Asst.CIT, Mysore V. Sri. Mahalingam, Mysore

ITA 1081/BANG/2015

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 1593 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-1969
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 15-07-2015
• Court: TRIBUNAL
• Keywords: Audit objection; Tax effect
• Section: 40a(ia)

Judgement Text

ITA.1081 & 1082/Bang/2015 Page - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER I.T.A Nos.1081 & 1082/Bang/2015 (Assessment Years : 2006-07) Asst. Commissioner of Income-tax, Circle -1(1), Mysuru ..Appellant v. Shri. Mahalingam, No.1161, 1 st Main, 1 st Cross, II Stage, Srirampura, Mysuru – 570 023 ..Respondent PAN : ADEPM1686R Assessee by : Shri. S. V. Ravishar, Advocate Revenue by : Shri. Sunil Kumar Agarwala, JCIT Heard on : 30.11.2015 Pronounced on : 04.12.2015 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : These are appeals by the Revenue are directed against an order dt.26.03.2015 of CIT(A), Mysuru, for the A. Ys. 2006-07 and 2008-09. ITA.1081 & 1082/Bang/2015 Page - 2 02. When the appeals came up for hearing, learned counsel for the assessee submitted that tax effect for each of the years were below the limit laid down by the CBDT Circular F. No.279/Misc.142/2007-(IT) (Pt), dt.10.07.2014. Further as per the Ld. AR the issue involved in the appeal was disallowance u/s.40(a)(ia) of the Income-tax Act, 1961 (‘the Act ‘ in short), for non-deduction of tax at source. Ld. AR pointed out that such disallowance could only by made on amounts remaining outstanding at the end of the relevant previous year and not on amounts which stood paid during the previous year. 03. Ld. DR on the other hand submitted that the circular relied on by the assessee excluded from its ambit those appeals where revenue audit objections were accepted by the Department. In support, Ld. DR produced copies of the scrutiny report, in the file of the Revenue which mentions that revenue audit objections were accepted by the Department. 04. We have heard the rival contentions. Leaving apart the issue whether the monetary limits for filing of the appeal were within or beyond the limits laid down in CBDT circular (supra), we find that disallowances made by the AO which were over turned by the CIT (A) were for payments which were made by the assessee during the relevant previous year and not ITA.1081 & 1082/Bang/2015 Page - 3 on the outstanding amounts. CIT (A) had followed the Vizag Bench decision of the Tribunal in the case of Merilyn Shipping and Transports v. ACIT [136 ITD 23] and also the decision of coordinate bench in the case of DCIT v. Anand A. Marakala [ITA.1584/Bang/2012, dt.13.09.2013]. Now before us, Ld. AR has placed a copy of order in the case of M/s. Capital Pharma V. ITO [ITA No.34/Bang/2013, dt. 14.08.2014] of the coordinate bench which also dealt with a similar issue. In the latter order at paras 6 & 7, it was held as under by the coordinate bench : “6. Learned counsel for the assessee submitted admitted that the disallowances were made by the AO for a reason that assessee had not deducted tax at source on following interest payments. 1. R.D.Sequira Rs.27,000 2.Roweena D’souza Rs.66,825 3. Ryna D’souza Rs.49,500 4.Ruban D’souza Rs.66,825 5. Alice Sequira Rs.48,000 6. Rosanne D’souza Rs. 9,000 Total Rs.2,67,150 As per the learned AR these interests were paid during the currency of the relevant previous year and hence Section 40a(ia) had no application. Reliance was placed on Special Bench decision in the case of Merilyn & Shipping Transports Vs Addl.CIT 136 ITD 23, and that of Hon.Allahabad High Court in the case of CIT Vs Vector ITA.1081 & 1082/Bang/2015 Page - 4 Shipping Services (P)Ltd.,357 ITR 642. As per learned AR, SLP filed by the department against the latter decision stood dismissed by Hon Supreme Court in CCNo.8065/2014 dated 02-07-2014. In any case, as per the learned AR, every recipient of interest had furnished 15G/H and hence assessee had no obligation to deduct tax. 7. Per contra, learned Dr submitted that judgments of Hon’ble Calcutta High Court in the case of CIT Vs Crescent Export Syndicate(262 CTR 525) and Gujarat High Court in the case of CIT Vs Sikandarkhan N Tanvar (357 ITR 312) were in revenue’s favour. Further, according to him Form 15G/H were filed by the assessee much later to the payment of interest and hence could not be taken cognizance of. 7. We have perused the orders and heard the rival contention. In so far as paid and payable issue is concerned, no doubt there are divergent opinions from various High Courts. There is no decision of the Hon’ble jurisdictional High Court on this issue, brought to our notice. Hence following the decision of the Hon’ble Apex Court in the case of CIT Vs Vegetable Products 88 ITR 192, decision in favour of assessee has to be followed by us. More so, since the department SLP in Vector Shipping Services cases(supra) having been dismissed by Apex Court. In any case, facts here show that assesee had obtained 15G/H form from the recipients, though filed belatedly. Irrespective of the date of filing these forms, assertion made therein by the payees that they were not having taxable income or were having income below taxable limits has not been found to be incorrect. When assessee was well aware that recipients had no taxable income, just because the declarations in Form 15G/H were obtained late, it cannot be fastened with the consequence that arise for non-deduction of tax at source. We cannot say that there was a failure on the part of the assessee that would attract the rigours of Sec.40a(ia). In the circumstances, we allow grounds 5 to 9 raised by the assessee, and delete the disallowance of Rs.2.67,150/- made u/s 40a(ia) of the IT Act, 1961.” ITA.1081 & 1082/Bang/2015 Page - 5 Accordingly we are of the opinion that disallowance made u/s.40(a)(ia) of the Act, were rightly deleted by the CIT (A) in the appeals filed by the assessee. 05. In the result, appeals of the Revenue stand dismissed. Order pronounced in the open court on 4th day of December, 2015. Sd/- Sd/- (SMT. ASHA VIJAYARAGHAVAN) (ABRAHAM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER MCN* Copy to: 1. The assessee 2. The Assessing Officer 3. The Commissioner of Income-tax 4. Commissioner of Income-tax(A) 5. DR 6. GF, ITAT, Bangalore By Order Assistant Registrar