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Income Tax Appellate Tribunal, ‘C’ (SMC
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
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.
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.
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
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.
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.
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.
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.
Reliance Capital Ltd to issue the certificate mandated in Annexure A to 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.