amounts received as a part of its income and filed return after paying

the taxes, assessee can always say that it cannot be deemed as one in

default. By virtue of the judgment of Hon’ble Delhi High Court in the

case of Ansal Land Mark Township P. Ltd (supra), first proviso to

Section 201(1) as well as proviso to Section 40(a)(i) of the Act had to

be construed retrospectively. Considering the facts and circumstances

of the case, we are of the opinion that issue requires a fresh look by

the ld. Assessing Officer. Ld. Assessing Officer can use the powers

vested on him for getting the required information from M/s. Reliance

Capital Ltd, so as to ascertain whether they had included the interest

paid by the assessee, as a part of their income and filed return after

paying due taxes. Ld. Assessing Officer can also direct the M/s.

Reliance Capital Ltd to issue the certificate mandated in Annexure A to

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form 26A, if the said company fails to respond to assessee’s request. Ld. Assessing Officer shall thereafter proceed in accordance with law.

In the result, the appeal of the assessee is allowed for 7. statistical purpose.

Order pronounced on Tuesday, the 18th day of September, 2018, at Chennai.

Sd/- Sd/- (जॉज� माथन) (अ�ाहम पी. जॉज�) (GEORGE MATHAN) (ABRAHAM P. GEORGE) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER

चे�नई/Chennai �दनांक/Dated:18 September, 2018. KV आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�त (अपील)/CIT(A) 5. �वभागीय ��त�न�ध/DR 2. ��यथ�/Respondent 4. आयकर आयु�त/CIT 6. गाड� फाईल/GF