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Income Tax Appellate Tribunal, RAIPUR BENCH
Before: SHRI RAVISH SOOD & DR. DIPAK P. RIPOTE
IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. ITA No.43/RPR/2020 िनधा�रणवष� / Assessment Year : 2008-09 DCIT, Circle 3(1), Shri Santosh Jain Raipur Vs Prop. M/s. Arihant Mining Co., Raipur. PAN: ACMPJ 5971 B Appellant/Revenue Respondent /Assessee Applicant by None Respondent by Shri G.N. Singh Date of hearing 02/11/2022 Date of pronouncement 12/12/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the Revenue against the order of ld.Commissioner of Income Tax(Appeals)-I, Raipur, dated 22.11.2019for Assessment Year 2008-09emanating from the assessment order dated 29.09.2015 passed under section 143(3) r.w.s. 147 of the Income-tax Act, 1961 (hereinafter also called as ‘the Act’). The Revenue has raised the following ground of appeal: “1. Whether the Ld. CIT(A) not erred in law and in fact by adjudicating the issue of retrospective applicability of the Second Proviso to Section 40(a)(ia) of the I. T. Act, which was not aground of appeal before the Ld. CIT(A)? 2. Whether the Ld.CIT(A) not erred in law and in facts by ignoring the fact that the order of the AO was erroneous and prejudicial to the interest of revenue in the light of the fact the AO did not examine the issue of non deduction of tax at source and applicability of provision u/s 40(a)(ia) of the I. T. Act?
ITA No.43/RPR/2020, for A.Y. 2008-09 Shri Santosh Jain
Whether the Ld. CIT(A) not erred in law and in facts by ignoring the decision of Hon'ble Kerala High Court in the case of Thomas Muthood V/s. CIT Kottayam 63 taxman.com 99[2015], in which the Hon'ble High Court has held that the Second Proviso toSection 40(a)(ia) introduced with effect from 01.04.2013 is notprospective? 4. Whether the Ld. CIT(A) not erred in law and in facts by ignoring the decision of Hon'ble Guwahati High Court in the case of CITV/s. Jawahar Bhhattarcharjee reported in 24 taxman.com 215[2012] in which the Hon'ble High Court has held that the object of Section 263 is to correct an erroneous order prejudicial to the interest of revenue as the department has no right to file an appeal against the order of Assessing Officer? 5. Whether the Ld. CIT(A) not erred in law and in facts by ignoring the decision of Hon'ble Guwahati High Court in the case of CITV/s. Daga Entrade Pvt. Ltd. reported in 327 ITR 467 [2010] in which the Hon'ble Court has held that if the order of the Assessing Officer passed in ignoring reliable relevant material, causing prejudice to the interest of the revenue, suo moto revisional jurisdiction could be exercised by the CIT? 6. Any other ground that may be adduced at the time of hearing. 2. None has appeared on behalf of the Respondent-assessee. We heard ld. DR, perused the records. In this case, the assessee had purchased vehicle by taking loan from N.B.F.C. on hire purchase scheme, as emanating from the assessment order. The assessee had paid Rs.32,07,753/- to N.B.F.C. in the form of interest. The Assessing Officer held that TDS was attracted u/s 194A on the said amount of Rs.32,07,753/- paid to N.B.F.C. as interest. Therefore, the Assessing Officer disallowed Rs.32,07,753/- u/s.40(a)(ia). Aggrieved by the same, the assessee filed an appeal before the
ITA No.43/RPR/2020, for A.Y. 2008-09 Shri Santosh Jain
ld.CIT(A). The ld.CIT(A) in paras 6 & 7 of the appeal’s order held as under: “The findings of CIT(A): 6…. It was stated that the appellant is a proprietor of M/s Arihant Mining Company engaged in the business of mining work including hiring and leasing of heavy earth moving machineries. The return of income for the AY 2008-09 was filed on 27.09.2008 declaring total income of Rs.32,19,620/-. The AO completed the assessment u/s 143(3) wherein the total income was assessed at Rs.32,99,620/- as against Rs.31,19,620/- declared in the return. The demand of Rs.31,540/- was paid. Further the order u/s 143(3) was reopened u/s 147 of the Act wherein Rs.32,07,753/- was disallowed under the provisions of Section 40(a)(ia) in respect of finance charges paid to Non Banking Financial Companies without appreciating the various submissions made before the then AO. It was submitted that the NBFCs have offered the interest income / finance charges received from the assessee to tax in their respective return of income. It was further submitted that in the appellant’s own case the Hon’ble ITAT Raipur Bench had allowed the appeal in favour of the appellant vide ITAT Order No.87/RPR/2014 dated 21.06.2016. The Tribunal relied on the decision of the Hon’ble Delhi High Court in the case of CIT v. Ansal Landmark Township (P) Ltd. reported in 377 ITR 635. It was also stated that the interest has been paid to the following NBFCs:- (1) Ashok Leyland Finance Limited (New Entity :Indusind Bank Limited) Rs.22,03,174/-. (2) Tata Capital Limited Rs.83,077/- (3) Tata Motors Finance Limited Rs.8,64,116/- It was stated that Ashok Leyland Finance Limited has been merged with M/s Indusind Bank Limited with effect from 2004 thus as per section 194A of the Income Tax Act no deduction of tax at source is required for the interest paid to Bank. It was submitted that for AY 2011-12 on similar facts the Hon’ble Jurisdictional ITAT Raipur Bench in the case of the appellant relied on its earlier decision in the case of R.K.P. Company vs. ITO (2016) 140 DTR 201 (Raipur) (Trib) in which it was held that in the case of non deduction of tax it is proper to remit the matter to the file of the AO for limited verification as to whether recipient of payment has included the same in his computation of business income offer to tax, and if found to be so, delete the disallowance in question. It
ITA No.43/RPR/2020, for A.Y. 2008-09 Shri Santosh Jain
was submitted that in the appellant’s own case in ITA No.177/RPR/2014 for AY 2011-12 the Raipur Tribunal as under: “In the light of above order of Raipur Bench of the Tribunal in the case of R.K.P. Company (supra), we restore this issue back to the file of the Assessing Officer with a limited direction to examine whether the payee ‘NBFCs’ have included the interest paid by the assessee in its return of income and paid the tax on the same. The assessee is at liberty to submit certificate in Form No.26.” 7. I have considered the grounds of appeal gone through the submissions of the appellant and seen the order of the AO. In the light of the above observations of the Hon’ble jurisdictional Tribunal in the appellant’s own case I deem it fit and proper to remit the matter to the file of the AO for limited verification as to whether recipient of payment has included the same in his computation of business income offered to tax, and if found to be so, delete the disallowance in question.”
Thus, the ld. CIT(A) has followed the Hon’ble ITAT’s decision in assessee’s own case. The ld. DR was unable to point out any distinguishable factor. The ld. DR could not bring to our notice any contrary decision of the Hon’ble jurisdictional High Court on this issue. In this case, ITAT, Raipur in ITA No.87/RPR/2014 vide order dated 21.06.2016 has followed the decision of the Hon’ble Delhi High Court in the case of CIT v. Ansal Land Mark Township (P) Ltd. (2015) 377 ITR 635, in which the Hon’ble High Court has held that second proviso to section 40(a)(ia) is curative and has retrospective effect from 01.04.2005. Therefore, in this case, the ld.CIT(A) allowed the appeal of assessee following ITAT, Raipur’s order in assessee’s own case. In this case, it is a fact that the N.B.F.C. has
ITA No.43/RPR/2020, for A.Y. 2008-09 Shri Santosh Jain
offered the interest income to tax in their respective returns of income. Therefore, respectfully following the order of ITAT, Raipur (supra) in assessee’s own case, we uphold the order of ld.CIT(A). Accordingly, the appeal of Revenue is dismissed.
In the result, the appeal of Revenue is Dismissed.
Order pronounced in the open Court on 12th December, 2022.
Sd/- Sd/- (RAVISH SOOD) (DR. DIPAK P. RIPOTE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; �दनांक / Dated : 12th Dec, 2022 / GCVSR आदेशक��ितिलिपअ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Applicant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-I, Raipur. 4. The Pr. CIT-I, Raipur. 5. DR, ITAT, “Raipur” Bench. गाड�फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.