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

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.

Ld. Counsel for the assessee submitted that assessee was a 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

Contention of the ld. Authorised Representative before us is 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.

We have considered the rival contentions and perused the 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.