M/s. M.G. Processors Pvt. Ltd., Surat V. The Income Tax Officer, Ward-1(1)(3), Surat

ITA 2492/AHD/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9262 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 03-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIVA SEWAK
• Assessee Lawyers: K R GHEEWALA
• Keywords: Retrospective amendment

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL CAMP AT SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2492/AHD/2016 / ASSTT. YEAR: 2011-2012 M/S.M.G. PROCESSORS P.LTD. SHOP NO.151, 451 TEXTILE MARKET KAMELA DAWAJA RING ROAD SURAT 395 002. VS. ITO, WARD-1(1)(3) SURAT. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI K.R. GHEEWALA REVENUE BY : SHRI SHIVA SEWAK, SR.DR ! / DATE OF HEARING : 09/03/2017 '#$ ! / DATE OF PRONOUNCEMENT: 10/03/2017 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST THE ORDER OF THE LD.CIT(A)-I DATED 28.4.2015 PASSED FOR THE ASSTT.YEAR 2011-12. 2. THOUGH THE ASSESSEE HAS TAKEN FOUR GROUNDS OF APPEAL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE, WHEREBY, IT HAS CHALLENGED DISALLOWANCE OF INTEREST EXPENSES AMOUNTING ITA NO.2492/AHD/2016 2 TO RS.8,48,744/-, WHICH WAS DISALLOWED BY THE AO WITH THE AID OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FI LED ITS RETURN OF INCOME ON 29.9.2011 DECLARING TOTAL INCOME AT N IL. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE COMPANY HAD CLAIMED FINANCIAL CHARGES TOWARDS VARIOUS SECURED LOANS. HE FURTHER FOUND THAT THE ASSESS EE HAS PAID AN INTEREST OF RS.7,71,156/- TO INDIA BULLS FINA NCE LTD., AND RS.77,588/- TO KOTAK MAHINDRA FINANCE. ACCOR DING TO THE AO, THE ASSESSEE FAILED TO DEDUCT TDS AS REQUI RED UNDER SECTION 194A OF THE ACT. ACCORDINGLY, THE LD.AO HA S DISALLOWED THE CLAIM OF THE ASSESSEE. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT ON THIS VERY LOAN, INTERESTS WERE PAID IN SUBSEQUENT YEARS ALSO, AND THE LD.CIT(A) HAS ALLOWED THE DEDUCTIO N IN THE ASSTT.YEAR 2013-14 BY PUTTING RELIANCE ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LA ND MARK TOWNSHIP LTD., 279 CTR (DEL) 384. THE LD.CIT(A) HAS MADE A LUCID DISCUSSION ON THIS SCOPE OF SECOND PROVISO APPENDED TO SECTION 40(A)(IA) OF THE ACT. HE FURTHER CONTENDED THAT IN VIEW OF INSERTION OF SECOND PROVISO T O SECTION 40(A)(IA) BY THE FINANCE ACT, 2012, IF THE RECIP IENT HAS INCLUDED THE INCOME EMBEDDED IN THESE PAYMENTS IN THEIR TAX RETURN FILED UNDER SECTION 139, THEN THE DISALLOWANCE UNDER SECTION 40(A)(IA) COULD NOT BE MADE. HE FURTHER R ELIED ITA NO.2492/AHD/2016 3 ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NARESH KUMAR, 262 CTR (DEL) 389, CIT VS. RAJI NDERE KUMAR, 260 CTR (DEL) 113 AND THE DECISION OF THE ITAT, AHMEDABAD BENCH IN THE CASE OF DIPAK GONDALIA IN ITA NO.3313/AHD/2015 DATED 16.3.2016 TO THE EFFECT THAT SE COND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATI VE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL, 2005. ON THE STRENGTH OF THIS JUDGMENT, HE CONTENDED LET THE ISSUE BE SET ASIDE TO THE AO FOR VERIFICATION. 5. THE LD.DR, ON THE OTHER HAND, CONTENDED THAT THE IN SUBSEQUENT YEARS, THE ASSESSEE HAS SUBMITTED COMPLETE DETAILS, WHEREAS IN THIS YEAR, THE ASSESSEE FAILED TO GIVE SUCH DETAILS. HE FURTHER CONTENDED THAT ASSESSMENT ORDER INVO LVED HEREIN IS A.Y.2011-12 AND THE PROVISO WAS INTRODUCED W.E.F. 1.4.2013. HENCE, THE ASSESSEE CANNOT TAKE BENEFIT THAT PROVISO. 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. ALL THE JUDGMENTS CITED B Y THE LD.COUNSEL FOR THE ASSESSEE AT BAR SUPPORTS THE CASE OF THE ASSESSEE THAT IF THE RECIPIENT INCLUDED THE INCOME EMBEDD ED IN THESE PAYMENTS IN THEIR TAX RETURN FILED UNDER SECTIO N 139, THEN THE DISALLOWANCE UNDER SECTION 40(A)(IA) COULD NOT BE MADE. HONBLE DELHI HIGH COURT HAS ALSO CONSIDERED TH IS ISSUE IN THE CASE OF CIT VS. RAJINDER KUMAR (SUPRA) HAS CONSIDERED THIS POSITION ELABORATELY AND HELD THAT THE PROVISO IS CURATIVE IN NATURE, AND HENCE, IT IS RETROSPECTIVE IN NATURE. ITA NO.2492/AHD/2016 4 RESPECTFULLY FOLLOWING THE JUDGMENT OF HONBLE DELHI HI GH COURT AND ALSO THE DECISION OF THE TRIBUNAL, AHMEDABAD BENCH IN THE CASE OF DIPAK GONDALIA (SUPRA), WE ARE OF T HE VIEW THAT IF RECIPIENT HAVE INCLUDED THE AMOUNTS OF TAXES EMBEDDED IN THE PAYMENT MADE BY THE ASSESSEE IN ITS RET URN, THEN THE ASSESSEE CANNOT BE TREATED IN DEFAULT, 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 SHALL CALL FOR DETAILS FROM M/S.INDIA BULLS FINANCE LTD., AND KOTAK MAHINDRA FINANCE, AND VERIF Y WHETHER THEY HAVE ACCOUNTED THESE INTEREST RECEIPTS IN THE IR INCOME TAX RETURNS OR NOT. 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. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 10 TH MARCH, 2017 AT SURAT CAMP. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER SURAT CAMP; DATED 10/03/2017 ITA NO.2492/AHD/2016 5 %& '() *%)$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. + / THE RESPONDENT. 3. ,, - / CONCERNED CIT 4. - ( ) / THE CIT(A) 5. )./ '' , / DR, ITAT, 6. /01 2 / GUARD FILE. %& / BY ORDER, 3 / ,4 ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION : 09-03-2017 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER. : 10-03-2017 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S : 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT. : 5. DATE ON WHICH FAIR ORDER PLACED BEFORE OTHER MEMBER : 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. : 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK. : 10-03-2017 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. : 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. : 10. DATE OF DESPATCH OF THE ORDER :