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Before: Shri Sanjay Arora & Shri Duvvuru RL Reddy
आयकर अपील�य अ�धकरण, ‘‘डी’’ �यायपीठ, चे�नई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI �ी संजय अरोड़ा, लेखा सद�य एवं �ी धु�वु� आर.एल रे�डी, �या�यक सद�य के सम� Before Shri Sanjay Arora, Accountant Member & Shri Duvvuru RL Reddy, Judicial Member आयकर अपील सं./I.T.A.No.849/Mds/2017 �नधा�रण वष�/Assessment Year:2012-13 M/s. Hydromet (India) Ltd., The Deputy Commissioner of No. 241, Mint Street, V Floor, Park Vs. Income Tax, Town, Chennai 600 003. Corporate Circle 2(2), Chennai – 34. [PAN:AAACH7165A] (अपीलाथ� /Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से / Appellant by : Shri V.S. Jayakumar, Advocate ��यथ� क� ओर से/Respondent by : Shri A. Srinivasan, JCIT सुनवाई क� तार�ख/ Date of hearing : 12.06.2017 घोषणा क� तार�ख /Date of Pronouncement : 21.06.2017 आदेश /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 6, Chennai, dated 07.02.2017 relevant to the assessment year 2012-13, wherein the only effective ground raised in the appeal of the assessee is that the ld. CIT(A) has erred in confirming the disallowance of an amount of ₹.36,79,702/- under section 40(a)(ia) of the Income Tax Act, 1961 [“Act” in short].
Brief facts of the case are that the assessee is engaged in manufacturing of non-ferrous metallic products and filed its return of income on 29.09.2012 admitting a total income of ₹.15,79,243/-. The assessment was completed under section 143(3) of the Act by assessing total income of ₹.53,25,123/- after making disallowances towards belated remittance of Employees CPF amounting to ₹.41,757/- and disallowance under section 40(a)(ia) of the Act for non-deduction of tax at source, amounting to ₹.36,79,702/-. Against the above disallowances, the assessee carried the matter in appeal before the ld. CIT(A) and the ld. CIT(A) confirmed the disallowance made under section 40(a)(ia) of the Act, against which, the assessee is in appeal before the Tribunal.
In the assessment order, the Assessing Officer has observed that the assessee has received loan from M/s. Religare Finvest Ltd. and paid an amount of ₹.36,79,702/- towards interest. Vide letter dated 11.02.2015 to the Assessing Officer, the assessee admitted that no tax was deducted on the interest payment. As per order sheet noting dated 11.02.2015, the AR of the assessee was asked as to why the interest payments to Religare Fininvest Ltd without TDS should not be disallowed. Since neither the assessee nor the AR of the assessee has replied to the above, the Assessing Officer was of the opinion that the assessee has no objection for the disallowance and accordingly he disallowed the above said amount and brought to tax. During the course of appellate proceedings, the assessee has filed a certificate from a C.A. in Form 26A, wherein, an interest of ₹.28,87,855/- has been paid by the assessee top M/s. Religare Finvest Ltd. during the period 01.04.2011 to 31.03.2012. It was further mentioned by the assessee vide letter dated 31.01.2017 that the total amount paid to M/s. Religare in the impugned year of ₹.28,95,783/- is inclusive of penal interest. The assessee has relied on various case before the ld. CIT(A). It was further submission of the assessee that the 2nd proviso to section 40(a)(ia) of the Act has been inserted by the Finance Act, 2012 w.e.f. 01.04.2013 and therefore, the same is applicable for and from the assessment year 2013-14 onwards and sought for comfort from this amendment, which is declaratory and curative in nature, which is applicable to assessment year 20-12-13 as well. After considering the various case law, the ld. CIT(A) has held as under: “5.8 The reliance placed by the appellant on Ansal Landmark Township case (supra) and other decisions are not of the jurisdictional High Court and as such do not create a binding judicial precedence. Also, the facts and circumstances as well as questions of Law before the Hon’ble High Court in Thomas George Muthoot case (supra) are squarely applicable to the facts of the appellants’ case. Hence, I am inclined to follow the findings of the Hon’ble Kerala High Court as the decision has given elaborate reasons why the impugned amendment cannot be considered curative and retrospective. As such, the plea of the appellant company for retrospective consideration of second proviso stand rejected. The appellants’ grounds of appeal fail on this count. However, the AO is directed to examine the plea of the appellant made in the ground of appeal that the figure of ₹.36,79,702/- was erroneously mentioned, and reduce the amount of disallowance under section 40(a)(ia) of the Act, if upon verification of the books of account the requirement of Law so warrants. Subject to these directions, the appellant’s grounds stand dismissed.”
4. On being aggrieved, the assessee is in appeal before the Tribunal and the ld. Counsel for the assessee has submitted that since there was no decision of the Jurisdictional High Court available to create a binding judicial precedence, the ld. CIT(A) could not able to take a view in favour of the assessee. On an identical issue in similar facts and circumstances, the Chennai Benches of the Tribunal in the case of Star Investments Pvt. Ltd. in & 21/Mds/2015 dated 21.06.2010 decided the issue against the Revenue, wherein, the Tribunal has followed the decision of the Agra Benches of the Tribunal in the case of Rajeev Kumar Agarwal v. Addl. CIT 45 taxmann.com 555, which was followed by the Delhi Benches of the Tribunal in the case of Ansal Landmark Township Pvt. Ltd. v. Addl.CIT in I.T.A. No. 2972/Del/2012 for the assessment year 2008-09 and in I.T.A. No. 877/Del/2013 for the assessment year 2009-10 and confirmed by the Hon’ble Delhi High Court in the case of CIT v. Ansal Landmark Township 279 CTR 384 (Del), the ld. Counsel for the assessee has prayed that the same decision should be followed in the present case.
5. On the other hand, by supporting the orders of authorities below, the ld. DR has submitted that the assessee has not filed any details before the Assessing Officer for verification. It is not known as to whether the assessee and the deductee have filed their returns of income on the due date of filing of return in terms of section 139(1) of the Act and therefore, the case law relied on by the ld. Counsel for the assessee cannot be accepted and pleaded that the orders of the authorities below should be sustained.
We have heard both sides, perused the materials available on record and gone through the orders of authorities below. During the course of assessment proceedings, the assessee has not filed any details before the Assessing Officer for verification and moreover, we find force in the arguments advanced by the ld. DR. In this case, the Assessing Officer has no occasion to verify the complete particulars as to whether the deductee has offered the interest receipts to tax. Moreover, filing of the return by the deductee on the due date of filing of return in terms of section 139(1) of the Act was also not available before the Assessing Officer. However, if the facts and circumstances of the case is similar to that of the decisions of the Chennai Benches of the Tribunal in the case of Star Investments Pvt. Ltd. v. ACIT (supra) and in the case of CIT v. Ansal Landmark Township 279 CTR 384 (Del), we are of the considered opinion that the Assessing Officer cannot make the disallowance under section 40(a)(ia) of the Act. Just because any decision of the Hon’ble Jurisdictional High Court is not available, the ld. CIT(A) was incorrect to say that other High Court’s decision is not binding, and proceed ignoring the same. Under these facts and circumstances, we set aside the order of the ld. CIT(A) and remit the matter back to the file of the Assessing Officer to verify all the particulars as may be filed by the assessee and decide the issue afresh in accordance with law after allowing sufficient opportunities of being heard to the assessee by keeping in mind the decision of the Chennai Benches of the Tribunal in the case of Star Investments Pvt. Ltd. v. ACIT (supra) and in the case of CIT v. Ansal Landmark Township (supra). The assessee is also directed to furnish complete details of the deductee as well before the Assessing Officer for verification. Hence, the ground raised by the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 21st June, 2017 at Chennai.