Shekhar Bhagwan Gore, Pune V. Income-tax Officer,

ITA 184/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1496 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 23-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Keywords: Capital asset

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO .184 /PN/201 5 / ASSESSM ENT YEAR : 20 1 0 - 11 SHRI SHEKHAR GHAGWAN GORE, ADITYA CONSTRUCTION, OFFICE NO.7, 2 ND FLOOR, ADITYA SHAGUN MALL, NDA - PASHAN ROAD, BHAVDHAN, PUNE 411021 . / APPELLANT PAN: A HRPG8762F VS. THE INCOME TAX OFFICER, WARD 3(4) , PUNE . / RESPONDENT / APPELLANT BY : SHRI ABHAY AVCHAT / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 2 5 . 0 7 .201 6 / DATE OF PRONOUNCEMENT: 29 . 0 7 .201 6 / ORDER PER SUSHMA CHOWLA, J M : THIS APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - II , PUNE , DATED 13 . 11 .20 1 4 RELATING TO ASSESSMENT YEAR 20 1 0 - 11 AGAINST ORDER PASSED UNDER SECTION S 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . ITA NO. 1 84 /PN/20 1 5 SHRI SHEKHAR BHAGWAN GORE 2 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DISALLOWING INTEREST PAID BY ASSESSEE TO NBFC U/S 40(A)(IA) DUE TO NON DEDUCTION OF TDS ON PAID EXPENDITURE WITHOUT APPRECIATING THE FACT THAT THE TAX ONCE AGAIN COULD NOT BE RECOVERED FROM THE APPELLANT (DEDUCTOR - ASSESSEE) SINCE THE TAX HAS ALREADY BEEN PAID BY THE RECIPIENT OF INCOME. 2. THE APPELLANT PRAYS THAT THE ADDITION OF RS.29,07,6 64/ - MADE IN RESPECT OF INTEREST PAID TO NBFC (SINCE TDS IS NOT DEDUCTED ON THE SAME) BE DELETED. 3 . THE ISSUE RAISED IN THE PRESENT APPEAL IS IN RELATION TO THE DISALLOWANCE OF INTEREST PAID DUE TO NON DEDUCTION OF TAX UNDER SECTION 40(A)(IA) OF THE ACT AT RS. 29,07 , 664 / - . 4 . BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.19,29,640/ - . DURING THE YEAR UNDER INCOME DECLARING TOTAL INCOME OF RS.19,29,640/ - . DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DEBITED SUM OF RS.35,32,982/ - UNDER THE HEAD INTEREST ON LOANS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD TAKEN LOAN FROM NBFCS AND THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF INTEREST PAID PARTY - WISE . THE ASSESSING OFFICER FURTHER ASKED WHETHER ANY T AX WAS DEDUCTED ON INTEREST PAID TO NBFCS TOTALING RS.29,07,664/ - . THE ASSESSEE WAS ALSO SHOW CAUSED TO EXPLAIN THAT FOR NON - DEDUCTION OF TAX AT SOURCE AS TO WHY THE DISALLOWANCE OF SAID EXPENDITURE SHOULD NOT BE MADE UNDER SECTION 40(A)(IA) OF THE ACT. THE ASSESSEE IN RETURN EXPLAINED THAT THE INTEREST WAS PAID TO VARIOUS NBFCS FOR LOAN TAKEN FOR CAPITAL ASSET FINANCE WITHOUT DEDUCTION OF TAX UNDER SECTION 194A OF THE ACT . THE ASSESSING OFFICER IN THIS REGARD OBSERVED THAT SUB - SECTION (3) OF SECTION 194 A OF THE ACT PROVIDES FOR NON - APPLICABILITY OF SECTION 194A OF THE ACT ITA NO. 1 84 /PN/20 1 5 SHRI SHEKHAR BHAGWAN GORE 3 TO BANKING COMPANIES . HOWEVER, NBFCS WERE NOT BANKING COMPANIES AND HENCE, THERE WAS REQUIREMENT OF DEDUCTION OF TAX AT SOURCE AND SINCE THE ASSESSEE HAS DEFAULTED, INTEREST EXPENDITUR E OF RS.29,07,664/ - WAS DISALLOWED. 5 . THE CIT(A) UPHELD THE ORDER OF ASSESSING OFFICER. 6 . THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT BECAUSE OF THE AMENDMENT BY FIN ANCE ACT, 2012, UNDER WHICH SECOND PROVISO HAS BEEN INSERTED TO SECTION 40(A)(IA) OF THE ACT , THERE IS NO REQUIREMENT TO DEDUCT TAX AT SOURCE WHERE THE PAYEE HAS PAID THE TAXES ON SUCH RECEIPTS. HE FURTHER REFERRED TO THE CERTIFICATE FILED BY THE TWO OF T HE CONCERNS, WHEREIN T HE Y ADMITTED TO HAVE INCLUDED THE SAID RECEIPTS IN THEIR INCOME. HE ALSO POINTED OUT THAT THERE WAS FOLLOW UP IN RESPECT OF BALANCE NBFCS AND CERTIFICATES FROM THREE CONCERNS WERE FILED BEFORE THE ASSESSING OFFICER. 8 . ON PERUSAL OF RECORD AND IN THE ENTIRETY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE FINANCE ACT, 2012 HAS INSERTED SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT , WHICH HAS BEEN HELD TO BE RETROSPECTIVE IN OPERATION BY VARIOUS COURTS, THERE IS MERIT IN THE CL AIM OF ASSESSEE. AS PER SECOND PROVISO, IN CASE THE AMOUNT PAID BY THE ASSESSEE IS INCLUDED BY THE PAYEE AS ITS RECEIPT AND IN TURN, PAID TAXES THEREON, THERE IS NO MERIT IN MAKING ANY DISALLOWANCE IN THE HANDS OF PAYER, FOR NON DEDUCTION OF TAX. HOWEVER , NECESSARY EVIDENCE IN THIS REGARD IS DIRECTED TO BE FILED BEFORE THE ASSESSING ITA NO. 1 84 /PN/20 1 5 SHRI SHEKHAR BHAGWAN GORE 4 OFFICER , WHO SHALL DECIDE THE ISSUE IN ACCORDANCE WITH LAW . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED FOR STATISTICAL PURPOSES . 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THIS 29 TH DAY OF JU LY , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 29 TH JU LY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - II , PUNE ; 4. / THE CIT - II , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE