Shri Rajendra K.Patel, Ahmedabad V. The Income Tax Officer, Ward-9(4), Ahmedabad

ITA 1699/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5834 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 02-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MONIL SHAH
• Keywords: Retrospective amendment
• Section: 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.1699/AHD/2014 ASSTT. YEARS: 2010-11 SHRI RAJENDRA K. PATEL 3/B, URMIJIVAN SOCIETY C/O. LIC STAFF SOCIETY VINZOL CROSS ROAD VATVA, AHMEDABAD 382 45. PAN : AIOPP 9436 H VS. THE ITO, WARD - 9(4) AHMEDABAD. ( APPLICANT ) ( RESPONENT ) ASSESSEE BY : SHRI MONIL SHAH, AR REVENUE BY : DHARAMVIR D. YADAV, SR.DR / DATE OF HEARING : 12/05/2017 / DATE OF PRONOUNCEMENT: 16/05/2017 &'/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE US AGAINST ORDER OF TH E LD.CIT(A)-XXI, AHMEDABAD DATED 18.3.2014 PASSED FOR THE ASSTT.YEAR 2010-11. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF R S.22,79,634/- WHICH WAS DISALLOWED BY THE AO UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ELECTRONICALLY ON 21.9.2010 DECLARING TOTAL INCOME AT RS.6,70,770/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE ITA NO.1699/AHD/2014 2 UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERV ED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THA T THE ASSESSEE HAS PAID INTEREST EXPENDITURE TO THE FOLLOWING PARTIES. THE DETAILS NOTICED BY THE AO READ AS UNDER: SR. NO. NAME OF THE COMPANY AMOUNT 1. CHOLA MANDALAM DBS FIN. LTD. 9736 2. GE CAPITAL 240231 3. MAGMA LEASING LTD. 437465 4. RELIANCE FINANCE LTD. 1121527 5. TATA FIN LTD. 480411 TOTAL: 22,89,370 ACCORDING TO THE AO, THE ASSESSEE FAILED TO DEDUCT TDS UNDER SECTION 194A OF THE INCOME TAX ACT, THEREFORE, THE EXPENDIT URE CLAIMED AT RS.22,89,370/- DESERVES TO BE DISALLOWED WITH THE H ELP OF SECTION 40(A)(IA) OF THE ACT. 4. ON APPEAL, THE LD.CIT(A) HAS DELETED DISALLOWANC E OF RS.9,736/- IN RESPECT OF CHOLA MANDALA DBS FIN. LTD. THE LD.CIT( A) HAS CONFIRMED REST OF THE DISALLOWANCES. 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE AT TH E VERY OUTSET CONTENDED THAT RECIPIENT OF INTEREST ARE FINANCE COMPANIES. THEY MUST HAVE INCLUDED THESE AMOUNTS IN THEIR RETURNS OF INCOME, AND THERE FORE, THE AO SHOULD HAVE VERIFIED THIS ASPECT. IN CASE THESE COMPANIES INCL UDED THE INTEREST INCOME IN THEIR RETURNS, THEN IN VIEW OF THE HONBLE SUPREME COURT DECISION IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE P.LTD. VS. CIT, 163 TAXMANN 355 (SC), DISALLOWANCE DESERVES TO BE DELETED. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORDER OF THE LD.CIT(A). ITA NO.1699/AHD/2014 3 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. WE FIND THAT ONE OF THE ADDITION OF RS.2 2,79,634/- MADE WITH THE AID OF SECTION 40A(IA) ON ACCOUNT OF NON-DEDUCTION OF TDS. HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK T OWNSHIP LTD., 377 ITR 635 HAS OBSERVED THAT SECOND PROVISO TO SEC 40(A)(I A) OF THE INCOME TAX ACT, 1961 IS TO BE READ AS APPLICABLE WITH RETROSPECTIVE EFFECT. ACCORDING TO THIS PROVISO, IF A PAYEE HAS FILED ITS RETURN OF INCOME DISCLOSING THE PAYMENT RECEIVED, THEN THE ASSESSEE WOULD NOT BE CONSIDERED IN DEFAULT. IN THE PRESENT CASE, IT HAS BEEN ALLEGED AGAINST THE ASSESSEE THAT IT MADE PAYMENT OF INTERESTS TO VARIOUS PRIVATE FINANCIAL INSTITUTIONS BUT THE A SSESSEE FAILED TO DEDUCT TDS. AS PER THE DECISION OF THE HONBLE DELHI HIGH COURT CITED SUPRA, THIS ASPECT HAS TO BE VERIFIED. THEREFORE, RESPECTFULLY FOLLOW ING THE JUDGMENT OF HONBLE DELHI HIGH COURT (SUPRA), WE ARE OF THE VIEW THAT I F RECIPIENTS HAVE INCLUDED THE AMOUNTS OF TAXES EMBEDDED IN THE PAYMENT MADE B Y THE ASSESSEE IN ITS RETURN, THEN THE ASSESSEE CANNOT BE TREATED IN DEFA ULT, AND NO DISALLOWANCE UNDER SECTION 40(A)(IA) IS TO BE MADE. ACCORDINGLY , WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO FOR VERIFICATION. THE LD.AO SHA LL CALL FOR DETAILS FROM PARTIES MENTIONED HEREINABOVE, AND VERIFY WHETHER T HEY HAVE ACCOUNTED THESE INTEREST RECEIPTS IN THEIR INCOME TAX RETURNS OR NO T. IF THEY ARE ACCOUNTED, THEN NO DISALLOWANCE SHALL BE MADE. IT IS ALSO OBSERVED THAT THE ASSESSEE SHOULD ALSO MAKE EFFORT FOR SUBMITTING THESE DETAILS OF RE CIPIENT COMPANIES. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED FOR S TATISTICAL PURPOSE. 7. IN THE NEXT GROUND OF APPEAL, GRIEVANCE OF THE A SSESSEE IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF R S.26,238/- OUT OF TELEPHONE AND MOBILE EXPENSES AND RS.27,788/- OUT O F CAR EXPENSES. 8. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD T HAT THE ASSESSEE FAILED TO ITA NO.1699/AHD/2014 4 SUBMIT REQUISITE DETAILS DEMONSTRATING THE FACT THA T THESE FACILITIES WERE USED EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE LD.AO HAS DISALLOWED THE EXPENDITURE AT 20% OUT OF THE CLAIM WHICH HAS BEEN RESTRICTED BY THE LD.CIT(A) TO 10%. AFTER CONSIDERING THE ORDER OF T HE LD.CIT(A), WE DO NOT FIND ANY ERROR IN IT. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 9. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY A LLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 16 TH MAY, 2017 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER