Sri.Azmath Ulla, Bangalore V. Assistant Commissioner of income tax, Bangalore

ITA 144/BANG/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5272 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-05-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 20-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Assessee Lawyers: C R NULVI
• Keywords: Retrospective amendment; Additional evidence
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 144/BANG/2017 ASSESSMENT YEAR : 2013-14 SHRI AZMATH ULLA, NO. 48/49, MEI FACTORY, TUMKUR ROAD, YESHWANTHPUR, BANGALORE 560 022. PAN: ABGPA 0983R VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 6(2)(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI C.R. NULVI, CA RESPONDENT BY : SHRI M.K. BIJU, JCIT DATE OF HEARING : 24.05.2017 DATE OF PRONOUNCEMENT : 07.06.2017 O R D E R PER VIJAY PAL RAO, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 23.11.2016 OF CIT(A) FOR THE ASSESSMENT YEAR 2013-14. THE ASSESS EE HAS RAISED THE FOLLOWING GROUNDS. 1.THE ORDER OF THE A.O IS BAD IN LAW AND AGAINST TH E FACT AND CIRCUMSTANCES OF THE CASE. 2.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND UN DER THE PROVISIONS OF THE LAW, THE A.O ERRED IN MAKING THE ADDITION U/S 40(A)(IA) FOR THE INTEREST PAID TO NBFCS WITHOUT T DS FOR THE LOAN ITA NO. 144/BANG/2017 PAGE 2 OF 9 AVAILED, AS THE SECTION 194A(1) IS NOT APPLICABLE T O FINANCIAL CORPORATIONS I.E., NBFCS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND U NDER THE PROVISIONS OF THE LAW, THE A.O ERRED IN MAKING THE ADDITION U/S 40(A)(IA), AS THE SAID SECTION IS NOT APPLICABLE FO R THE INTEREST PAID DURING THE YEAR WITHOUT TDS PRIOR TO THE ASSESSMENT YEAR 2014-15. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND U NDER THE PROVISIONS OF THE LAW, THE A.O ERRED IN MAKING THE ADDITION U/S 40(A)(IA) FOR THE INTEREST PAID TO NBFCS, WHERE TH E SECOND PROVISO TO SECTION 40(A)(IA) IS COMPLIED BY THE NBF CS BY FILING THE RETURN OF INCOME, DECLARING SUCH INTEREST AND P AYING TAX THEREON. 5. FOR THESE AND OTHER REASONS WHICH MAY BE ADDUCED AT THE TIME OF HEARING, THE APPELLANT PRAYS BEFORE YOUR HONOUR TO DELETE THE ADDITION MADE BY THE A.O, WHICH IS BAD IN LAW. 6. APPELLANT CRAVES LEAVES TO ADD, TO ALTER, TO AME ND AND TO DELETE ANY OF THE OTHER GROUNDS AT THE TIME OF HEAR ING. 2. THE ONLY ISSUE ARISES IN THE APPEAL OF THE ASSESSEE IS WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE AUTHORITIES BELOW HAVE ERRED IN DISALLOWING THE INTEREST PAYMENT TO NON BANKING FIN ANCIAL CORPORATIONS (NBFCS) U/S. 40(A)(IA). 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO MADE A DISALLOWANCE OF RS. 17,79,823/- ON ACCOUNT OF INTEREST PAYMENT MADE BY THE ASSESSEE TO NBFCS WITHOUT DEDUCTION OF TAX AT SOURCE BY INVOKIN G THE PROVISIONS OF SECTION 40(A)(IA). THE ASSESSEE CHALLENGED THE ACT ION OF THE AO BEFORE THE CIT(A) AND CONTENTED THAT NON BANKING FINANCIAL CORPORATIONS ARE FALLING UNDER THE EXCLUSION FROM TDS AS PER PROVISI ONS OF SECTION ITA NO. 144/BANG/2017 PAGE 3 OF 9 194A(3)(A)(B) OF THE ACT. THE CIT(A) DID NOT ACCEP T THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE DISALLOWANCE MADE BY THE AO. 4. BEFORE THE TRIBUNAL THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT THE NBFCS HAVE ALREADY TAKEN INTO CONSIDERATION THE INT EREST AMOUNT IN QUESTION FOR COMPUTATION OF THEIR INCOME OFFERED TO TAX. HE HAS REFERRED TO THE CERTIFICATES ISSUED BY THE AUDITORS OF THE N BFCS THEREBY IT HAS BEEN CERTIFIED THAT ALL THESE NBFCS NAMELY M/S. BAJAJ FI NANCE LIMITED, M/S. KOTAK MAHINDRA PRIME LIMITED AND RELIANCE CAPI TAL LIMITED HAVE CONSIDERED THESE INTEREST AMOUNTS IN COMPUTATION OF THEIR INCOMES FOR THE PURPOSE OF TAX IN ACCORDANCE WITH THE PROVISIONS OF ACT. THUS THE LD. AR HAS SUBMITTED THAT IN VIEW OF THE SECOND PROVISO TO SECTION 40(A)(IA) NO DISALLOWANCE CAN BE MADE WHEN THE RECIPIENTS OF THE AMOUNT HAVE ALREADY CONSIDERED THE SAME AS PART OF THEIR INCOME OFFERED TO TAX. HE HAS FURTHER CONTENTED THAT THOUGH THESE CERTIFICATES WERE NOT P RODUCED BEFORE THE AO HOWEVER, THE ASSESSEE RAISED THIS ISSUE BEFORE THE CIT(A) AND NOW FILED THESE CERTIFICATES IN SUPPORT OF HIS CLAIM. HENCE IT IS PLEADED THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE MAY BE AD MITTED AND THE MATTER MAY BE REMITTED TO THE RECORD OF THE AO FOR VERIFIC ATION AND DECIDING THE SAME. ON THE OTHER HAND, THE LD. DR HAS OBJECTED T O THE PRAYER OF THE ASSESSEE FOR ADMITTING THE ADDITIONAL EVIDENCES. H E HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. ITA NO. 144/BANG/2017 PAGE 4 OF 9 5. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. AS REGARDS THE APPLICABILITY OF THE SECOND PROVISO TO SECTION 40(A)(IA) RETROSPECTIVELY AN IDENTICAL ISSUE WAS CO NSIDERED BY THE HONBLE DELHI HIGH COURT IN CASE OF CIT VS NARESH KUMAR (36 2 ITR 256) AND HELD THAT THE PROVISO INSERTED IN SECTION 40(A)(IA) IS AN EXPLANATORY AND REMEDIAL IN NATURE AND THEREFORE WILL BE APPLICABLE WITH RETROSPECTIVE EFFECT IN PARA 26 TO 29 AS UNDER. 26. PRINCIPLE OF MATCHING WHICH IS DISTURBED BY SECTIO N 40(A)(IA) OF THE ACT, MAY NOT MATERIALLY BE OF CONSEQUENCE TO THE REVENUE WHEN THE TAX RATES ARE STABLE AND UNIFORM OR IN CAS ES OF BIG ASSESSEES HAVING SUBSTANTIAL TURNOVER AND EQUALLY H UGE EXPENSES AS THEY HAVE NECESSARY CUSHION TO ABSORB T HE EFFECT. HOWEVER, MARGINAL AND MEDIUM TAXPAYERS, WHO WORK AT LOW G.P. RATE AND WHEN EXPENDITURE WHICH BECOMES SUBJECT-MAT TER OF AN ORDER UNDER SECTION 40(A)(IA) IS SUBSTANTIAL, CAN S UFFER SEVERE ADVERSE CONSEQUENCES AS IS APPARENT FROM THE CASE O F NARESH KUMAR. TRANSFERRING OR SHIFTING EXPENSES TO A SUBSE QUENT YEAR, IN SUCH CASES, WILL NOT WIPE OFF THE ADVERSE EFFECT AND THE FINANCIAL STRESS. NEVERTHELESS THE SECTION 40(A)(IA ) HAS TO BE GIVEN FULL PLAY KEEPING IN MIND THE OBJECT AND PURP OSE BEHIND THE SECTION. AT THE SAME TIME, THE PROVISION CAN BE AND SHOULD BE INTERPRETED LIBERALLY AND EQUITABLE SO THAT AN ASSE SSEE SHOULD NOT SUFFER UNINTENDED AND DELETERIOUS CONSEQUENCES BEYO ND WHAT THE OBJECT AND PURPOSE OF THE PROVISION MANDATES. C ASE OF NARESH KUMAR IS NOT ONE OF RARE CASES, BUT ONE OF S EVERAL CASES AS WE FIND THAT SECTION 40(A)(IA) IS INVOKED IN LAR GE NUMBER OF CASES. 27. ONE IMPORTANT CONSIDERATION IN CONSTRUING A MACHIN ERY SECTION IS THAT IT MUST BE SO CONSTRUED SO AS TO EF FECTUATE THE LIABILITY IMPOSED BY THE CHARGING SECTION AND TO MA KE THE MACHINERY WORKABLE. HOWEVER, WHEN THE MACHINERY SECTION RESULTS IN UNIN TENDED OR HARSH CONSEQUENCES WHICH WERE NOT INTENDED, THE REM EDIAL OR CORRECTION ACTION TAKEN IS NOT TO BE DISREGARDED BU T GIVEN DUE REGARD. 28. IT IS, IN THIS CONTEXT, THAT WE HAD IN RAJINDER KU MAR'S CASE (SUPRA) OBSERVED AS UNDER: '22. NOW, WE REFER TO THE AMENDMENTS WHICH HAVE BEE N MADE BY THE FINANCE ACT, 2010 AND THE EFFECT THEREOF. WE HA VE ALREADY ITA NO. 144/BANG/2017 PAGE 5 OF 9 QUOTED THE DECISION OF THE CALCUTTA HIGH COURT IN V IRGIN CREATIONS (SUPRA). THE SAID DECISION REFERS TO THE EARLIER DECISION OF THE SUPREME COURT IN THE CASE OF ALLIED MOTORS ( P.) LTD(SUPRA) AND COMMISSIONER OF INCOME TAX V. ALOM EXTRUSIONS L TD, [2009] 319 ITR 306 (SC) . IN THE CASE OF ALLIED MOTORS (P.) LTD. (SUPRA), THE SUPREME COURT WAS EXAMINING THE FIRST PROVISO T O SECTION 43B AND WHETHER IT WAS RETROSPECTIVE. SECTION 43B W AS INSERTED IN THE ACT WITH EFFECT FROM 1ST APRIL 1984 FOR CURB ING CLAIMS OF TAXPAYERS WHO DID NOT DISCHARGE OR PAY STATUTORY LI ABILITIES BUT CLAIMED DEDUCTIONS ON THE GROUND THAT THE STATUTORY LIABILITY HAD ACCRUED. SECTION 43B STATES THAT THE STATUTORY LIAB ILITY WOULD BE ALLOWED AS A DEDUCTION OR AS AN EXPENSE IN THE YEAR IN WHICH THE PAYMENT WAS MADE AND WOULD NOT BE ALLOWED, EVEN IN CASES OF MERCANTILE SYSTEM OF ACCOUNTANCY, IN THE YEAR OF AC CRUAL. IT WAS NOTICED THAT IN SOME CASES HARDSHIP WOULD BE CAUSED TO ASSESSEES, WHO PAID THE STATUTORY DUES WITHIN THE P RESCRIBED PERIOD THOUGH THE PAYMENTS SO MADE WOULD NOT FALL W ITHIN THE RELEVANT PREVIOUS YEAR. ACCORDINGLY, A PROVISO WAS ADDED BY FINANCE ACT, 1987 APPLICABLE WITH EFFECT FROM 1ST A PRIL, 1988. THE PROVISO STIPULATED THAT WHEN STATUTORY DUES COVERED BY SECTION 43B WERE PAID ON OR BEFORE THE DUE DATE FOR FURNISH ING OF THE RETURN UNDER SECTION 139(1), THE DEDUCTION/EXPENSE, EQUAL TO THE AMOUNT PAID WOULD BE ALLOWED. THE SUPREME COURT NOT ICED THE PURPOSE BEHIND THE PROVISO AND THE REMEDIAL NATURE OF THE INSERTION MADE. OF COURSE, THE SUPREME COURT ALSO R EFERRED TO EXPLANATION 2 WHICH WAS INSERTED BY FINANCE ACT, 19 89 WHICH WAS MADE RETROSPECTIVE AND WAS TO TAKE EFFECT FROM 1ST APRIL, 1984. HIGHLIGHTING THE OBJECT BEHIND SECTION 43B, I T WAS OBSERVED THAT THE PROVISO MAKES THE PROVISION WORKA BLE, GIVES IT A REASONABLE INTERPRETATION. IT WAS ELUCIDATED: '12. IN THE CASE OF GOODYEAR INDIA LTD. V. STATE OF HARYANA THIS COURT SAID THAT THE RULE OF REASONABLE CONSTRUCTION MUST BE APPLIED WHILE CONSTRUING A STATUTE. LITERAL CONSTRU CTION SHOULD BE AVOIDED IF IT DEFEATS THE MANIFEST OBJECT AND PURPO SE OF THE ACT. 13. THEREFORE, IN THE WELL-KNOWN WORDS OF JUDGE LEA RNED HAND, ONE CANNOT MAKE A FORTRESS OUT OF THE DICTIONARY; A ND SHOULD REMEMBER THAT STATUTES HAVE SOME PURPOSE AND OBJECT TO ACCOMPLISH WHOSE SYMPATHETIC AND IMAGINATIVE DISCOV ERY IS THE SUREST GUIDE TO THEIR MEANING. IN THE CASE OF R.B. JUDHA MAL KUTHIALA V. CIT, THIS COURT SAID THAT ONE SHOULD AP PLY THE RULE OF REASONABLE INTERPRETATION. A PROVISO WHICH IS INSER TED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE PROVISION W ORKABLE, A PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION IN THE S ECTION AND IS REQUIRED TO BE READ INTO THE SECTION TO GIVE THE SE CTION A REASONABLE INTERPRETATION, REQUIRES TO BE TREATED A S RETROSPECTIVE IN OPERATION SO THAT A REASONABLE INTERPRETATION CA N BE GIVEN TO THE SECTION AS A WHOLE. ITA NO. 144/BANG/2017 PAGE 6 OF 9 14. THIS VIEW HAS BEEN ACCEPTED BY A NUMBER OF HIGH COURTS. IN THE CASE OF CIT V. CHANDULAL VENICHAND, THE GUJARAT HIGH COURT HAS HELD THAT THE FIRST PROVISO TO SECTION 43-B IS RETROSPECTIVE AND SALES TAX FOR THE LAST QUARTER PAID BEFORE THE FILI NG OF THE RETURN FOR THE ASSESSMENT YEAR IS DEDUCTIBLE. THIS DECISION DE ALS WITH ASSESSMENT YEAR 1985-85. THE CALCUTTA HIGH COURT IN THE CASE OF CIT V. SRI JAGANNATH STEEL CORPN. HAS TAKEN A SI MILAR VIEW HOLDING THAT THE STATUTORY LIABILITY FOR SALES TAX ACTUALLY DISCHARGED AFTER THE EXPIRY OF THE ACCOUNTING YEAR IN COMPLIAN CE WITH THE RELEVANT STATUTE IS ENTITLED TO DEDUCTION UNDER SEC TION 43-B. THE HIGH COURT HAS HELD THE AMENDMENT TO BE CLARIFICATO RY AND, THEREFORE, RETROSPECTIVE. THE GUJARAT HIGH COURT IN THE ABOVE CASE HELD THE AMENDMENT TO BE CURATIVE AND EXPLANAT ORY AND HENCE RETROSPECTIVE. THE PATNA HIGH COURT HAS ALSO HELD THE AMENDMENT INSERTING THE FIRST PROVISO TO BE EXPLANA TORY IN THE CASE OF JAMSHEDPUR MOTOR ACCESSORIES STORES V. UNIO N OF INDIA. THE SPECIAL LEAVE PETITION FROM THIS DECISION OF TH E PATNA HIGH COURT WAS DISMISSED. THE VIEW OF THE DELHI HIGH COU RT, THEREFORE, THAT THE FIRST PROVISO TO SECTION 43-B W ILL BE AVAILABLE ONLY PROSPECTIVELY DOES NOT APPEAR TO BE CORRECT. A S OBSERVED BY G.P. SINGH IN HIS PRINCIPLES OF STATUTORY INTERPRET ATION, 4TH EDN. AT P. 291: 'IT IS WELL-SETTLED THAT IF A STATUTE IS CURATIVE OR MERELY DECLARATORY OF THE PREVIOUS LAW RETROSPECTIVE OPERA TION IS GENERALLY INTENDED.' IN FACT THE AMENDMENT WOULD NO T SERVE ITS OBJECT IN SUCH A SITUATION UNLESS IT IS CONSTRUED A S RETROSPECTIVE. THE VIEW, THEREFORE, TAKEN BY THE DELHI HIGH COURT CANNOT BE SUSTAINED.' 23. SECTION 43B DEALS WITH STATUTORY DUES AND STIPU LATES THAT THE YEAR IN WHICH THE PAYMENT IS MADE THE SAME WOULD BE ALLOWED AS A DEDUCTION EVEN IF THE ASSESSEE IS FOLLOWING TH E MERCANTILE SYSTEM OF ACCOUNTANCY. THE PROVISO, HOWEVER, STIPUL ATES THAT DEDUCTION WOULD BE ALLOWED WHERE THE STATUTORY DUES COVERED BY SECTION 43B STAND PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. SECTION 40(A)(IA) IS APPLICABLE T O CASES WHERE AN ASSESSEE IS REQUIRED TO DEDUCT TAX AT SOURCE AND FAILS TO DEDUCT OR DOES NOT MAKE PAYMENT OF THE TDS BEFORE T HE DUE DATE, IN SUCH CASES, NOTWITHSTANDING SECTIONS 30 TO 38 OF THE ACT, DEDUCTION IS TO BE ALLOWED AS AN EXPENDITURE IN THE YEAR OF PAYMENT UNLESS A CASE IS COVERED UNDER THE EXCEPTIO NS CARVED OUT. THE AMENDED PROVISO AS INSERTED BY FINANCE ACT , 2010 STATES WHERE AN ASSESSEE HAS MADE PAYMENT OF THE TD S ON OR BEFORE THE DUE DATE OF FILING OF THE RETURN UNDER S ECTION 139(1), THE SUM SHALL BE ALLOWED AS AN EXPENSE IN COMPUTING THE INCOME OF THE PREVIOUS YEAR. THE TWO PROVISIONS ARE AKIN A ND THE PROVISOS TO SECTIONS 40(A)(IA) AND 43B ARE TO THE S AME EFFECT AND FOR THE SAME PURPOSE. 24. IN PODAR CEMENT (P.) LTD. (SUPRA), THE SUPREME COURT CONSIDERED WHETHER TERM 'OWNER' WOULD INCLUDE UNREG ISTERED OWNERS WHO HAD PAID SALE CONSIDERATION AND WERE COV ERED BY ITA NO. 144/BANG/2017 PAGE 7 OF 9 SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THE CO NTENTION OF THE ASSESSEES WAS THAT THE AMENDMENTS MADE TO THE D EFINITION OF TERM 'OWNER' BY FINANCE BILL, 1987 SHOULD BE GIV EN RETROSPECTIVE EFFECT. IT WAS HELD THAT THE AMENDMEN TS WERE RETROSPECTIVE IN NATURE AS THEY RATIONALISE AND CLE AR THE EXISTING AMBIGUITIES AND DOUBTS. REFERENCE WAS MADE TO CRAWF ORD: 'STATUTORY CONSTRUCTION' AND 'THE PRINCIPLE OF DECL ARATORY STATUTES', FRANCIS BENNION: 'STATUTORY INTERPRETATI ON', JUSTICE G.P. SINGH'S 'PRINCIPLES OF STATUTORY INTERPRETATIO N', IT WAS OBSERVED THAT SOMETIMES AMENDMENTS ARE MADE TO SUPP LY AN OBVIOUS OMISSION OR TO CLEAR UP DOUBTS AS TO THE ME ANING OF THE PREVIOUS PROVISION. THE ISSUE WAS ACCORDINGLY DECID ED HOLDING THAT IN SUCH CASES THE AMENDMENTS WERE RETROSPECTIV E THOUGH IT WAS NOTICED THAT AS PER TRANSFER OF PROPERTY ACT, R EGISTRATION ACT, ETC. A LEGAL OWNER MUST HAVE A REGISTERED DOCU MENT. 25. IN VIEW OF THE AFORESAID DISCUSSION IN PARAS 18 ,19 AND 20, IT IS APPARENT THAT THE RESPONDENT ASSESSEE DID NOT VI OLATE THE UNAMENDED SECTION 40(A)(IA) OF THE ACT. WE HAVE NOT ED THE AMBIGUITY AND REFERRED THEIR CONTENTION OF REVENUE AND REJECTED THE INTERPRETATION PLACED BY THEM. THE AMENDED PROV ISIONS ARE CLEAR AND FREE FROM ANY AMBIGUITY AND DOUBT. THEY W ILL HELP CURTAIL LITIGATION. THE AMENDED PROVISION CLEARLY S UPPORT VIEW TAKEN IN PARAGRAPHS 17 - 20 THAT THE EXPRESSION 'SA ID DUE DATE' USED IN CLAUSE A OF PROVISO TO UNAMENDED SECTION RE FERS TO TIME SPECIFIED IN SECTION 139(1) OF THE ACT. THE AMENDED SECTION 40(A)(IA) EXPANDS AND FURTHER LIBERALISES THE STATU TE WHEN IT STIPULATES THAT DEDUCTIONS MADE IN THE FIRST ELEVEN MONTHS OF THE PREVIOUS YEAR BUT PAID BEFORE THE DUE DATE OF FILIN G OF THE RETURN, WILL CONSTITUTE SUFFICIENT COMPLIANCE.' 29. IN VIEW OF THE AFORESAID DISCUSSION, WE DO NOT FIN D ANY MERIT IN THE PRESENT APPEALS FILED BY THE REVENUE AND THE Y ARE DISMISSED. 6. HAVING HELD THAT THE SECOND PROVISO TO SECTION 40(A )(IA) SHALL HAVE RETROSPECTIVE EFFECT THE QUESTION ARISES THAT IF TH E RECIPIENTS OF INTEREST IN QUESTION HAVE ALREADY CONSIDERED THE SAME FOR COMPU TING THEIR INCOME OFFERED TO TAX THEN THE DISALLOWANCE U/S. 40(A)(IA) IS NOT ATTRACTED. IN THIS CASE THOUGH THE ASSESSEE DID NOT FILE THE RELEVANT MATERIAL BEFORE THE AO IN THIS REGARD HOWEVER, IT IS A FACT WHICH EXISTED RIGHT FROM THE BEGINNING AND THE RELEVANT DETAILS ARE AVAILABLE WITH THE REV ENUE REGARDING THE ITA NO. 144/BANG/2017 PAGE 8 OF 9 INCOME OFFERED BY THESE NBFCS. THEREFORE, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE IF THE CERTIFICATES FILED IN SUPPORT OF THE CLAIM THAT THE NBFCS HAVE INCLUDED THIS AMOUNT OF INTERES T IN COMPUTATION OF THEIR INCOME OFFERED TO TAX ARE FOUND TO BE CORRECT THEN THE COMPLIANCE U/S. 40(A)(IA) IS DEEMED TO HAVE BEEN MADE AND NO D ISALLOWANCE IS CALLED FOR. THEREFORE THIS ISSUE IS SET ASIDE TO THE RECO RD OF THE AO FOR VERIFICATION OF THE FACT THAT THE RECIPIENT NBFCS H AVE ALREADY TAKEN INTO ACCOUNT THE AMOUNT OF INTEREST RECEIVED BY THEM FOR COMPUTING THE INCOME IN THEIR RETURN OF INCOME. IN CASE THE AO I S SATISFIED THAT THE NBFCS HAVE CONSIDERED THIS AMOUNT FOR COMPUTATION O F INCOME IN THEIR RETURN OF INCOME THEN NO DISALLOWANCE IS CALLED FOR U/S. 40(A)(IA). 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. 6. PRONOUNCED IN THE OPEN COURT ON THIS 07 TH DAY OF JUNE, 2017 SD/- (VIJAY PAL RAO) JUDICIAL MEMBER BANGALORE, DATED, THE 07 TH JUNE, 2017. / MS/ COPY TO: ITA NO. 144/BANG/2017 PAGE 9 OF 9 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.