Valsad District Central Co.Op. Bank Ltd., Valsad V. The Addl. CIT, Valsad Range, Valsad

ITA 1336/AHD/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1846 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 14-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B P K PANDA
• Assessee Lawyers: MITISH S MODI
• Keywords: TDS
• Section: 40(a)(ia)

Judgement Text

VALSAD DISTRICT CO-OPERATIVE BANK LTD. V. ADDL. CIT RANGE- VALSAD /I.T.A. NO.1336/AHD/2015/A.Y.10-11 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUNTANT MEMBER I.T.A. NO.1336/AHD/2015: ASSESSMENT YEAR: 2010-11 VALSAD DISTRICT CO - OPERATIVE BANK LTD. , SAHAKAR SADAN CENTRAL KACHERI ROAD VALSAD 396001 PAN: AAAAV0539L VS. ADDL. CIT RANGE - VALSAD APPELLANT RESPONDENT ASSESSEE BY SHRI MITISH S. MODI, CA REVENUE BY SHRI B. P. K. PANDA, SR. D.R. DATE OF HEARING 20.02.2019 DATE OF PRONOUNCEMENT 20 .02.2019 ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VALSAD (IN SHORT THE CIT (A)) DATED 03.03.2015 PERTAINING TO ASSESSMENT YEAR 2010-11, WHICH IN TURN HAS ARISEN FROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) DTD.19.03.2014 OF INCOME TAX ACT, 1961 (IN SHORT THE ACT) BY THE ADDL. CIT RANGE- VALSAD (IN SHORT THE AO). 2. THE SOLE ISSUE UNDER THE GROUNDS OF APPEAL IS THE DISALLOWANCE OF INTEREST EXPENSES OF RS.9,17,159 UNDER SECTION 40(A)(IA) OF THE ACT. 3. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE BANK HAS NOT DEDUCTED TDS ON INTEREST PAID/CREDITED AMOUNTING TO RS. 3,12,322 TO INDIVIDUALS/ TRUST ETC. ON THE GROUND THAT IT HAS OBTAINED FORM NO. 15H/15G FROM THE INDIVIDUALS HENCE, NO TDS WAS REQUIRED AS PER SECTION 197 OF THE ACT. SIMILARLY NO TDS WAS MADE IN RESPECT OF AN AMOUNT RS. 6,04,837 BEING INTEREST PAID/CREDITED TO INDIVIDUALS /TRUST. THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO FURNISH COPIES OF FORM NO. VALSAD DISTRICT CO-OPERATIVE BANK LTD. V. ADDL. CIT RANGE- VALSAD /I.T.A. NO.1336/AHD/2015/A.Y.10-11 PAGE 2 OF 4 15H AND FORM NO. 15G FILED BY THE DEPOSITOR HOLDER BY 15.03.2013. THE ASSESSEE HAS FILED A LETTER DTD. NIL MARCH 2013 STATING THAT COPIES OF FORM NO.15G AND FORM NO.15H ARE ATTACHED HEREWITH. HOWEVER, THE AO FOUND THAT NO COPIES OF FORM NO.15G/H WERE FOUND ATTACHED. SINCE, THE ASSESSEE HAS NOT PRODUCED THE COPIES OF FORM NO.15G AND FORM NO.15H, HENCE, THE INTEREST PAYMENT WAS HELD TO BE NOT ALLOWABLE EXPENDITURE IN VIEW OF THE LEGAL PROVISION UNDER SECTION 197A OF THE ACT. ACCORDINGLY, SAME WERE DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. SIMILARLY, THE AO FURTHER FOUND THAT THE ASSESSEE HAS NOT DEDUCTED THE TAX ON INTEREST ON TERM DEPOSITS OF INDIVIDUALS TO THE EXTENT OF RS.6, 04, 837. HENCE, THE SAID AMOUNT WAS ALSO DISALLOWED UNDER SECTION 40(A)(IA) OF THE ACT. 4. IN APPEAL, THE LD. CIT(A) OBSERVED THAT THE EXPENDITURE ON ACCOUNT OF INTEREST PAYMENT HAS BEEN DISALLOWED FOR NON-DEDUCTION OF TDS AND NON-SUBMISSION OF FORM NO.15G AND FORM NO.15H. THIS FACT HAS BEEN ADMITTED BY THE APPELLANT IN ITS WRITTEN SUBMISSIONS DURING THE APPELLATE PROCEEDINGS. THEREFORE, NON-DEDUCTION OF TDS CLEARLY ATTRACTED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THEREFORE, THE LD. CIT(A) DID NOT INTERFERE WITH THE FINDINGS GIVEN BY THE AO. ACCORDINGLY, DISALLOWANCE MADE BY THE AO WERE CAME TO BE CONFIRMED. 5. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THERE IS DISPUTE BETWEEN THE AO AND THE ASSESSEE REGARDING SUBMISSIONS OF FORM NO.15G AND FORM NO.15H DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS FURTHER SUBMITTED THAT THE AO DIRECTED THE APPELLANT ONLY TO SUBMIT THE BREAKUP OF INTEREST PAYMENT ON DEPOSITS AND ACCORDINGLY IT HAS NOT COMPLIED WITH REQUIREMENT VIDE ITS SUBMISSIONS MADE IN MARCH 2013. THEREFORE, VALSAD DISTRICT CO-OPERATIVE BANK LTD. V. ADDL. CIT RANGE- VALSAD /I.T.A. NO.1336/AHD/2015/A.Y.10-11 PAGE 3 OF 4 PRESUMPTION DRAWN BY THE AO IS NOT CORRECT, HENCE, NOT TENABLE IN THE LAW . THE LEARNED COUNSEL NOT GOING INTO FURTHER DETAILS, SUBMITTED THAT THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT MAY BE RESTRICTED ONLY TO 30% OF THE AMOUNT OF TOTAL DISALLOWANCE OF EXPENDITURE CLAIMED BY THE ASSESSEE BY FOLLOWING THE DECISION OF COORDINATE BENCH OF TRIBUNAL IN THE CASE OF SMT. SONU KHANDELWAL V. ITO IN I.T.A.NO.597/JP/2013 DATED 13. 05. 2016 IN THE LIGHT OF AMENDMENT BROUGHT OUT IN THE FINANCE ACT 2014 WITH EFFECT FROM 01. 04. 2015, WHICH HAS BEEN HELD TO BE RETROSPECTIVE IN NATURE. 6. ON THE OTHER HAND, LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT HE HAS NO OBJECTION IF THE DISALLOWANCES ARE RESTRICTED TO 30% IN THE LIGHT OF AMENDMENT IN THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT HELD AS RETROSPECTIVE IN NATURE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE HAS CLEARLY ADMITTED BEFORE THE LD. CIT(A) IN THE APPELLATE PROCEEDINGS THAT FORM NO.15G AND 15H WERE NOT SUBMITTED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT DISALLOWANCE MADE BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE LEGALLY VALID. HOWEVER, SINCE THE LEARNED COUNSEL FOR THE ASSESSEE HAS CLAIMED AND AGREED THAT DISALLOWANCE BE RESTRICTED TO 30% OF TOTAL DISALLOWANCE OF EXPENDITURE IN THE LIGHT OF AMENDMENT MADE BY THE FINANCE ACT, 2014 WITH EFFECT FROM 01.04.2015 WHICH HAS BEEN HELD TO BE RETROSPECTIVE IN NATURE BY THE VARIOUS COURTS AND CO-ORDINATE BENCH OF TRIBUNAL AS RELIED BY THE LEARNED COUNSEL FOR THE ASSESSEE. THEREFORE, FOLLOWING THE DECISION OF CO-ORDINATE BENCH OF TRIBUNAL IN THE CASE OF SMT. SONU KHANDELWAL V. ITO IN ITA NUMBER 597/JP/2013 DATED 13. 05. 2016 WHICH IN TURN FOLLOWING THE DECISION VALSAD DISTRICT CO-OPERATIVE BANK LTD. V. ADDL. CIT RANGE- VALSAD /I.T.A. NO.1336/AHD/2015/A.Y.10-11 PAGE 4 OF 4 OF HON`BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF P M S DIESELS [2015] 59 TAXMANN.COM 100 (P&H) HAS RESTRICTED THE DISALLOWANCE UNDER SECTION 40(A)(IA) TO 30% OF TOTAL DISALLOWANCE MADE BY THE AO. IN VIEW OF THIS MATTER, RESPECTFULLY FOLLOWING THE AFORESAID JUDGEMENTS, OF TRIBUNAL AND HON`BLE HIGH COURT, THE DISALLOWANCE OF RS. 9,17,159 MADE UNDER SECTION 40(A)(IA) OF THE ACT ARE RESTRICTED TO 30% OF SAID EXPENDITURE. ACCORDINGLY, THE GROUNDS OF APPEAL IS PARTLY ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 20.02.2019 SD/- SD/- (KUL BHARAT) (O.P.MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: DATED: 20 TH FEBRUARY, 2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A)/ ITAT (DR)/GUARD FILE OF ITAT. BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, SURAT