M/s B.Himmatlal Agrawal , Nagpur V. Income Tax Officer 4(4), Nagpur

ITA 194/NAG/2019

AI Insights

The case involves M/s. B. Himmatlal Agrawal, a partnership firm engaged in transport contracting and supply of labor, which appealed against the order of the Commissioner of Income Tax (Appeals)-1, Nagpur. The firm had filed a return declaring nil income for the assessment year 2014-15, which was later assessed by the Income Tax Officer at a total income of Rs.1,22,14,639, primarily due to disallowed interest payments for which tax was not deducted at source. The Tribunal examined whether the interest payments to NBFCs were exempt from TDS under section 194A, as claimed by the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136690 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-09-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 18-08-2019
• Other Referred Cases: Ashok Leyland Finance Ltd. vs. ACIT, 80 ITD 560
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJAT SINGHAI
• Keywords: FORM 26AS
• Section: 143(3); 40(a)(ia); 194A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR – VIRTUAL COURT BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER आयकर अपील सं. / ITA No.194/NAG/2019 िनधाᭅरण वषᭅ / Assessment Year : 2014-15 M/s. B. Himmatlal Agrawal, 71/A, Krishna House, Ganeshpet, S. T. Bus Stand Road, Nagpur- 440018. PAN : AAHFB5140P Vs. ITO, Ward-4(4), Nagpur. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-1, Nagpur [‘the CIT(A)’] dated 20.06.2019 for the assessment year 2014-15. 2. Briefly, the facts of the case are that the appellant is a partnership firm engaged in the business of transport contractor, civil and supply of labour. The Return of Income for the assessment year 2014-15 was filed on 29.11.2014 declaring total income of Rs.Nil. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-4(4), Nagpur (‘the Assessee by : Shri Naresh Jakhotia Revenue by : Shri Rajat Singhai Date of hearing : 25.09.2023 Date of pronouncement : 12.10.2023 ITA No.194/NAG/2019 2 Assessing Officer’) vide order dated 29.12.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.1,22,14,639/-. While doing so, the Assessing Officer disallowed interest of Rs.1,21,29,696/- u/s 40(a)(ia) of the Act on the ground that the appellant had failed to deduct tax at source on the interest paid to the following parties :- Sr. No. Name Amount 01 Shriram Equipment Finance Company Limited 1390928 02 Mahindra & Mahindra Finance Limited 4548361.36 03 Tata Motors Limited 5372440.69 04 India Bulls Housing Finance Limited (short interest shown) 5641 05 Tata Capital Finance Limited (short interest shown) 40020 06 SREI Equipment Finance Limited (short interest shown) 772304.76 1,21,29,695.81 3. Being aggrieved by the above disallowances, an appeal was filed before the ld. CIT(A), who vide impugned order held that the in respect of the parties i.e. Tata Motors Limited and Shriram Equipment Finance Company Limited, the appellant had filed Form 26AS received from the said parties, therefore, directed the Assessing Officer to allow the same and addition in respect of balance parties was confirmed by the ld. CIT(A). 4. Being aggrieved, the appellant is in appeal before us in the present appeal. ITA No.194/NAG/2019 3 5. It is contended before us that the interest paid to the NBFC are in the nature of higher purchase charges and, therefore, the provisions of section 194A has no application. In this regard, he placed reliance on the decision of the Chennai Bench of the ITAT in the case of Ashok Leyland Finance Ltd. vs. ACIT, 80 ITD 560. 6. On the other hand, ld. Sr. DR placed reliance on the orders of the lower authorities. 7. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to the applicability of provisions of section 194A in respect of the interest paid to the NBFCs. Admittedly, the appellant had not deducted the tax at source on the payment of interest made to the above parties nor submitted Form 26AS before the relevant authorities. The appellant took for the first time a plea that the amount paid to the NBFC are in the nature of higher purchase charges. However, the appellant had not led any factual foundation in support of this contention either before the lower authorities or before us Therefore, the contention of the assessee that the interest paid to the NBFC is in the nature of higher purchase charges cannot be accepted. Therefore, the ratio of the decision of the Chennai Bench of ITAT in the case of Ashok Leyland Finance Ltd. (supra) has no application to the facts of the present case. Therefore, we do not find any ITA No.194/NAG/2019 4 reason to interfere with the order of the ld. CIT(A). Accordingly, the grounds of appeal filed by the assessee stand dismissed. 8. In the result, the appeal filed by the assessee sands dismissed. Order pronounced on this 12 th day of October, 2023. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 12 th October, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-1, Nagpur. 4. The Pr. CIT-1/2/3, Nagpur. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, नागपुर / DR, ITAT, Nagpur. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.