Capital Transformers P.Ltd, Delhi V. ACIT, Circle-5(2), New Delhi

ITA 1397/DEL/2019

AI Insights

Capital Transformers P. Ltd. appealed against the order of the Commissioner of Income Tax (Appeals) which had confirmed the disallowance of interest under Section 40(a)(ia) of the Income Tax Act, 1961, due to non-deduction of TDS as required under Section 194A. The assessee argued that the recipient company, RIICO, was exempt from Section 194A as per certain government notifications, which were in public domain and should not be considered additional evidence. The Tribunal found merit in the assessee's plea that the CIT(A) should have admitted the government notifications for a fair determination of tax liability and substantial justice.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121511 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-04-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 19-02-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 6; 201; 194A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A No.1397/DEL/2019 Assessment Year 2014-15 Capital Transformers P. Ltd., 56-B, Dilshad Garden, G.T. Road, Shahdara, Delhi. v. ACIT, Circle-5(2), New Delhi. TAN/PAN: AABCC7434J (Appellant) (Respondent) Appellant by: Shri C.S. Anand, Adv. Respondent by: Shri N.K. Bansal, Sr.DR Date of hearing: 21 04 2023 Date of pronouncement: 21 04 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The capt i oned appe al has been fi l ed b y t he Assessee agai nst the or der of the Co mmi ssioner of I nc o me Tax (A ppeal s)- XX XIII, New Del hi ( ‘C IT( A) ’ in shor t) date d 12. 09. 2018 arisi ng fro m the assessment or der dated 21. 12. 2016 passed by t he Assessi ng Of ficer (AO ) under Secti on 143( 3) of t he I nco me Tax Act , 1961 ( the Act) concerni ng A Y 201 4- 15. 2. The gr ounds of appeal raised b y the assessee read as under: “ 1 . T ha t o n t h e f a c t s o f th e ca se a n d u nd e r t h e l a w, t he do c u m e n t a r y e v i d e n c e s, w hi c h w e re i n p ub l i c d o m ai n a n d w h i c h we r e f ur ni sh e d by t h e a s s e ss e e b e f o r e t h e L d. C I T ( A) s i m p l y t o su p p o r t i t s c o nt e nt i o n ( w hi c h w a s m ad e b y t h e a s s e ss e e b e f o r e I.T.A No.1397/Del/2019 2 th e L d A s se s si ng O f f i c e r ) t ha t t he t a x wa s n ot r e qui re d t o b e de d u c t e d a t so u rc e o ut o f i nt e r e st pa i d/ p a y ab le t o R I I C O - a St at e G o ve r n m e n t C om p an y, o ug h t t o h a d be e n a d m it t ed . 2. T ha t on t h e f a ct s o f t h e c a s e a nd un de r t he l a w , I d. C I T ( A ) ha s e r re d i n no t co ns id e r i n g t he d o c u m e n ta r y e v id e nc e s, w h i c h we r e m a d e a v a i l ab l e t o hi m b y t he as s e s s e e du r i ng th e c o u r se o f ap p e l l at e p r oc e e di n g s t o de c i de t h e i s su e r el a t i n g t o ad d i t i on / d i sal l o w a n c e o f Rs . 1 1 , 90 , 68 8 / - m a de u / s . 4 0( a ) ( i a ). 3. T ha t o n t he f a c ts o f t h e c a s e a n d un d e r th e l a w, ad d i t i on / d i sal l o w a n c e o f R s. 1 1, 9 0, 6 8 8/ - m a d e u / s . 40 ( a) ( i a ) de se r v e s t o b e d e l et e d. ” 3. Br iefl y stat ed, t he assessee fi led ret urn of i nco me decl ari ng l oss of Rs. 4, 65, 60, 448/ -. T he case w as sel ect ed f or scruti n y assess me nt u nder Sect ion 14 3( 3) of t he A ct. In the cou rse of the as sess ment pr oceedi ngs, t he Assessing Offi ce r inquir ed on t he appl icabi li t y of TDS on i nt er est payme nt t o Rs.11,9 0, 688/ - made t o Raj ast han Est ate I ndustr ial Develo p ment and I nvest ment Cor porat i on ( RII CO). The Assessi ng Offi cer eve nt ual l y di sal lowed the i nterest i nvoki ng Se ct ion 40(a)(i a) of the Act on t he gr ound that TDS on i nterest has not been ded uct ed as appl ic abl e under Sect i on 194A of t he Act . 4. Aggri eved, the assessee pr ef err ed appeal bef ore the CIT( A) . Bef ore the CI T( A), the assessee f il ed cert ai n gover n me nt not if icat ions t o establi sh t hat the r ecipi ent co mpan y, i. e., RIICO i s e xe mpte d fr o m t he appl i cabil i t y of Secti on 1 94A an d t her ef or e, the as sessee cannot be tr eated i n def aul t under Sect i on 40(a) ( ia) of t he Act . The CIT( A) t reated such doc u ment a s addi ti onal e vidences and ref use d to ad mit such addi t ional evi de nces. Ha vin g done so, t he CI T(A) con fir med t he act i on of the Assessi ng Offi cer. I.T.A No.1397/Del/2019 3 5. Furt her aggri eved, the assessee pr ef err ed appe al bef or e the Tri bunal. 6. We have hea rd t he ri val submi ssions. The assessee conte nds t hat t he addi ti onal evi denc es placed bef ore t he CI T(A) ar e in t he natur e of gover n me nt not if icat ion a nd are in publ i c do mai n and t her efore st ri ct l y speaking there is no addi ti onal evi de nce i n it . T he not if icat i on go es to t he root of t he mat ter and are extre mel y relevant for t he purpose of det e mi anti on of tax l i abi li t y of t he assessee and ther ef ore, shoul d not have been di scar ded b y t he a ssessee on t echni cal gr ounds. 7. The l d. counsel sub mi t ted t hat on t he basis of noti fi ca ti on, the reci pient co mp an y RII CO does not fal l wit hi n the purvi ew of Secti on 194A of t he Act and t heref ore, Sect io n 40(a) (i a) is not at tr acted in the i nst ant case on meri ts. We fi nd mer it i n the plea of the assessee compan y f or a d mi ssi on of t he e vide nce sought t o be reli ed up on f or det er mi nat io n of correct ta xable i nco me. Rul e 46A of t he I ncome Ta x R ul es i s founde d upon pr inci ples of nat ur al just ice. I n the process of di schar gi ng the appel l at e functi on, it is i ncu mbent upon t he CIT (A) not t o arbit raril y refuse t o ma ke a n en quir y where ci rcu mstanc es so demand a nd to t heref or e ei the r ad mi t or call f or addi ti onal evi dence if so nee ded in ter ms of Sect i on 250( 4) of the Act . Thus, Secti on 250( 4) r .w. Rul e 46A gi ves ample power to the CI T( A) to ad mi t the addi t ional evi dence in t he ci rcums t anc es whi ch ar e avai labl e in t he pr esent ca se. It i s t he case of t he assessee t hat non consi derat i on of gover n me nt n oti fi cati on wil l cause seri ous prejudice t o t he assessee and suc h addit i onal e videnc e i s i n the I.T.A No.1397/Del/2019 4 nat ur e of go ver n ment noti fi cat ion w hich i n an y case i s avai labl e in t he publi c do ma i n. 8. Havi ng r ega rd t o the fact s and cir cu mst ances of the case, we are of t he vi ew t hat t he CI T( A) sh oul d have e xerci se i ts statut or y po wer to ad mi t t he ad dit ional evi dence i n favour of t he assessee bef it ti ng wi t h t he fact si tuat ion i n or der t o a dvance the cause of substanti al j usti ce. In t he prese nt case, ther e does not app ear to be an y i mpedi me nt e ven under R ul e 46A f or ad mi ssi on of such addit ional evi dence. The ref ore, the acti on of the CI T( A) is set aside and t he issue is r esto red bac k t o t he f i l e of the CIT( A) f or fres h adj udi cati on aft er t aki ng i nt o account such addit ional evi denc es as ma y be pl aced b y t he assessee t o support it s cont ent io n on t he i ssue t owar ds non deducti bi lit y of TDS on interest pa yment to RI IC O. We howe ver do not e xpress an y opi nion on me ri ts of the i ssue at thi s junct ure. It shal l be open to t he CIT(A) t o exa mi ne t he docu ment s and expl anati ons offere d concerni ng t he issue an d deci de t he issue afres h i n accor dance wit h l aw. 9. I n the result , the appeal of t he assessee i s al lowed f or stati sti cal purpose s. Order pronounced in the open Court on 21/04/2023. Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /04/2023 Prabhat