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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश / O R D E R
PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER:-
This appeal by the Revenue is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-3, Madurai dated 13.06.2016 in for the assessment year 2012-13 passed u/s.250(6) r.w.s.143(3) of the Act.
The Revenue has raised several grounds in its appeal, however the crux of the issue is that the Ld.CIT(A) has erred in deleting the addition made by the Ld.AO invoking Section 40(a)(ia) of the Act towards non-deduction of tax at source.
The brief facts of the case are that the assessee is a private limited company engaged in the business of windmill power generation and its maintenance, filed the return of income for the assessment year 2012-13 on 30.09.2012, admitting total income of Rs.1,67,25,390/-. Initially the return was procession U/s.143(1) of the Act. Subsequently the case was selected for scrutiny under CASS and finally order was passed U/s.143(3) of the Act on 30.03.2015, wherein the Ld.AO disallowed interest payment of Rs.50,04,848/- to M/s. L & T Finance and Tata Finance invoking the provisions of Section 40(a)(ia) of the Act, due to non-deduction of tax at source.
On appeal, the Ld.CIT(A) granted relief to the assessee by deleting the addition made by the Ld.AO, because the assessee had established before him that the recipient of the interest had included the same in their respective return of income filed in compliance with Section 139(1) of the Act and paid tax duly.
Further the assessee had also produced the requisite certificate from the qualified Chartered Accountant as prescribed under the Act. The gist of the decision of the Ld.CIT(A) is reproduced herein below for reference “3.3. Without prejudice to the above, the representative submitted that the appellant had already made the payments by means of post paid cheques and nothing was outstanding at the year end and, therefore, u/s 40(a)(ia) is not applicable as it can be applied only in respect of payable amount. The representative contended that as nothing was "payable" as on 31.03.2012, no disallowance could be made as per the decision of the Hon'ble Allahabad High Court in the case of Vector Shipping Services Private Limited (357 ITR 642) in which it was held that disallowance u/s 40(a)(ia) could be made only if the amount was outstanding as at , the end of the year as the words used in section 40(a)(ia) is "Payable" and not "Paid". The representative further relied on the decision of the Hon'ble Chennai Tribunal in the case of M/s Devendra Exports Private Limited (2015) 038 ITR (Tribunal) 0744 and also the decision of the Hon'ble Chennai Tribunal in the case of M/s Narayana Moorthy Travels (2015) 038 ITR (Tribunal) 0592.
4. I have considered the submissions of the representative. Admittedly, the appellant paid interest to M/s L & T Finance Ltd and M/s Tata Finance Ltd during the year without deduction of tax at source and, therefore, the Assessing Officer disallowed the entire interest claimed u/s 40(a)(ia). However the second proviso to section 40(a)(ia) was inserted by Finance Act, 2012 with effect from 01.04.2013. The Hon'ble Agra Tribunal Rajeev Kumar Agarwal (cited above) held that this amendment being beneficial to the assessee is retrospective in nature and consequently it is applicable to earlier assessment years also. The appellant has filed Form No.26A from a qualified Chartered Accountant stating that both the above parties are assessed to income tax and they have filed their income tax returns on 29.09.2012 and paid the taxes by offering interest income received from the appellant, Copies of annexure of Form 26A are enclosed to this order. It is seen from the same that the above companies have paid the taxes due within the due date of filling of return u/s 139(1). In the 4 circumstances, as per second proviso to section 40(a)(ia), no disallowance can be made and consequently the addition made by the Assessing Officer is deleted.
4.1. Without prejudice to the above, as the entire interest amount had been paid during the year itself, disallowance u/s 40(a)(ia) is not correct as only "payable" amount can be disallowed. The decisions relied on by the representative support the case of the appellant. I therefore, direct the Assessing Officer to delete the disallowance on this ground also.”
Since the Ld.CIT(A) has allowed the appeal of the assessee following the ratio laid down in the decision of the Tribunal (supra), we do not find it necessary to interfere with his order. Accordingly we hereby uphold the same.
In the result, appeal of the Revenue is dismissed.
Order pronounced on the 10th July, 2017 at Chennai.