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Income Tax Appellate Tribunal, BENCH “F”, MUMBAI
Before: SHRI PAWAN SINGH & SHRI RAJESH KUMARShri Ram Tiwari (DR) PER PAWAN SINGH:
Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee under section 253 of Income Tax Act (‘the Act’) is directed against the order of Ld. Commissioner of Income-Tax (Appeals)- 53, Mumbai, [for short the ld. CIT(A)] dated 23.06.2016 for Assessment Year 2011-2012 which in turn arises from the assessment order passed by Assessing Officer under section 143(3) of the Act dated 14.03.2014. The assessee has raised the following grounds of appeal:
1. On the facts and in the circumstances of the case and in law the learned CIT(A)-53, Mumbai grossly erred in confirming the disallowance made by the Dy. CIT, Central Circle-5(3) (before reorganization formerly it was by. CIT C.C. 36), Mumbai of interest expenditure incurred of Rs.2,71,257/- on the capital borrowed for purchase of motor car.
2. On the facts and in the circumstances of the case and in law the learned CIT(A)-53, Mumbai grossly erred in confirming the disallowance made by the Dy. CIT, Central Circle-5(3) (before reorganization formerly it was Dy. CIT C.C. 36), Mumbai of Rs.2,71,257/- under the provisions of section 40(a)(ia) of the Act as the appellant has failed to deduct TDS on the same.
Brief facts of the case are that the assessee is engaged in the business of real estate development, filed its return of income for relevant Assessment Year on 30.09.2011. The Assessing Officer while passing the assessment besides the other disallowances disallowed Rs. 2,71,257/- on account of non- deduction of tax at source on payment of interest made to M/s Tata Capital Ltd. On appeal before the Ld. CIT(A), the action of Assessing Officer was confirmed. Thus, further aggrieved by the order of Ld. CIT(A), the assessee has filed the present appeal before us.
We have the Ld. Authorized Representative (AR) of the assessee and Ld. Departmental Representative (DR) for the Revenue and perused the order of authorities below. The Ld. AR of the assessee submits that the assessee has not deducted the tax at source while making the payment of interest to M/s Tata Capital Ltd. It was submitted that the second proviso in section 40(a)(ia) is brought by Finance Act 2012 and is applicable w.e.f. 01.04.2013. The said proviso is held to be retrospective in nature by various decision of Tribunal and by Hon’ble Delhi High Court in CIT Vs Ansal Landmark Townships (P.) Ltd. [2015] (377 ITR 635). The Ld. AR of the assessee further submitted that Tata Capital Ltd. has paid the tax on the interest income on payment of interest by assessee. The Ld. AR of the assessee further submits that no disallowances warranted at the hand of assessee and the matter may be restored to the file of Assessing Officer for limited purpose for verification of payment on tax on such interest payment 2 M/s Palash Corporation by Tata Capital Ltd. and to grant the relief to the assessee. On the other hand, the Ld. DR for the Revenue fairly conceded that he has no objection, if the matter is restored to the file of Assessing Officer for verification, if the recipient of the interest has included the interest income in their return of income.
We have considered the rival submission of the parties and find merit in the submission of Ld. AR of the assessee. Accordingly, the grounds of appeal
raised in the present appeal is restored to the file of Assessing Officer to verify the fact whether the recipient of interest have included the interest income while filing return of income. With these limited direction that if the recipient has included the interest income and had paid the tax, the disallowance be deleted, hence, the matter is restore to the file of Assessing Officer to examine the issue afresh and consider the application of second proviso to section 40(a)(ia) of the Act and pass the order in accordance with law. Needless to say that the Assessing Officer shall grant necessary opportunity of hearing before passing the order.
5. In the result, appeal filed by assessee is allowed for statistical purpose. Order pronounced in the open court on 19th day of March 2018.