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Income Tax Appellate Tribunal, KOLKATA BENCH ‘SMC’, KOLKATA
Before: Shri P.M. Jagtap, AM]
IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH ‘SMC’, KOLKATA [Before Shri P.M. Jagtap, AM] I.T.A. No. 186/Kol/2018 Assessment Year: 2014-15 M/s. Shera Electric Co. .................................……………………………………….................Appellant 47, Lenin Sarani, Kolkata – 700 013 [PAN: AAMFS 3071 R] ITO, Ward 33(4) Kolkata...................……………………………………………..................Respondent 10B, Middleton Row, 3rd Floor, Kolkata – 700 071. Appearances by: Shri V.N. Purohit, AR appearing on behalf of the Assessee. Shri D.C. Mondal, Addl. CIT appearing on behalf of the Revenue. Date of concluding the hearing : May 29, 2018 Date of pronouncing the order : June 20, 2018 ORDER This appeal filed by the assessee is directed against the order of Ld. CIT (Appeals) – 9, Kolkata dated 25.10.2017 and the solitary issue involved therein relates to the addition of Rs. 10,34,160/- made by the AO and confirmed by the Ld. CIT(A) on account of disallowance of interest under section 40(a)(ia) of the Income Tax Act, 1961.
At the outset, it is noted that there is a delay of 4 days on the part of the assessee in filing this appeal before the Tribunal. In this regard, the assessee has filed an application seeking condonation of the said delay and keeping in view the reasons given therein, I am satisfied that there is a sufficient cause for the delay of 4 days on the part of the assessee in filing this appeal before the Tribunal. The learned DR has also not raised any objection in this regard. The said delay is accordingly condoned.
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The assessee in the present case is an individual who is engaged in the business of execution of works contract. The return of income for the year under consideration was filed by him on 30.11.2014 declaring a total income of Rs. 8,02,820/-. In the profit and loss account filed along with the said return, a sum of Rs. 18,33,673/- was debited by the assessee on account of interest paid on loans. During the course of assessment proceedings, the claim of the assessee for deduction on account of interest was examined by the AO. On such examination, he found that the assessee was liable to deduct tax at source under section 194A of the Act from the payment of interest of Rs. 10,34,160/- made to HDB Financial Services Ltd. and Cholamondalam Investment and Finance Co. Ltd. Since the assessee had failed to comply with the said requirement, the interest of Rs. 10,34,160/- was disallowed by the AO under section 40(a)(ia).
The disallowance made by the AO on account of interest under section 40(a)(ia) was challenged by the assessee in the appeal filed before the Ld. CIT(A) who confirmed the said disallowance as the assessee could not offer any satisfactory explanation as regards its failure to deduct tax at source from the payment of interest of Rs. 10,34,160/- as required by under section 194A of the Act. Aggrieved by the order of the Ld. CIT(A), the assessee has preferred this appeal before the Tribunal.
I have heard the arguments of both the sides and also perused the relevant material available on record. The only contention raised
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by the learned counsel for the assessee is that the recipients of interest in question having offered to tax the said interest income in their hands and having paid tax thereon, the assessee again cannot treated as assessee in default in respect of the same tax which is already paid by the recipient and consequently disallowance under section 40(a)(ia) cannot be sustained. The learned DR, on the other hand, has contended that this issue raised by the learned counsel for the assessee for the first time before the Tribunal requires verification. We find merit in this contention of the learned DR and since the learned counsel for the assessee has not raised any objection in this regard, I set aside the impugned order of the Ld. CIT(A) on this issue and restore the matter to the file of the AO for the limited purpose of verifying the new claim made by the assessee. The AO shall afford sufficient opportunity of being heard to the assessee and decide the issue in accordance with law.
In the result, the appeal of the assessee is treated as allowed for statistical purpose. Order Pronounced in the Open Court on 20th June, 2018.
Sd/- (P.M. Jagtap) ACCOUNTANT MEMBER Dated: 20/06/2018 Biswajit, Sr. PS Copy of order forwarded to: 1. M/s. Shera Electric Co., 47, Lenin Sarani, Kolkata – 700 013. 2. ITO, Wd –33(4), 10B, Middleton Row, 3rd Floor, Kolkata – 71.
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The CIT(A) 4. The CIT 5. DR True Copy, By order, Sr. P.S. / H.O.O. ITAT, Kolkata