M/S. RUKMANI INFRA PROJECTS PVT. LTD.,BHUBANESWAR vs. ACIT(TDS-1), BHUBANESWAR

आयकर अपीलीय अधधकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM आयकर अपील सं./ITA No.444&445/CTK/2015 (धनधाारण वषा / Assessment Year :2011-2012) M/s Rukmani Infra Projects Pvt. Vs. ACIT, (TDS-1), Ltd., 242, District Centre, Bhubaneswar Chandrasekharpur, Bhubaneswar स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No. : AABCH 3970 L (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) धनधााररती की ओर से /Assessee by : None राजस्व की ओर से /Revenue by : Shri D.K.Pradhan, DR सुनवाई की तारीख / Date of Hearing : 13/07/2017 घोषणा की तारीख/Date of Pronouncement 14/07/2017 आदेश / O R D E R Per Shri Pavan Kumar Gadale, JM: These are the appeals filed by the assessee against the different orders of the CIT(A)-3, Bhubaneswar, passed in ITAppeal No.0324/2013- 14, dated 6-8-2015 u/s.201(1)/201(1A) of the Income Tax Act, wherein the assessee raised only one substantial ground that the CIT(A) has erred in confirming the addition in respect of interest paid to the financial companies without deduction of TDS where such financial companies have disclosed interest income in their income tax returns and complied the income tax provisions. 2. Since the issues involved in both the appeals are identical, therefore, the appeals have been heard and are being disposed off by this consolidated order. For the sake of convenience, we shall take the facts and grounds raised in ITA No.444/CTK/2015 (AY : 2011-12) for deciding both the appeals.

2 ITA No.444/15 3. Brief facts of the case are that the assessee company is an Engineering, construction work in different steel and power plants in India. There was a survey operations u/s.133A of the Act conducted in the assessee’s business premises and the income tax department found that the assessee has obtained loans from various Non Banking Financial Companies (NBFCs) and no TDS was deducted and, therefore, provisions of Section 194H of the Act are applied. The AO issued show cause notice on 10.12.2013, referred at page 2 of the assessment order. In compliance, ld. AR of the assessee filed reply on 30.12.2013. the assessee made aggregate interest payments of Rs.52,97,668/- in respect of 9 parties and the AO found that such payments are without deduction of tax at source and provisions of Section 194H are applicable. Therefore, the ld. AO relied on the provisions of Section 40(a)(ia) of the Act and made disallowance and raised the demand of non-deduction of TDS u/s.201(1) at Rs.5,29,792/- and Rs.2,13,620/- u/s.201(1A) of the Act, vide order dated 28.1.2014. 4. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A). In the appellate proceedings, ld. CIT(A) on the disputed issue in respect of assessment year under consideration found that the assessee has made the payments to the finance companies without deduction of TDS and the assessee could not support with any proof of recipient of interest has offered such income in their individual assessments. Since no material was submitted, the CIT(A) considered the

3 ITA No.444/15 submission and concord with the findings of AO and dismissed the assesse’s appeal. 5. Aggrieved by the order of CIT(A), the assessee has filed an appeal before the Tribunal. 6. Since none appeared on behalf of the assessee, ld. DR argued on the disputed issue. 7. We heard the submissions of ld. DR and perused the material on record. Prima facie, we found that the assessee has obtained loans from NBFC for the purpose of purchase of cranes and vehicles and issued post dated cheques in respect of principal amount and interest. The assessee as per the agreement with NBFC has to be provide post dated cheques. On perusal of the assessment order, we found that the assessee has paid the interest to NBFC’s which are of the business houses and also the assessee could not substantiate its claim by submitting the details of offering interest income by the recipient NBFCs in their income tax returns. Further, ld. CIT(A) has observed that the assessee relied on the decision of the M/s. Hindustan Coca Cola Beverages Pvt. Ltd., 293 ITR 226 (SC) but could not support their stand with the proof of Income Tax Returns of NBFC and certificate from the CA that interest has been paid to respective NBFCs has been offered for taxation purpose. We also perused the amendment of Section 40(a)(ia)[of the Act, where an assessee fails to deduct TDS whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section(1) of Section 201

4 ITA No.444/15 of the Act and, then for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of Return of income by the resident payee in their income tax returns. We are of the considered view that in the interest of substantial justice one more opportunity be provided to the assessee to support its claim by filing evidence of offering of income by the recipients in their income tax assessment and there is no loss of revenue. Accordingly, we remit the entire disputed issue to the file of AO for verification and examination of recipient NBFCs interest income in accordance with law and the AO shall provide adequate opportunity of hearing to the assessee to file evidence to support its claim before passing the order. Accordingly, the appeal of the assessee is allowed for statistical purposes. 8. Similar appeal is filed by the assessee in ITA No.445/CTK/2015 (AY : 2013-2014), which is identical to the facts and disputed issues raised in appeal of the assessee for A.Y.2011-2012 and decided, therefore, the present appeal is also remitted to the file of AO for verification and examination of recipient income and the AO shall provide adequate opportunity of hearing to the assessee to file evidence in support of its claim before passing the order. Accordingly, we allow the appeal of the assessee for statistical purposes. 9. In the result, appeals of the assessee (ITA Nos.444&445/CTK/2015) are is allowed for statistical purposes. Order pronounced in the open court on this 14/07/2017. Sd/- Sd/- (N. S. SAINI) (PAVAN KUMAR GADALE) लेखा सदस्य / ACCOUNTANT MEMBER न्याधयक सदस्य / JUDICIAL MEMBER

5 ITA No.444/15 कटक Cuttack; ददनांक Dated 14/07/2017 प्र.कु.धि/PKM, Senior Private Secretary आदेश की प्रधतधलधप अग्रेधषत/Copy of the Order forwarded to : अपीलाथी / The Appellant- 1. M/s Rukmani Infra Projects Pvt. Ltd., 242, District Centre, Chandrasekharpur, Bhubaneswar 2. प्रत्यथी / The Respondent- ACIT (TDS), Bhubaneswar 3. आयकर आयुक्त(अपील) / The CIT(A), 4. आयकर आयुक्त / CIT विभागीय प्रविविवि, आयकर अपीलीय अविकरण, कटक / DR, ITAT, Cuttack 5. 6. गाडा फाईल / Guard file. सत्याधपत प्रधत //True Copy// आदेशानुसार/ BY ORDER,

(Senior Private Secretary) आयकर अपीलीय अधधकरण, कटक / ITAT, Cuttack