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Income Tax Appellate Tribunal, SURAT BENCH, SURAT
Before: SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM
O R D E R
PER DR. A. L. SAINI, ACCOUNTANT MEMBER:
Captioned appeal filed by the assessee, pertaining to Assessment Year (AY) 2012-13, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-3, Vadodara [in short “the ld. CIT(A)”] in Appeal No. CIT(A)-Vadodara-3/10473/2015-16 dated 29.01.2018, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”], dated 27.02.2015.
Grounds of appeal
raised by the assessee are as follows:
1. The addition made on account of Research Fees disallowed u/s 40(a)(ia) of the Income Tax Act 1961 of Rs.18,30,358/-. Without prejudice to the above Applicant reserves its right to make any amendment to the grounds of appeal at the time of hearing be deleted.”
3. At the outset, Learned Counsel submitted that payee has included receipts of Rs.18,30,358/- in his books of accounts and paid the taxes thereon. Therefore,
ITANo.351/SRT/2018 Assessment Year. 2012-13 Shree Chemopharma Ankleshwar P. Ltd no disallowance under section 40(a)(ia) of the Act has attracted. Learned Counsel for the assessee also submitted before us a certificate from the Chartered Accountant (CA) stating that the payee has sown the receipts in his books of accounts and has included the receipts in his return of income and paid the taxes thereon, therefore addition made under section 40(a)(ia) of the Act should be deleted.
On the other hand, Ms Anupama Singla, Learned Departmental Representative (ld. DR) for the Revenue submitted that the issue may be remitted back to the file of Assessing Officer for verification, whether payee has included the receipts in his books of accounts/return of income or not.
We have heard both the parties and perused the material available on record. We note that Assessing Officer has disallowed the research fee under section 40(a)(ia) of the Act to the tune of Rs.18,30,358/-. However, the learned Counsel has submitted before us a certificate of the Chartered Accountant. The said certificate of Chartered Accountant states that payee has included these receipts in his return of income and paid the taxes thereon. In respect of disallowance made by AO invoking section 40(a)(ia) of the Act, we note that the Finance Act 2012 made an amendment of section 201 & 40(a)(ia) of the Act. In accordance with this amendment, the payer [assessee] would not be deemed to be in default if the recipient of income (payee), has taken into account the amount received from the payer in computing its income and declared it in the return and has paid due tax on the returned income. We note that Hon’ble Delhi High Court in CIT v. Ansal Land Mark Township Pvt. Limited [ITA 160/2015 & 161/2015, dated 26/08/2015], wherein Hon'ble High Court held that 2nd proviso to section 40(a)(ia) of the Act is curative amendment and has retrospective effect from 01/04/2005. From the above precedent, we find that the Amendment has come into effect with retrospective date and as per the amended provision if the payee has included the receipt in its books of account and has offered for taxes then the disallowance on account of non-deduction of TDS will not arise.
ITANo.351/SRT/2018 Assessment Year. 2012-13 Shree Chemopharma Ankleshwar P. Ltd In the light of the above facts, we are of the view that matter may be remitted back to the file of the assessing officer for verification whether payee has included the receipt in its books of account and has offered for taxes. Therefore, we set aside the order of ld CIT(A) and remit this issue back to the file of the assessing officer to examine the fact whether payee has included the receipts in his return of income and offered for taxation or not. If the payee has included the receipts, in his return of income and offered for tax then no disallowance is attracted. Therefore, the appeal filed by the assessee is allowed for statistical purposes.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order is pronounced in the open court on 12/01/2022 by placing the result on the Notice Board as per Rule 34(5) of the Income Tax (Appellate Tribunal) Rule 1963.