PELICAN ESTATES AND DEVELOPERS,CHENNAI vs. ACIT, CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 2, Chennai, dated 31.03.2016 and pertains to assessment year 2012-13.

Sh. B. Ramakrishnan, the Ld. representative for the assessee, submitted that the only issue arises for consideration is disallowance of ₹8,00,000/- under Section 40(a)(ia) of the Income- tax Act, 1961 (in short 'the Act'). According to the Ld. representative, the recipient has already paid the tax, therefore, there cannot be any disallowance. The Ld. representative further submitted that the matter may be remitted back to the file of the Assessing Officer to verify whether the recipient has paid the tax on the amount paid by the assessee.

We have heard Shri Murali Mohan, the Ld. Departmental Representative also. The Ld. D.R. submitted that whether the recipient paid taxes or not need to be verified, therefore, the matter may be remitted back to the file of the Assessing Officer.

We have considered the submissions on either side and perused the relevant material available on record. The Assessing Officer disallowed ₹8,00,000/- under Section 40(a)(ia) of the Act for non-deduction of tax at source. The assessee now claims that the recipient has already paid taxes on the amount paid by the assessee, therefore, there cannot be any disallowance. However, the matter needs to be verified by the Assessing Officer. Accordingly, the orders of lower authorities are set aside and the disallowance of ₹8,00,000/- under Section 40(a)(ia) of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall reconsider the issue and verify whether the tax was paid by the recipient on the amount received from the assessee and thereafter decide the issue, in accordance with law, after giving a reasonable opportunity to the assessee.