Bhimaas Drive Inn Private Limited, CHENNAI V. ITO Corporate Ward 1(2), CHENNAI

ITA 2625/CHNY/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4328 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 12-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SANJIV KUMAR SHAH; RELIGARE
• Keywords: Opportunity of being heard; TDS
• Section: 143(3); 40(a)(ia); 201

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A. NO. 2625/CHNY/2018 / ASSESSMENT YEAR: 2015-16 M/S. BHIMAAS DRIVE INN PVT. LTD., NO. 1, AMMAN KOIL STREET, VADAPALANI, CHENNAI 600 026. [PAN:AADCB5775D] VS. THE INCOME TAX OFFICER, CORPORATE WARD 1(2), CHENNAI. ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI SANJIV KUMAR SHAH, C.A. / RESPONDENT BY : SHRI R. CLEMENT RAMESH KUMAR, ADDL. CIT / DATE OF HEARING : 06.02.2019 /DATE OF PRONOUNCEMENT : 12.02.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 1, CHENNAI, DATED 28.06.2018 RELEVANT TO THE ASSESSMENT YEAR 2015-16. THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT]. 2. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT [ACT IN SHORT] WAS COMPLETED I.T.A. NO. 2625/CHNY/18 2 BY MAKING DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT TOWARDS 30% OF INTEREST PAYMENTS ON .32,47,281/- AMOUNTING TO .9,74,184/- WITHOUT CONSIDERING THE FACT THAT THE ASSESSEE PRODUCED THE EVIDENCE IN FORM 26A, WHICH IS A CONCLUSIVE THAT THE ASSESSEE IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT AS PER THE PROVISIONS OF SECTION 201 OF THE ACT AND THEREFORE, HE SUBMITTED THAT THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT HAS NOT APPLICATION AND PRAYED FOR DELETING THE DISALLOWANCE. 3. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSEE HAS FURNISHED TWO DIFFERENT CERTIFICATES IN FORM 26A AND MOREOVER, THE ASSESSEE HAS FAILED TO FOLLOW THE PROCEDURE PRESCRIBED UNDER RULE 31ACB. THUS, THE LD. DR PLEADED THAT THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. DURING THE COURSE OF SCRUTINY PROCEEDINGS, THE ASSESSING OFFICER NOTICED FROM THE LEDGER ACCOUNT OF RELIGARE FINVEST TERM LOAN INTEREST AS MAINTAINED IN THE BOOKS OF THE ASSESSEE THAT AN AMOUNT OF .32,47,281/- WAS CREDITED AS INTEREST. THE LEDGER ACCOUNT DID NOT REFLECT ANY TDS MADE BY THE ASSESSEE ON THE INTEREST PAYMENT. THUS, THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY 30% OF THE INTEREST PAYMENT OF 32,47,281/- SHOULD NOT BE DISALLOWED UNDER I.T.A. NO. 2625/CHNY/18 3 SECTION 40(A)(IA) OF THE ACT. BEFORE THE ASSESSING OFFICER, IT WAS CONTENDED THAT RELIGARE FINVEST PVT. LTD. HAD CONSIDERED THE INTEREST PAYMENT OF .32,47,281/- IN ITS RETURN OF INCOME AND PRODUCED COPY OF FORM NO. 26A ALONG WITH ANNEXURE-A TO SUBSTANTIATE ITS CONTENTION. ON PERUSAL OF ANNEXURE A, THE ASSESSING OFFICER NOTICED THAT THE ACCOUNTANT AUTHORISED TO ISSUE ANNEXURE A HAD ISSUED THE SAME AFTER EXAMINING THE RECORDS OF RELIGHARE FINVEST LTD. IN FAVOUR OF HOTEL BHIMAAS AND NOT IN FAVOUR OF THE ASSESSEE. A TABULAR COLUMN APPENDED TO ANNEXURE 'X INDICATES THAT THE INTEREST RECEIVED BY RELIGARE OF . 58,22,075/- FROM HOTEL BHIMAAS COMPRISES OF AN INTEREST AMOUNT OF . 9,51,132/- ATTRIBUTABLE TO INTEREST FROM THE ASSESSEE, BHIMAAS DRIVE INN PVT. LTD. HOWEVER THE FACT REMAIN THAT ANNEXURE 'A' HAS BEEN ISSUED BY THE AUTHORISED ACCOUNTANT IN FAVOUR OF INTEREST PAID OR CREDITED IN RESPECT OF HOTEL BHIMAAS AND NOT IN FAVOUR OF THE ASSESSEE. IN VIEW OF THE ABOVE, SINCE, THE ANNEXURE 'A' FORMING PART OF FORM NO. 26A DOES NOT SERVE THE CAUSE OF THE ASSESSEE RATHER IT ESTABLISHES THAT RELIGARE FINVEST LTD. HAS NOT RECKONED THE INTEREST RECEIVABLE FROM THE ASSESSEE IN ITS RETURN OF INCOME AND MOREOVER THE ASSESSEE HAS NOT DEDUCTED TDS ON THE INTEREST PAYMENTS MADE TO RELIGARE FINVEST PVT. LTD., THE SAID INTEREST PAYABLE OF .32,47,281/- TO RELIGARE FINVEST PVT. LTD. WAS DISALLOWED AT THIRTY PERCENT, WHICH COMES TO .9,74,184/-, AS ENVISAGED UNDER SECTION 40(A)(IA) OF THE ACT AND BROUGHT TO TAX. ON APPEAL, THE I.T.A. NO. 2625/CHNY/18 4 ASSESSEE HAS FURNISHED TWO DIFFERENT CERTIFICATES IN FORM 26A AND MOREOVER, THE ASSESSEE HAS FAILED TO FOLLOW THE PROCEDURE PRESCRIBED UNDER RULE 31ACB, THE LD. CIT(A) CONFIRMED THE ADDITION MADE UNDER SECTION 40(A)(IA) OF THE ACT. BEFORE US, BY FILING FORM NO. 26A UNDER RULE 31ACB ALONG WITH ANNEXURE A, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ANNEXURE A TO FORM NO. 26A CLEARLY INDICATES, THE DETAILS OF THE ASSESSEE, RECKONING THE AMOUNT OF INTEREST RECEIVABLE FROM THE ASSESSEE BY RELIGARE FINVEST LTD. PRAYED FOR DELETING THE DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE SAME AND DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 12 TH FEBRUARY, 2019 IN CHENNAI. SD/- SD/- (INTURI RAMA RAO) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, 12.02.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.