NAWANY CORP (I) LTD,MUMBAI vs. ITO 9(2)(3), MUMBAI

The only issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of interest amounting to Rs.16,01,356/- for non-deduction of TDS under section 194A of the Act thereby invoking provisions of section 40(a)(ia) of the Act.

At the outset, Ld. Counsel for the assessee stated that in this case he don’t want to argue the issue of “paid or payable” as mentioned in the provisions of section 40(a)(ia) of the Act but, according to Ld. counsel the recipients of interest have already included the receipt of this interest as income in their respective return of income. According to him, the issue is clearly covered by second proviso to section 40(a) (ia) of the Act as inserted by Finance Act, 2012, w.e.f. 01/04/2013 and which is held to be retrospective by Hon’ble Delhi High Court in the case of CIT vs. Ansal Land Mark Township Pvt. Ltd. In & 161 of 2015 dated 28/08/2015. According to Ld. Counsel for the assessee, once the second proviso to section 40(a)(ia) is retrospective and in the present case, the recipients have included receipt of interest in their respective return of income, the disallowance under section 40(a)(ia) cannot be made on the non-deduction of TDS on the above interest payments.

We have heard the rival submissions and gone through the facts and circumstances of the case. Briefly stated fats are that the assessee has paid interest without deduction of TDS to Tata Motor Finance Ltd., Tata Capital Ltd. and G.E. Commercial Finance Ltd. This fact is narrated in the assessment order, wherein the total amount of interest paid by the assessee is depicted. As argued by Ld. Counsel for the assessee, these parties are assessed to income-tax and assessee’s Counsel undertakes to file the assessment details of these parties to the Assessing Officer, so that Assessing Officer can verify whether this interest is included by these parties in their respective return of income in the relevant assessment years and paid taxes accordingly. As the Ld. Counsel for the assessee has not argued the issue of ‘paid and payable’ in respect to disallowance u/s. 40(a)(ia) of the Act, we dismiss the same as not argued. In term of above, this issue is set aside to the file of Assessing Officer and allowed for statistical purposes.

In the result, the appeal of the assessee is allowed for statistical purposes.