HERMAN PROPERTIES (P) LTD.,NEW DELHI V. ACIT CIRCLE 11(1), NEW DELHI

ITA 134/DEL/2024

AI Insights

The case involves M/s. Herman Properties (P.) Ltd., the appellant, contesting a disallowance of Rs. 58,53,195/- which represented interest paid to a non-banking finance company/securitization trust. The disallowance was initially made by the Assessing Officer under section 143(3) of the Income-tax Act, 1961, and upheld by the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre. The primary contention was that the interest payments should not have been disallowed as the payee had already paid taxes on the received interest, invoking the second proviso to section 40(a)(ia) of the Act. The appellant also argued that there was a bona fide belief that TDS was not deductible, referencing a judgment by the Hon'ble Bombay High Court in CIT v. Kotak Securities Ltd. The Tribunal found merit in the Revenue's objection to the additional evidence being considered at the Tribunal level for the first time and thus remanded the issue back to the Assessing Officer for a fresh examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706978 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 15-01-2024
• Other Referred Cases: CIT v. Kotak Securities Ltd. reported in 340 ITR 333
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: ANKIT KUMAR
• Keywords: Additional evidence; TDS; Reason to believe
• Section: 143(3); 40(a)(ia)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘B’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.134/Del/2024 Assessment Year: 2017-18 M/s. Herman Properties (P.) Ltd., WZ-48, Shadi Khampur, West Patel Nagar, New Delhi Vs. ACIT, Circle-11(1), New Delhi PAN: AAACH2542M (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2017-18, arises against the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre [in short, the “CIT(A)/NFAC”], Delhi’s DIN and order no. ITBA/NFAC/S/250/2023-24/1058117909(1), dated 21.11.2023 involving proceedings under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Heard both the parties. Case file perused. Assessee by Sh. Ankit Kumar, Adv. Department by Sh. Rajesh Kumar Dhanesta, Sr. DR Date of hearing 23.06.2025 Date of pronouncement 09.07.2025 ITA No.134/Del/2024 2 | P a g e 2. This assessee’s appeal raises the following substantive grounds: 1. That the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi has erred both in law and on facts in upholding a disallowance of a sum of Rs. 58,53,195/- representing interest paid by the appellant company to non-banking finance company / securitization trust by invoking section 40(a)(ia) of the Act. 1.1 That in any case since the payee had paid the taxes on the interest paid by the appellant company, no disallowance was warranted in view of second proviso to section 40(a)(ia) of the Act. 1.2 That the learned Commissioner of Income Tax (Appeals) has also failed to appreciate that once assessee had bonafide reason to believe TDS was not deductible, section 40(a)(ia) of the Act is inapplicable as has been held by the judgment of Hon'ble Bombay High Court in the case of CIT v. Kotak Securities Ltd. reported in 340 ITR 333 1.3 That various adverse findings recorded by the learned Commissioner of Income Tax (Appeals) are factually incorrect, legally misconceived and wholly untenable. It is therefore, prayed that, disallowance made and sustained by the learned Commissioner of Income Tax (Appeals) be deleted and appeal of the appellant company be allowed. 3. Suffice to say, both the learned lower authorities have disallowed the assessee’s interest paid of Rs.58,53,195/- for the sole reason of its failure to deduct TDS thereupon; in the course of assessment framed on 28.12.2019 and upheld in the lower appellate discussion. 4. Faced with this situation, learned counsel has invited our attention to the assessee’s application dated 22nd May, 2025 seeking to admit it’s additional evidence under Rule 29 of Income Tax (Appellate Tribunal) Rules, 1963 which contains all the ITA No.134/Del/2024 3 | P a g e relevant details of it’s payees concerned having got assessed qua the very interest income(s) in light of section 40(a)(ia) 2nd proviso. 5. The Revenue’s case on the other hand is that the assessee’s above additional evidence deserves to be restored back to the learned Assessing Officer for his afresh factual verification. We find merit in the Revenue’s instant technical objection as the assessee’s foregoing additional evidence has seen light of day for the first time in tribunal only. We thus accept the assessee’s sole issue of section 40(a)(ia) disallowance back to the learned Assessing Officer for his afresh appropriate adjudication and factual verification as per law. Orders accordingly. 6. This assessee’s appeal is allowed for statistical purposes. Order pronounced in the open court on 9th July, 2025 Sd/- Sd/- (S. RIFAUR RAHMAN) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 9th July, 2025. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "