SHRI SHRI BIHARILAL PATEL,RAIGARH(CG) vs. THE INCOME TAX OOFICER-1, RAIGARH(CG)

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ITA 218/BIL/2016Status: DisposedITAT Raipur04 June 2018AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the issue to the Assessing Officer for verification. The AO is to check if the recipients of the payments included these amounts in their computation of business income offered to tax.

What were the facts?

The assessee made payments of finance charges to non-banking finance companies without deducting tax at source. The Assessing Officer disallowed these expenses under Section 40(a)(ia) of the Income Tax Act.

What were the issues?

Whether disallowance under Section 40(a)(ia) is warranted when the recipient has offered the income to tax, despite non-deduction of TDS by the payer.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 194A

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR

Before: SHRI N.K. BILLAIYA (AM) & SHRI RAM LAL NEGI (JM)

For Appellant: Shri S.R. Rao (Advocate)
For Respondent: Shri Sanjay Kumar (DR)
Hearing: 09/03/2018Pronounced: 04/06/2018

PER RAM LAL NEGI, JM This appeal has been filed by the assessee against the order dated 28.03.2016 passed by the Ld. Commissioner of Income Tax (Appeals), Bilaspur, for the assessment year 2012-13, whereby the Ld. CIT (A) has partly allowed the appeal filed by the assessee against assessment order passed by the AO u/s 143 (3) of the Income Tax Act, 1961 (for short ‘the Act’).

2.

Brief facts of the case are that the assessee filed its return of income for the assessment year under consideration declaring the total income of Rs. 9,63,610/- and agriculture income of Rs. 81,400/-. Since, the case was selected for scrutiny the AO issued notice u/s 143 (2). In response to the said notice, the authorized representative of the assessee appeared before the AO and also submitted the details called for by the 2 Assessment Year: 2012-13

AO. After hearing the AR, the AO inter alia made addition of Rs. 85,27,962/- u/s 40(a)(ia) of the Act and determined the total income of the assessee at Rs. 95,98,990/-. The AO made the addition on the ground that the assessee had paid the finance charges of the said amount to various non banking finance companies such as Cholamandalam DVS Finance Ltd., Magma Fincorp Ltd., Relegere Finvest Ltd., SERI Infrastructure Finance Ltd., SERI Equipment Finance Pvt. Ltd. and debited the P&L account without deducting tax at source under the provisions of section 194A of the Act. The assessee challenged the assessment order before the Ld.CIT (A). However, the Ld. CIT (A) upheld the disallowance and dismissed this ground of appeal. The assessee is in appeal against the impugned order passed by the Ld. CIT (A).

3.

The assessee has preferred this appeal before the Tribunal on the following grounds:-

1.

“In the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) has erred in confirming the order of the learned Assessing Officer disallowing Rs. 85,27,962/- u/s 40(a)(ia) of the Income Tax Act, 1961 by overlooking the law laid down in various cases including that rendered by the Hon’ble jurisdictional Bench of Income Tax Appellate Tribunal.

2.

The order of the ld. Commissioner of Income Tax (Appeals) is bad in law and on facts.”

4.

At the outset, the Ld. counsel for the assessee submitted that the Raipur Bench of ITAT has dealt with the identical issue in the assessee’s own case ITA No. 42/RPR/2015 A.Y. 2010-11 and sent the issue back to 3 Assessment Year: 2012-13

the Assessing Officer for limited verification on the aspect as to whether the recipients of the payment have included the amount in their computation of business income offered to tax and if found to be so delete the disallowance in question by following the judgment of Hon’ble

6.

We have heard the rival submissions and also perused the material on record. The only grievance of the assessee is that the Ld. CIT (A) has wrongly made the disallowance u/s 40(a)(ia) of the Act on the ground that the assessee has failed to deduct the tax at source while making payments towards finance charges to various non banking financial companies. We further notice that the assessee’s case is covered by the order of the Raipur Bench of the ITAT aforesaid and the Tribunal has remitted the issue back to the file of AO to ascertain as to whether the payees have included the same in their income offered to tax.

7.

Since, the issue involved in this case is covered by the assessee’s own case pertaining to the assessment year 2011-12, respectfully following the said decisions, we restore the sole ground of the appeal to the file of the AO for limited verification on the aspect as to whether recipient of payment has included the same in their computation of 4 Assessment Year: 2012-13

business income offered to tax and if found so, to delete the disallowance made u/s 40(a)(ia) of the Act. In the result, appeal filed by the assessee for assessment year 2012- 2013 is allowed for statistical purposes.

Order pronounced in the open court on 4th June, 2018. (N.K. BILLAIYA) JUDICIAL MEMBER Raipur, दिन ांक Dated: 04/06/2018

Alindra, PS आदेश प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण,Raipur / DR, ITAT, Raipur 6. ग र्ड फ ईल / Guard file.

आदेशानुसार/ BY ORDER, सत्य दपि प्रदि //// उि/सहायक िंजीकार (Dy./Asstt.

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