Tirumala Music Centre Private Limited, Hyderabad, Hyderabad V. ACIT, Circle-2(2), Hyderabad, Hyderabad

ITA 133/HYD/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9645 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 11-03-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 30-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B SATYANARAYANA MURTHY
• Keywords: Additional evidence; TDS; Set aside
• Section: 143(3); 40(a)(ia); 201; 194A; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD. BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 133/ HYD/201 7 (ASSESSMENT YEAR : 2012 - 13 ) M/S. TIRUMALA MUSIC CENTRE (P) LTD., 16 - 10 - 27/105/10, NANGUNURI COMPLEX, MAIN ROAD, MALAKPET, HYDERABAD. PAN AAACT 8339A VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2(2), HYDERABAD. APPELLANT RESPONDENT APPELLANT BY : SHRI B. SATYANARAYANA MURTHY. RESPONDENT BY : SHRI SUNIL KUMAR PANDEY (D.R) DATE OF HEARING : 11.03. 2021. DATE OF PRONOUNCEMENT : 16 .03. 2021. O R D E R PER S MT. P. MADHAVI DEVI , J.M. : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 2 , HYDERABAD DT.29.08.2016 FOR THE ASSESSMENT YEAR 2012 - 13 . 2. B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY , ENGAGED IN THE BUSINESS OF RETAIL TRADE IN ELECTRONIC GOODS AND HOME APPLIANCES, FILED ITS RE TURN OF INCOME 2 ITA NO. 133/HYD/2017 FOR THE ASSESSMENT YEAR 2012 - 13 ON 28.09.2012 DECLARING A TOTAL INCOME OF RS.4,46,79,040. DURING THE ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT'), THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PAID AN AM OUNT OF RS.12,30,118 TOWARDS INTEREST TO NON - BANKING FINANCIAL CORPORATIONS (NBFCS) SUCH AS MAGMA FINCORP LTD., RELIGARE FINVEST LTD., TATA CAPITAL LTD., KOTAK PRIME LTD. ETC BUT DID NOT MAKE TDS THEREFROM . THE ASSESSEE WAS THEREFORE ASKED TO SHOW CAUSE A S TO WHY THE ABOVE MENTIONED INTEREST PAYMENT SHOULD NOT BE DISALLOWED U/S. 40(A)(IA) OF THE ACT. IN RESPONSE TO THE SAME, THE ASSESSEE SUBMITTED THAT NO PAYMENTS WERE MADE TOWARDS INTEREST AS PER THE PROVISIONS OF SECTION 194A BUT EMIS WERE RECOVERED F R O M THE BANK THROUGH A MANDATE AND HENCE NO TDS COUL D HAV E BEEN DEDUCTED BY THE ASSESSEE . THE ASSESSING OFFICER, HOWEVER, NOT SATISFIED WITH THE ASSESSEE'S EXPLANATION , HELD THAT THE ASSESSEE OUGHT TO HAVE MADE TDS BEFORE MAKING PAYMENT. ACCORDINGLY, A S UM OF RS.12,30,118 PAID TOWARDS INTEREST PAYMENTS WAS BROUGHT TO TAX U/S. 40(A)(IA) OF THE ACT. AGGRIEVED , THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) STATING THAT THE LOANS AVAILED FROM THE BANKS AND NBFCS WERE REPAID THROUGH EQUATED MONTHLY INSTALMENTS (EMIS) / MANDATES TAKEN BY THESE INSTITUTIONS AT THE TIME OF DISBURSING THE LOANS AND SINCE EMIS INCLUDED THE INTEREST COMPONENT ALSO, NO SEPARATE 3 ITA NO. 133/HYD/2017 PAYMENT WAS MADE BY THE ASSESSEE TOWARDS INTEREST AND THEREFORE THE PROVISIONS OF SECTION 194A OF THE ACT WERE NOT ATTRACTED . 3. ON APPEAL, THE CIT(A) , HOWEVER , WAS NOT CONVINCE D BY THE ASSESSEE'S SUBMISSIONS AND ACCO RDINGLY REJECTED THE ASSESSEE'S APPEAL. AGGRIEVED , BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS : 1. THE ORDERS OF THE LOWER AUTHORITIES IN SO FAR AS THEY ARE AGAINST THE APPELLANT - COMPANY, ARE CONTRARY TO THE FACTS OF THE CASE AND THE PROVISIONS OF LAW. 2. THE HON'BLE COMMISSIONER OF INCOME TAX IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.12,30, 118/ - FOR THE ALLEGED CONTRAVENTION OF SECTION 40(A)(IA). THE OFFICER SHOULD HAVE APPRECIATED THAT THE APPELLANT - COMPANY COULD NOT HAVE COMPLIED WITH THE PROVISIONS OF SECTION 40(A)(IA) AS NO SEPARATE PAYMENTS TOWARDS INTEREST WERE MADE IN RESPECT OF RS.12,30,118/ - AND THIS AMOUNT IS A PART OF EMLS PAID TO NBFCS VIZ. MAGMA FINCORP LTD., RELIGARE F INVEST LTD., TATA CAPITAL LTD., KOTAK PRIME LTD., ETC. 3. WITHOUT PREJUDICE TO THE FOREGOING CONTENTIONS, IT IS CONTENDED THAT THE APPELLANT - COMPANY COULD NOT COMPLY WITH THE PROVISIONS AS THE NBFCS HAVE ALREADY PAID TAXES ON THE INTEREST BY FILING THEIR RETURNS OF INCOME. THEREFORE, THE HON'BLE COMMISSIONER OF INCOME TAX SHOULD HAVE DIRECTED THE ASSESSING OFFICER TO ALLOW THE INTEREST AS A DEDUCTION. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS SUBMITTED THAT THE ORDER OF T HE LOWER AUTHORITIES BE SET ASIDE OR MODIFIED AS MAY BE DEEMED FIT. 4 . AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE GROUND NO.3 IS AN ADDITIONAL GROUND TAKEN IN SUPPORT OF THE MAIN GROUND (GR. NO.2), AND THAT THE ASSES SEE HAS FILED ADDITIONAL EVIDENCE IN THE FORM OF CERTIFICATE S 4 ITA NO. 133/HYD/2017 FROM THE CHARTERED ACCOUNTANT OF THE NBFCS, TO THE EFFECT THAT THEY HAVE INCLUDED THE INTEREST INCOME IN THE IR RESPECTIVE HANDS AND OFFERED IT TO TAX. THE LEARNED COUNSEL FOR THE ASSESSEE PRAY ED THAT THE ADDITIONAL EVIDENCE MAY BE ADMITTED AND REMAND ED TO THE FILE OF ASSESSING OFFICER FOR CONSIDER IN TERMS OF THE PROVISO TO SECTI O N 40(A)(IA) OF THE ACT. THE LD. DR WAS ALSO HEARD , WHO SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5 . HAVING REGARD TO THE AMENDMENT TO SECTION 201 AND SECTION 40(A)(IA) OF THE ACT MADE BY THE FINANCE ACT, 2012 W.E.F. 1.4.2013 TO THE EFFECT THAT THE SAID PROVISIONS WOULD NOT APPLY, IF THE PAYEE HAS TAKEN THE AMOUNT IN COMPUTING ITS INCOME AND HAS PAI D TAX THEREON. IN VIEW OF THE SAME, THE ADDITIONAL EVIDENCE IS ADMITTED AND REMAND ED TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION AND RECONSIDERATION OF THE ISSUE IN ACCORDANCE WITH LAW. 5. IN THE RESULT, THE ASSESSEE'S APPEAL IS TREATED AS ALL OWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 16TH MARCH, 2021. SD/ - SD/ - (A. MOHAN ALANKAMONY) (SMT. P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 16TH MARCH, 2021. * REDDY GP 5 ITA NO. 133/HYD/2017 COPY TO : 1. M/S. TIRUMALA MUSIC CENTRE (P) LTD., 16 - 10 - 27/105/10, NANGUNURI COMPLEX, MAIN ROAD, MALAKPET, HYDERABAD. 2. ACIT, CIRCLE 2(2), HYDERABAD. 3. PR. C I T - 2, HYDERABAD. 4. CIT(APPEALS) - 2, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.