Sri Debasis Ray, Bhubaneswar V. DCIT, Circle-4(1), Bhubaneswar

ITA 28/CTK/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4348 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 12-02-2018
• Assessment Year: 2012-2013
• Appeal Filed On: 20-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: G N NAIKS K SARANGIAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAV AN KUMAR GADALE, JM ITA NO. 28 /CTK/201 7 ( / ASSESSMENT YEAR : 201 2 - 201 3 ) SRI DEBASIS RAY, 72, SATYANAGAR, BHU BANESWAR - 751007 VS. DCIT, CIRC4(1), BHUBANESWAR ./ ./ PAN/GIR NO. : A DIPR 5262 J ( / APPELLANT ) .. ( / RESPONDENT ) /AS SESSEE BY : SHRI G.N.NAIK/S.K.SARANGI,AR /REVENUE BY : SHRI D.K.PRADHAN , DR / DATE OF HEARING : 12 / 0 2 /201 8 / DATE OF PRONOUNCEMENT 14 / 0 2 /201 8 / O R D E R PER SHRI N.S.SAINI , A M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) - 2 , BHUBANESW AR , DATED 11.11.2016 . 2. GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS GENERAL IN NATURE AND, HENCE, REQUIRES NO SEPARATE ADJUDICATION BY US. 3. GROUND NO.2 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE ADDITION OF RS. 33,88,578/ - U /S.40(A)(IA) OF THE ACT. 4. BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE HAS MADE INTEREST PAYMENT OF RS.33,88,578/ - TO THE FOLLOWING FOUR PARTIES WITHOUT DEDUCTING TDS U/S.40(A)(IA) OF THE ACT : - SL. NO PARTICULARS DEBITED IN P&L A/C AMOUNT (RS.) 01 INTEREST ON SUNDARAM FINANCE 3,69,595 02 INTEREST ON SREI FINANCE 8,59,766 03 INTEREST ON MAGMA SARACHI FINANCE 3,82,536 04 INTEREST ON L&T FINANCE 17,76,681 TOTAL 33,88,578 ITA NO. 28 / /1 7 2 5. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF A SSESSING OFFICER . 6. BEFORE US, THE AR OF THE ASSESSEE ARGUED THAT AS WILL BE OBSERVED FROM PAGES 1 & 2 OF THE PAPER BOOK FILED BEFORE THE TRIBUNAL THAT BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT IT HAD AVAILED LOAN FROM FINANCIAL COMPANIES FOR PURCHASE OF MACH INERIES AND REPAYMENT OF LOANS INCLUDING INTEREST WERE MADE BY POST DATED CHEQUES. IT IS , THEREFORE, NOT PRACTICABLE TO DEDUCT TAX AT SOURCE IN THE YEAR UNDER APPEAL. THE FINANCIAL COMPANIES ARE REPUTED COMPANIES AND FILED THEIR INCOME TAX RETURN REGULARLY . THE ASSESSEE ENCLOSED COPY OF CA CERTIFICATES OF THE PAYEE COMPANY TO SHOW THAT THE RECIPIENTS HAVE DISCLOSED THE AMOUNT PAID BY THE ASSESSEE AS THEIR INCOME IN THE RETURN FILED AND PAID DUE TAXES THEREON AND, THEREFORE, IN VIEW OF SECOND PROVISO TO SECT ION 40(A)(IA) OF THE ACT, NO DISALLOWANCE OF INTEREST EXPENDITURE IN THE HANDS OF THE ASSESSEE WAS CALLED FOR. HE SUBMITTED THAT THE CIT(A) HAS CONFIRMED THE ORDER OF AO ON THE GROUND OF PAID AND PAYABLE AND HAS NOT ADJUDICATED UPON THIS ARGUMENT OF TH E ASSESSEE. HENCE, THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF CIT(A) FOR ADJUDICATING THE SAME AFRESH AS PER THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT IN THE LIGHT OF THE EVIDENCE FILED BEFORE THE CIT(A). 7. THE DR COULD NOT CONTROVERT THE SUBMISSION OF AR OF THE ASSESSEE. 8. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE AO HAS DISALLOWED DEDUCTION FOR INTEREST EXPENDITURE OF RS.33,88,578/ - PAID TO FOUR PARTIES ON THE GROUND THAT THE ASS ESSEE HAS FAILED TO DEDUCT TDS THEREFROM U/S.194A OF THE ACT ITA NO. 28 / /1 7 3 AND, HENCE, NO DEDUCTION OF THE SAME WAS ALLOWABLE WHILE COMPUTING THE INCOME OF THE ASSESSEE AS PER PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 9. THE ASSESSEE BEFORE THE CIT(A) FILED CA CERTIFI CATE OF THE FOUR PAYEE COMPANIES EVIDENCING THE FACT THAT THEY HAVE DISCLOSED THE AMOUNT RECEIVED FROM THE ASSESSEE AS THEIR INCOME IN THE RETURN OF INCOME FILED AND PAID DUE TAXES THEREON AND, HENCE, IN VIEW OF SECOND PROVISO TO SECTION 40(A)(IA) OF THE A CT, NO DISALLOWANCE ON INTEREST EXPENDITURE WAS REQUIRED TO BE MADE IN THE HANDS OF THE ASSESSEE. 10. WE FIND THAT THE CIT(A) HAS NOT ADJUDICATED THIS SUBMISSION OF THE ASSESSEE, EVEN THOUGH THE ASSESSEE HAD FILED BEFORE HIM THE EVIDENCE FOR THE SAME. IN O UR CONSIDERED VIEW IN ORDER TO RENDER SUBSTANTIAL JUSTICE, THE MATTER NEEDS TO BE RESTORED BACK TO THE FILE OF CIT(A) FOR ADJUDICATION OF THE ISSUE AFRESH AFTER CONSIDERING THE EVIDENCE FILED BEFORE THE CIT(A) AND AFTER ALLOWING REASONABLE OPPORTUNITY OF H EARING TO THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE TO ADJUDICATE THE ISSUE AFRESH AFTER ALLOWING REASONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. THIS GROUND OF APPEAL OF ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 11. GROUND NO.3 OF THE APPEAL IS DIRECTED AGAINST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO DISALLOWING FOLLOWING EXPENSES : - SL. NO PARTICULARS DISALLOWANCE MADE BY THE AO 01 TRAVELLING & CONVEYANCE 1,54,898/ - 02 REP AIRS & MAINTENANCE 80,540/ - 03 VEHICLES RUNNING & MAINTENANCE 50,360/ - 04 BUSINESS PROMOTION 47,160/ - 05 STAFF WELFARE 33,058/ - TOTAL 3,66,466/ - ITA NO. 28 / /1 7 4 12. BRIEF FACTS OF THE CASE ARE THAT THE AO DISALLOWED THE EXPENSES UNDER THE FIVE HEADS AGGREGATING TO RS.3,66,466/ - ON THE GROUND THAT THE ASSESSEE FAILED TO PRODUCE THE BILLS AND VOUCHERS. 13. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF ASSESSING OFFICER. 14. BEFORE US, THE AR OF THE ASSESSEE COULD NOT CONTROVERT THE FINDING OF LOWER AUTHORITIES BY PRO DUCING BEFORE US THE BILLS AND VOUCHERS FOR THE EXPENSES DISALLOWED BY THE AO UNDER THE FIVE HEADS STATED ABOVE. THEREFORE, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF CIT(A), WHICH IS CONFIRMED AND THIS GROUND OF APPEAL OF ASSESSEE IS DISMISSED . 15 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON WEDNESDAY , THE 14 TH DAY OF FEBRUARY , 2018 AT CUTTACK . SD/ - ( PAVAN KUMAR GADALE ) S D/ - (N. S. SA INI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 14 /0 2 /2018 . . / PKM , SENIOR PRIVATE SECRETARY / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - SRI DEBA SIS RAY, 72, SATYANAGAR, BHUBANESWAR - 751007 2. / THE RESPONDENT - DCIT, CIRC4(1), BHUBANESWAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUAR D FILE. //TRUE COPY//