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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
ORDER PER N.K. SAINI, A.M.
This is an appeal by the assessee and is directed against the order dated 25.08.2015 of the CIT(A)- XIX, New Delhi. 2. Following grounds have been raised in this appeal :
1. Because the learned CIT(A) has erred in law and on facts in dismissing the appeal filed by the appellant and thereby upholding the addition of Rs. 34,43,647/- made by the learned assessing officer.
2. Because the learned CIT(A) has erred in law and on facts in upholding the addition made by the assessing officer u/s 40(a)(ia) even though it has been held in various case laws that disallowance under the said section can be made only when the amount remains unpaid, though it is an undisputed fact that the entire amount of interest expense disallowed stood paid at the end of the year.
3. Because the learned CIT(A) has erred in law and on facts in not following the decision of the jurisdictional ITAT in the case of ITO v. Anoop Khandelwal decided on 17.10.2014, as reported in MANU/ID/0775/2014 by ITAT Delhi.
S.A. No. 540/Del/2015 Sudhir Vig 3.1 Because the learned CIT(A) does not have power to overrule decision of the jurisdictional ITAT in Anoop Khandelwal (supra) decided on identical facts.
4. Because the learned CIT(A) has erred in law and on facts in not dealing with all the submissions made by the appellant before him. 4.1 Because the learned CIT(A) has not dealt with the submissions made in the written submissions regarding retrospective applicability of proviso added to section 40(a)(ia) vide Finance Act, 2012 as was later also upheld by jurisdictional High Court of Delhi in and 161/2015 vide order dated 26.08.2015 in the case of CIT vs. Ansal Land Mark Township (P) Ltd.
5. Because the learned CIT(A) has erred in law and on facts in not following the decision of the Hon’ble Supreme Court in the case of The Commissioner of Income Tax, West Bengal v. Vegetables Products Ltd. – (1973) 88 ITR 192 (SC) wherein it has been held that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted especially when different views have been ascribed by different High Courts as well as different benches of Income Tax Appellate Tribunals 6. Because the learned CIT has erred in law and on facts in upholding the addition made by the learned assessing officer even though the addition is revenue neutral.
7. Because the appellant craves for leave to add/alter, amend any of the grounds of appeal
before or at the time of hearing.
8. Because the order appealed against is contrary to the facts, law and principles of natural justice.”
Facts of the case in brief are that the assessee filed e-return of income on 26.09.2012 declaring an income of Rs. 2298711/- which was processed u/s 143(1) of the IT Act, 1961 (hereinafter referred to as the Act). Later on the case was selected for scrutiny. Since there was increase in the GP ratio, the AO accepted the trading results of the assessee. However, he made an addition of Rs. 34,43,647/- u/s 40(a)(ia) of the Act on account of interest paid to TATA Capital Ltd. without deducting tax at source.
4. Being aggrieved the assessee carried the matter to the ld. CIT(A) who confirmed the action of the AO. Now the assessee is in appeal.
S.A. No. 540/Del/2015 Sudhir Vig 5. The ld. Counsel for the assessee submitted that the assessee had taken a loan from M/s. TATA Capital Ltd. which is a non-banking financial company and paying equated monthly installments (EMIs) to the lender and the interest was embedded in the payments made. It was further submitted that the assessee furnished the judgment of the ITAT Delhi in the case of ITO vs. Anoop Khandelwal order dated 17.10.2014 reported in MANI/ID/0775/2014, however, the assessment order did not even have a whisper of the said case. The assessee moved an application dated 17.11.2015 for admission of the additional evidence and requested to admit the additional evidence which is the copy of a certificate dated 28.09.2015 u/s 201(1) issued by NSON and Company, Chartered Accountants. In the said application dated 17.11.2015, the assessee stated as under -: “1. The appellant is an individual who has been running a proprietorship business under the name and style of “M/s True Friends Electronics.”The assessee had also earned income under the head “Income from House Property”, “Capital Gain” and “Other Sources.” During the year under appeal appellant e-filed its return of income on 26.09.2012 vide e-filing acknowledgement No. 496396651260912, declaring an income of Rs. 22,83,711/-, after claiming deductions u/s VI-A of Rs. 1,15,000/- computing a tax liability of Rs. 5,42,008. The returns so filed was duly processed and assessed under section 143(1) of the Income-tax Act, 1961. Thereafter, appellant’s case was selected for scrutiny and notice u/s 143(2) was issued. In response to the same all the requisite information as were called for were furnished by the appellant company.
While framing assessment learned Assessing Officer has made an addition u/s 40(a)(ia) of Rs. 34,43,647/- being amount paid as interest embedded in equated monthly installments (EMIs) to TATA Capital Ltd. The assessee had taken the loan from M/s TATA Capital Ltd which is a non-banking finance company NBFC). The assessee had been paying EMIs to the lender, interest being embedded in the payments made. The learned Assessing Officer has made a disallowance of the interest paid as part of the EMI.
S.A. No. 540/Del/2015 Sudhir Vig 3. That, Finance Act, 2012 has added the following proviso to section 40 of the Income-tax Act, in clause (a), in sub-clause (ia), after the proviso and before the Explanation, the following proviso has been inserted with effect from the 1st day of April, 2013, namely : “Provided further that where an assessee fails to deduct the 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, 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 referred to in the said proviso.”
The jurisdictional High Court of Delhi in and 161/2015 vide order dated 26.08.2015 in the case of CIT v. Ansal Land Mark Township (P) - Ltd. [2015] 377 ITR 635 (Del.) has held that the aforementioned proviso would have retrospective effect.
In this regard the appellant highlighting the legal background of retrospective applicability of provisions, had made the following submissions before the learned Commissioner of Income Tax (Appeals) -19, New Delhi (hereinafter referred to as “CIT(A)”): “10.8 In relation to the impugned provision, it deserves to be highlighted that in the absence of the proviso added by the Finance Act, 2012, the provision was leading to double taxation. It deserves to be pointed out that double taxation is seldom the intention of the legislature. Thus, it can be safely said that the proviso inserted vide Finance Act, 2012 is merely clarificatory and curative in nature and hence would be applicable with retrospective effect. The appellant had taken loan from M/s TATA Capital Ltd. which is being regularly assessed to income tax vide PAN AADCP9147P. Certificate required to be filed u/s 201 is not available with the appellant on this date of personal hearing i.e. 24.08.2015. However, the same will be filed in due course if your honours so require.”
6. It is worth mentioned here that even though the appellant had made detailed submissions on this issue from para 10.5 to 10.8 of the written submissions filed before he learned CIT(A), appearing at 38-39 of PB, however, no discussion or finding is given in the impugned order dated 25.08.2015. Moreover, even though it was specifically mentioned that if required, the S.A. No. 540/Del/2015 Sudhir Vig appellant would file the certificate mentioned u/s 201 of the Act, the CIT(A) did not afford any opportunity to the appellant to do so.
In view of aforesaid narration of facts, appellant was prevented by sufficient cause from producing the related document before the lower authorities and also for the reason that no sufficient opportunity was provided to the appellant to adduce the evidence relevant in relation to the sole addition made in the assessment of the appellant. Accordingly, the certificate as mentioned u/s 201 of the Act is being filed before your honour.
8. In view of the submission made in the foregoing paragraphs, it is prayed that your honour be please to admit the same for consideration at the time of hearing of appeal.”
During the course of hearing the ld. Counsel for the assessee reiterated the contents of the aforesaid application and also submitted that the certificate dated 28.09.2015 u/s 201 of the Act was not available to the assessee at the time of assessment proceedings or the appellate proceedings before the ld. CIT(A). It was contended that the additional evidence now furnished, goes to the root of the matter and the assessee was prevented by the reasonable cause in not producing the same before the AO as well as the ld. CIT(A). He, further, requested that the additional evidence may be admitted.
7. In his rival submission, the ld. DR objected to the admission of the additional evidence and stated that the assessee did not furnish the certificate which now furnished as an additional evidence, either before the AO or the ld. CIT(A) in spite of the fact that ample opportunities of being heard were given by them.
We have considered the submissions of both the parties and perused the material available on the record. In the present case it appears that the S.A. No. 540/Del/2015 Sudhir Vig assessee requested the ld. CIT(A) vide para 10.8 of the written submission furnished before him that the certificate required to be filed u/s 201 of the Act would be furnished in due course, if so required, as the same was not available at the relevant time. However, the ld. CIT(A) neither accepted the request of the assessee nor declined the same. Now the assessee has filed the said certificate which goes to the root of the matter. We, therefore, deem it appropriate to set aside this issue back to the file of the AO to be decided afresh inaccordance with law after providing due and reasonable opportunity of being heard to the assessee. The AO should also consider the aforesaid certificate now furnished by the assessee while deciding the issue under consideration afresh.
Since we have adjudicated the appeal of the assessee, therefore, the stay application becomes infructuous, we order accordingly.
In the result appeal of the assessee allowed for statistical purposes and the stay application is dismissed as infructuous. (Order Pronounced in the Court on 12/01/2016)