Anjali Pushkar Hingane, Nashik V. Income-tax Officer, Ward - 1(3), Nashik

ITA 2837/PUN/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5630 (ITAT-PUNE)
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 04-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH GAWLI
• Keywords: Business expenditure; Opportunity of being heard; Principle of natural justice; Retrospective amendment; Reasonable cause; Condonation of delay; TDS
• Section: 40(a)(ia); 201(1); 192; 263

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE . , BEFORE SHRI D. KARUNAKARA RAO , AM . / ITA NO. 2837 /P U N/201 7 / ASSESSMENT YEAR : 20 12 - 13 ANJALI PUSHKAR HINGANE, PROP. M/S AREEN PETROLEUM SERVICES, SAIKHEDA PHATA, AT POST CHANDORI, TALUKA - NIPHAD, DIST. NASHIK. PAN : ABIPH8603F . / APPELLANT VS. ITO, WARD - 1( 3 ) , NASHIK . . / RESPONDENT / APPELLANT BY : SHRI SANKET JOSHI / RESPONDENT BY : SHRI RAJESH GAWLI / / / DATE OF HEARING : 01 . 11 .2018 / DATE OF PRONOUNCEMENT: 20 . 1 1 .201 8 / ORDER PER D. KARUNAKARA RAO, AM : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1 , NASHIK DATED 13.07.2016 FOR THE ASSESSMENT YEAR 20 12 - 13 . 2. THE LD. COUNSEL FOR THE ASSESSEE PRAYED FOR CONDONATION OF DELAY AND ADJUDICAT ED THE ISSUE ON MERIT S. CONDONATION OF DELAY : 3. I PERUSED THE PRELIMINARY ISSUE I.E. CONDONATION OF DELAY OF 524 DAYS AND FIND THAT THE REASONS FOR THE SAID DELAY IN FILING OF THE APPEAL BY THE ASSESSEE , CONSTITUTES RELEVANT FOR PERUSAL. IN THIS REGARD, THE REASONS AS ITA NO. 2837 /PUN /201 7 - 2 - MEN TIONED IN A FFIDAVIT FILED BY H ER ARE PERUSED . FOR THE SAKE OF COMPLETENESS, THE RELEVANT PARA GRAPHS OF THE SAID A FFIDAVIT ARE EXTRACTED HEREUNDER : - .......... I HEREBY STATE THAT THE APPELLATE ORDER PASSED BY CIT(A) - 1, NASHIK FOR A.Y. 2012 - 13 WAS RECEIV ED BY ME THROUGH POST ON 08.08.2016. ON RECEIPT OF THE ORDER, I IMMEDIATELY FORWARDED THE SAID ORDER TO MY TAX CONSULTANT, ITP MR. APPA D. USHIR FOR TAKING FURTHER ACTION. I WISH TO STATE THAT I COME FROM A TECHNICAL BACKGROUND AND I DID NOT HAVE ANY PRI OR EXPERIENCE REGARDING INCOME TAX APPELLATE PROCEEDINGS IN THE PAST AND THEREFORE, I WAS COMPLETELY DEPENDENT ON MY TAX CONSULTANT FOR MY INCOME TAX MATTERS. I HEREBY AFFIRM THAT ON FOLLOW UP DONE BY ME, THE ITP ASSURED ME THAT APPROPRIATE ACTION HAD BEE N TAKEN AGAINST THE CIT(A) ORDER AND THAT THE FURTHER APPEAL WAS FILED. HOWEVER, I WISH TO FURTHER STATE THAT IN THE MONTH OF SEPTEMBER, 2017, THE ITO, WARD 1(3), NASHIK ATTACHED MY BANK ACCOUNTS IN ORDER TO RECOVER THE OUTSTANDING DEMAND FOR A.Y. 2012 - 13 . AT THAT TIME, I PERSONALLY VISITED THE INCOME TAX OFFICE SINCE MY TAX CONSULTANT WAS NOT RESPONDING TO MY CALLS. ON VISITING THE INCOME TAX OFFICE, THE DEPT. ASKED ME TO FILE COPY OF FORM NO.36 IN RESPECT OF THE APPEAL FILED AGAINST THE CIT(A) ORDER FO R A.Y. 2012 - 13. I HEREBY STATE THAT AT THIS JUNCTURE, I AGAIN TRIED TO CONTACT MY TAX CONSULTANT ITP MR. APPA D. USHIR FOR OBTAINING THE COPY OF APPEAL FILED BEFORE TRIBUNAL. HOWEVER, THE TAX CONSULTANT WAS NOT ABLE TO PROVIDE THE COPY OF FORM NO.36 FI LED FOR A.Y. 2012 - 13. I WISH TO FURTHER STATE THAT AT THIS POINT OF TIME, I APPROACHED ANOTHER CHARTERED ACCOUNTANT, MR. SANKET MILIND JOSHI, WHO WAS KNOWN TO ME THROUGH MUTUAL FRIENDS, FOR CONSULTATION REGARDING THE ABOVE SITUATION. ON VERIFYING THE DETA ILS WITH THE ITAT PUNE OFFICE BY SHRI SANKET JOSHI, I WAS VERIFYING THE DETA ILS WITH THE ITAT PUNE OFFICE BY SHRI SANKET JOSHI, I WAS INFORMED THAT NO APPEAL HAD BEEN FILED IN MY CASE BEFORE HONBLE TRIBUNAL FOR A.Y. 2012 - 13. SINCE THE ERSTWHILE TAX CONSULTANT WAS NOT EVEN ABLE TO PROVIDE THE APPELLATE ORDER PASSED BY CIT(A) FOR A.Y. 2012 - 13, UPON THE ADVICE OF THE NEW COUNSEL, I FILED A WRITTEN REQUEST DATED 06.10.2017 WITH THE OFFICE OF CIT(A) 1, NASHIK REQUESTING THE LEARNED CIT(A) TO ISSUE A CERTIFIED COPY OF THE CIT(A) ORDER FOR A.Y. 2012 - 13 SO THAT I WOULD BE ABLE TO FILE A PPEAL AGAINST THE SAME. THE CERTIFIED COPY OF THE CIT(A) ORDER WAS RECEIVED BY ME IN THE LAST WEEK OF OCTOBER 2017 AND THEREAFTER, AS PER THE CONSULTATION AND ADVICE OF THE NEW COUNSEL APPOINTED BY THE APPELLANT, THE APPEAL IN FORM NO.36 IS BEING FILED IMM EDIATELY BEFORE HONBLE TRIBUNAL ON 04.12.2017. I HEREBY AFFIRM THAT IN VIEW OF THE ABOVE FACTS, THERE WAS A DELAY OF 423 DAYS IN FILING THE APPEAL BEFORE HONBLE INCOME TAX APPELLATE TRIBUNAL, PUNE. ........ 4. FROM THE ABOVE, I FIND THE ASSESS EE IS AN INDIVIDUAL AND RELIED ON THE SERVICE OF AN ITP. FROM THE REASONS NARRATED ABOVE, ALL IS NOT WELL. THE INEFFICIENCY AND MISCHIEF SHOULD CONSTITUTE A REASONABLE CAUSE. CONSIDERING THE ABOVE, I AM OF THE OPINION THAT THIS IS A FIT CASE FOR CONDONI NG THE DELAY AND, THEREFORE, I PROCEEDED TO ADJUDICATE THE ISSUE ON MERITS. ITA NO. 2837 /PUN /201 7 - 3 - 5 . BRIEFLY STATED RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HER RETURN OF INCOME ON 31.10.2013 DECLARING TOTAL INCOME OF RS.2,06,080/ - . DURING THE COURS E OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE PAID INTEREST OF RS.2,98,426/ - TO THE SANJIVANI GRAMIN BIGER SAH. PATSANSTHA. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS PER THE TDS PROVISIONS OF SECTION 194A OF THE ACT, T HE ASSESSEE DID NOT DEDUCT THE TDS ON THE SAID INTEREST AMOUNT AND CREDITED TO THE GOVERNMENT ACCOUNT WHILE PAYING THE INTEREST. REJECTING THE VARIOUS EXPLANATIONS OF THE ASSESSEE , ASSESSING OFFICER INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND THE ASSESSING OFFICER MADE ADDITION OF RS.5,80,108/ - TO THE TOTAL INCOME OF THE ASSESSEE. 6 . AGGRIEVED WITH THE ORDER OF ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). REJECTING THE VARIOUS EXPLANATIONS OF THE ASSESSEE AND RELYIN G ON THE DECISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT VS. CIT IN ITA NO.278 OF 2014 ORDER DATED 03.07.2015 , THE CIT(A) ENHANCED THE INTEREST AMOUNT BY RS.3,21,500/ - AND MADE THE ADDITION OF RS.9,01,608/ - TO THE TOTAL INCOM E OF THE ASSESSEE. 7 . AGGRIEVED WITH THE ORDER OF CIT(A) ENHANCING THE ADDITION, THE ASSESSEE IS IN APPEAL BEFORE ME RAISING THE FOLLOWING GROUNDS : - 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE U/S 40(A)(IA) OF RS.5,80,108/ - MADE BY TH E A.O. IN RESPECT OF INTEREST PAYMENT MADE TO M/S. THE SANJIVANI GRAMIN BIGER SHETI PATSANSTHA WITHOUT APPRECIATING THAT THE ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS IN RESPECT OF THE SAID PAYMENT AS PER THE PROVISIONS OF SECTION 194A(3)(III)(A) AND THUS, T HE DISALLOWANCE WAS NOT JUSTIFIED. 2] THE LEARNED CIT(A) FURTHER ERRED IN ENHANCING THE ABOVE DISALLOWANCE U/S 40(A)(IA) IN RESPECT OF INTEREST PAID TO M/S. THE SANJIVANI GRAMIN BIGER SHETI PATSANSTHA BY RS.3,21,500/ - AND THUS, MAKING THE TOTAL DISALLOWANC E U/S 40(A)(IA) OF RS.9,01,608/ - WITHOUT APPRECIATING THAT THE SAID ENHANCEMENT WAS NOT JUSTIFIED ON FACTS AND IN LAW. 3] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE PAYEE, M/S. THE SANJIVANI GRAMIN BIGER SHETI PATSANSTHA HAD DULY CONSIDERED THE INTER EST PAID BY THE ASSESSEE AS ITS INCOME IN THE RETURN FILED FOR THE RELEVANT YEAR AND ALSO PAID TAXES THEREON AND THE CERTIFICATE IN FORM 26A R.W.R. 31ACB WAS ALSO FURNISHED BY THE PAYEE IN THIS REGARD AND HENCE, IN VIEW OF THE ITA NO. 2837 /PUN /201 7 - 4 - AMENDMENT MADE TO SECOND PROV ISO TO SECTION 40(A)(IA) WHICH IS CLARIFICATORY IN NATURE, THERE WAS NO REASON TO MAKE ANY DISALLOWANCE U/S 40(A)(IA) IN THE INSTANT CASE. 4] THE APPELLANT CRAVES, LEAVE TO ADD, ALTER, AMEND AND DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 8 . AT THE OUTSE T, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS IS A CASE WHERE THE ASSESSEE TOOK LOAN AND THE INTEREST WAS PAID THEREON TO THE CREDITORS WITHOUT MAKING TDS. THE ASSESSEE TOOK LOAN FROM SANJIVAN GRAMIN BIGER PATSANSTHA AND THE ASSESSEES OBLIGATION TO MAKE THE PAYMENTS ON INTEREST. L D. COUNSEL BROUGHT MY ATTENTION TO THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE CASE OF RBL BANK LIMITED VS. DCIT VIDE ITA NO.501/PUN/2015, DATED 31.05.2018 AND SUBMITTED THAT THE TRIBUNAL ON SIMILAR FACTS AND ALSO R E LYING ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT VS. CIT REPORTED IN 287 CTR 101 AND THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF YAMAZAKI MAZAK INDIA PVT. LTD. VS. PR.CIT IN ITA NO.153/PN/2016 FOR ASSESSMENT YEAR 2010 - 11, ORDER DATED 28.10.2016 , REMITTED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL IN THE SAID DECISION ARE EXTRACTED HEREUNDER : - 6. W E HAVE HEARD THE SUBMISSIO NS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED THE DECISIONS ON WHICH BOTH THE SIDES HAVE PLACED RELIANCE. THE FIRST ISSUE IN APPEAL FOR ASSESSMENT YEAR 2010 - 11 IS WITH RESPECT TO DISAL LOWANCE OF INTEREST PAID TO CO - OPERATIVE CREDIT SOCIETIES WITHOUT DEDUCTION OF TAX AT SOURCE. THE ASSESSEE WAS UNDER OBLIGATION TO DEDUCT TAX U/S. 194A ON THE PAYMENT OF INTEREST TO THE CO - OPERATIVE CREDIT SOCIETIES. SINCE, THE ASSESSEE FAILED TO COMPLY WITH THE TDS PROVISIONS, DISALLOWANCE WAS MADE U/S. 40(A)(IA) OF THE ACT. THE ASSESSEE HAS NOW RAISED AN ADDITIONAL GROUND SEEKING BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) INSERTED BY THE FINANCE ACT, 2012 W.E.F. 01 - 04 - 2013. THE LD. AR SUBMITTED THAT THE ASSESSEE WOULD FURNISH NECESSARY DOCUMENTS TO SHOW THAT THE RECIPIENTS OF INTEREST HAVE OFFERED INTEREST INCOME TO TAX IN THEIR RESPECTIVE RETURNS. THE DEPARTMENT HAS VEHEMENTLY OPPOSED THE ADDITIONAL GROUND RAISED BY ASSESSEE ON THE GROUND THAT SECOND PROVISO TO SECTION 40(A)(IA) DOES NOT APPLY RETROSPECTIVELY. WE FIND THAT IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF YAMAZAKI MAZAK INDIA PVT. LTD. VS. PR. COMMISSIONER OF INCOME TAX (SUPRA). THE CO - ORDINATE BENCH AFTER CONSIDE RING THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ANSAL LAND MARK TOWNSHIP (P) LTD. (SUPRA) AND THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF THOMAS GEORGE MUTHOOT VS. COMMISSIONER OF INCOME TAX (SUPRA) DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. THE RELEVANT EXTRACT OF THE FINDINGS OF TRIBUNAL ON THIS ISSUE ARE AS UNDER : ITA NO. 2837 /PUN /201 7 - 5 - 6. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY ISSUE IN THE PRESENT APPEAL ARISING FROM THE ARGUMENTS MADE ON BEHALF OF BOTH THE SIDES IS; WHETHER THE SECOND PROVISO TO SECTION 40(A)(IA) INSERTED BY FINANCE ACT, 2012, IS APPLICABLE RETROSPECTIVELY OR W.E.F. 01 - 04 - 2013. BEFORE WE PROCEED WITH THE ISSUE IT WOULD BE RELEVANT TO FIRST REFER TO THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2012 TO SECTION 40(A)(IA) BY WAY OF INSERTION OF PROVISO. 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO [38], THE FOLLOWING AMOUNTS SHALL NOT BE DED UCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION, (A) IN THE CASE OF ANY ASSESSEE XXXXXXXXXX XXXXXXXXXX (IA) [ANY INTEREST, COMMISSION OR BROKERAGE,[RENT, ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FE ES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR, BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, [HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139;] PROVIDED THAT XXXXXXXXXX PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART O F THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII - B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB - SECTION (1) OF SECTION 201, THEN, FOR THE PURPOSE OF THIS SUB - CLAUSE, IT SHALL BE DEEMED THAT THE AS SESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE SAID PROVISO. W ITH THE INTRODUCTION OF SECOND PROVISO IT WOULD BE IMPERATIVE THAT BEFORE DISALLOWING ANY AMOUNT FOR NO N - DEDUCTION OF TAX AT SOURCE IT WOULD BE NECESSARY TO ASCERTAIN WHETHER THE RECIPIENT OF THE AMOUNT IN QUESTION HAD PAID TAXES ON SUCH AMOUNT. IF ASCERTAIN WHETHER THE RECIPIENT OF THE AMOUNT IN QUESTION HAD PAID TAXES ON SUCH AMOUNT. IF THE ANSWER IS IN AFFIRMATIVE NO DISALLOWANCE U/S. 40(A)(IA) IS WARRANTED ON SUCH PAYMENT. THE MEMORANDUM EXP LAINING THE INSERTION OF NEW PROVISO READS AS UNDER : A RELATED ISSUE TO THE ABOVE IS THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF CERTAIN BUSINESS EXPENDITURE LIKE INTEREST, COMMISSION, BROKERAGE, PROFESSIONAL FEE, ETC. DUE TO NON - DEDUCTION OF TAX. IT HA S BEEN PROVIDED THAT IN CASE THE TAX IS DEDUCTED IN SUBSEQUENT PREVIOUS YEAR, THE EXPENDITURE SHALL BE ALLOWED IN THAT SUBSEQUENT PREVIOUS YEAR OF DEDUCTION. IN ORDER TO RATIONALISE THE PROVISIONS OF DISALLOWANCE ON ACCOUNT OF NON - DEDUCTION OF TAX FROM THE PAYMENTS MADE TO A RESIDENT PAYEE, IT IS PROPOSED TO AMEND SECTION 40(A)(IA) TO PROVIDE THAT WHERE AN ASSESSEE MAKES PAYMENT OF THE NATURE SPECIFIED IN THE SAID SECTION TO A RESIDENT PAYEE WITHOUT DEDUCTION OF TAX AND IS NOT DEEMED TO BE AN ASSESSEE IN DE FAULT UNDER SECTION 201(1) ON ACCOUNT OF PAYMENT OF TAXES BY THE PAYEE, THEN, FOR THE PURPOSE OF ALLOWING DEDUCTION OF SUCH SUM, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME B Y THE RESIDENT PAYEE. THESE BENEFICIAL PROVISIONS ARE PROPOSED TO BE APPLICABLE ONLY IN THE CASE OF RESIDENT PAYEE. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST APRIL, 2013 AND WILL, ACCORDINGLY, APPLY IN RELATION TO THE ASSESSMENT YEAR 2013 - 14 AND SUBSEQUEN T ASSESSMENT YEARS. 7. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS MADE PAYMENT OF RENT TO THE TUNE OF `1,15,90,000/ - TO M/S. ELPRO INTERNATIONAL LTD. NO TAX HAS BEEN DEDUCTED ON THE AFORESAID PAYMENT BY THE ASSESSEE. THE ASSESSEE W AS SUPPOSED TO DEDUCT TAX AT SOURCE @ 0.75%, IN ACCORDANCE WITH THE LOW RATE TAX CERTIFICATE ISSUED BY THE DEPARTMENT. THE ASSESSING OFFICER DURING THE SCRUTINY ASSESSMENT PROCEEDINGS FAILED TO TAKE INTO CONSIDERATION THE RENT PAID BY THE ASSESSEE WITHOUT DEDUCTION OF TAX AT SOURCE. THE PR. COMMISSIONER OF INCOME TAX INVOKED THE PROVISIONS OF SECTION 263 AND DIRECTED THE ASSESSING OFFICER TO MAKE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT. WHILE ISSUING AFORESAID DIRECTIONS THE PR. COMMISSIONER OF INCOME TAX HELD THAT THE ASSESSEE IS NOT ELIGIBLE TO CLAIM THE BENEFIT OF THE SECOND PROVISO TO SECTION 40(A)(IA) INSERTED BY FINANCE ACT, 2012 AS THE AMENDMENT IS EFFECTIVE FROM 01 - 04 - 2013. THE PR. COMMISSIONER OF INCOME TAX HAS FURTHER PLACED RELIANCE ON THE DECI SION OF HON'BLE KERALA HIGH COURT IN THE CASE OF PRUDENTIAL ITA NO. 2837 /PUN /201 7 - 6 - LOGISTICS AND TRANSPORTS VS. INCOME TAX OFFICER (SUPRA) TO FORTIFY HIS VIEW. THE CONTENTION OF THE ASSESSEE IS THAT THE AMENDMENT TO SECTION 40(A)(IA) BY WAY OF INSERTION OF THE SECOND PROVISO IS APPLICABLE WITH RETROSPECTIVE EFFECT. TO STRENGTHEN THIS CONTENTION SUPPORT HAS BEEN DRAWN FROM THE JUDGMENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ANSAL LAND MARK TOWNSHIP (P) LTD. (SUPRA). THE QUESTION BEFORE HON'BLE HIGH COURT FOR DETERMINATION WAS : 5. THE OTHER ISSUE URGED BY THE REVENUE DURING THE COURSE OF ARGUMENTS PERTAINS TO THE RETROSPECTIVITY OF THE SECOND PROVISO TO SECTION 40(A) (IA) OF ACT. THE HON'B LE HIGH COURT ANSWERED THE QUESTION BY HOLDING THE AMENDMENT TO BE RETROSPECTIVE. THE RELEVANT EXTRACT OF THE JUDGMENT IS REPRODUCED AS UNDER : 12. RELEVANT TO THE CASE IN HAND, WHAT IS COMMON TO BOTH THE PROVISOS TO SECTION 40 (A) (IA) AND SECTION 210 (1) OF THE ACT IS THAT THE AS LONG AS THE PAYEE/RESIDENT (WHICH IN THIS CASE IS ALIP) HAS FILED ITS RETURN OF INCOME DISCLOSING THE PAYMENT RECEIVED BY AND IN WHICH THE INCOME EARNED BY IT IS EMBEDDED AND HAS ALSO PAID TAX ON SUCH INCOME, THE ASSESSEE WOULD NOT BE TREATED AS A PERSON IN DEFAULT. AS FAR AS THE PRESENT CASE IS CONCERNED, IT IS NOT DISPUTED BY THE REVENUE THAT THE PAYEE HAS FILED RETURNS AND OF FERED THE SUM RECEIVED TO TAX. 13. TURNING TO THE DECISION OF THE AGRA BENCH OF ITAT IN RAJIV KUMAR AGARWAL V. ACIT (SUPRA ) , THE COURT FINDS THAT IT HAS UNDERTAKEN A THOROUGH ANALYSIS OF THE SECOND PRO VISO TO SECTION 40 (A)(IA) OF THE ACT AND ALSO SOUGHT TO EXPLAIN THE RATIONALE BEHIND ITS INSERTION. IN PARTICULAR, THE COURT WOULD LIKE TO REFER TO PARA 9 OF THE SAID ORDER WHICH READS AS UNDER: 'ON A CO NCEPTUAL NOTE, PRIMARY JUSTIFICATION FOR SUCH A DISALLOWANCE IS THAT SUCH A DENIAL OF DEDUCTION IS TO COMPENSATE FOR THE LOSS OF REVENUE BY CORRESPONDING INCOME NOT BEING TAKEN INTO ACCOUNT IN COMPUTATION OF TAXABLE INCOME IN THE HANDS OF THE RECIPIENTS OF THE PAYMENTS. SUCH A POLICY MOTIVATED DEDUCTION RESTRICTIONS SHOULD, THEREFORE, NOT COME INTO PLAY WHEN MOTIVATED DEDUCTION RESTRICTIONS SHOULD, THEREFORE, NOT COME INTO PLAY WHEN AN ASSESSEE IS ABLE TO ESTABLISH THAT THERE IS NO ACTUAL LOSS OF REVENUE. THIS DISALLOWANCE DOES DEINCENTIVIZE NOT DEDUCTING TAX AT SOURCE, WHEN SUCH T AX DEDUCTIONS ARE DUE, BUT, SO FAR AS THE LEGAL FRAMEWORK IS CONCERNED, THIS PROVISION IS NOT FOR THE PURPOSE OF PENALIZING FOR THE TAX DEDUCTION AT SOURCE LAPSES. THERE ARE SEPARATE PENAL PROVISIONS TO THAT EFFECT. DEINCENTIVIZING A LAPSE AND PUNISHING A LAPSE ARE TWO DIFFERENT THINGS AND HAVE DISTINCTLY DIFFERENT, AND SOMETIMES MUTUALLY EXCLUSIVE, CONNOTATIONS. WHEN WE APPRECIATE THE OBJECT OF SCHEME OF SECTION 40(A)(IA), AS ON THE STATUTE, AND TO EXAMINE WHETHER OR NOT, ON A 'FAIR, JUST AND EQUITABLE' IN TERPRETATION OF LAW - AS IS THE GUIDANCE FROM HON'BLE DELHI HIGH COURT ON INTERPRETATION OF THIS LEGAL PROVISION, IN OUR HUMBLE UNDERSTANDING, IT COULD NOT BE AN 'INTENDED CONSEQUENCE' TO DISALLOW THE EXPENDITURE, DUE TO NON DEDUCTION OF TAX AT SOURCE, EVEN IN A SITUATION IN WHICH CORRESPONDING INCOME IS BROUGHT TO TAX IN THE HANDS OF THE RECIPIENT. THE SCHEME OF SECTION 40(A)(IA), AS WE SEE IT, IS AIMED AT ENSURING THAT AN EXPENDITURE SHOULD NOT BE ALLOWED AS DEDUCTION IN THE HANDS OF AN ASSESSEE IN A SITUA TION IN WHICH INCOME EMBEDDED IN SUCH EXPENDITURE HAS REMAINED UNTAXED DUE TO TAX WITHHOLDING LAPSES BY THE ASSESSEE. IT IS NOT, IN OUR CONSIDERED VIEW, A PENALTY FOR TAX WITHHOLDING LAPSE BUT IT IS A SORT OF COMPENSATORY DEDUCTION RESTRICTION FOR AN INCOM E GOING UNTAXED DUE TO TAX WITHHOLDING LAPSE. THE PENALTY FOR TAX WITHHOLDING LAPSE PER SE IS SEPARATELY PROVIDED FOR IN SECTION 271 C, AND, SECTION 40(A)(IA) DOES NOT ADD TO THE SAME. THE PROVISIONS OF SECTION 40(A)(IA), AS THEY EXISTED PRIOR TO INSERTION OF SECOND PROVISO THERETO, WENT MUCH BEYOND THE OBVIOUS INTENTIONS OF THE LAWMAKERS AND CREATED UNDUE HARDSHIPS EVEN IN CASES IN WHICH THE ASSESSEE'S TAX WITHHOLDING LAPSES DID NOT RESULT IN ANY LOSS TO THE EXCHEQUER. NOW THAT THE LEGISLATURE HAS BEEN COM PASSIONATE ENOUGH TO CURE THESE SHORTCOMINGS OF PROVISION, AND THUS OBVIATE THE UNINTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TRE ATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STATE SO SPECIFICALLY, THE INSERTION OF SECOND PROVISO MUST ITA NO. 2837 /PUN /201 7 - 7 - BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME WHEN THE RELATED LEGAL PROVISION WAS INTRODUCED. IN VIEW OF THESE DISCUSSIONS, AS ALSO F OR THE DETAILED REASONS SET OUT EARLIER, WE CANNOT SUBSCRIBE TO THE VIEW THAT IT COULD HAVE BEEN AN 'INTENDED CONSEQUENCE' TO PUNISH THE ASSESSEES FOR NON DEDUCTION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF RELATED PAYMENTS, EVEN WHEN THE C ORRESPONDING INCOME IS DULY BROUGHT TO TAX. THAT WILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGLY, WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE E FFECT FROM 1ST APRIL, 2005, BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2004.' 14. THE COURT IS OF THE VIEW THAT THE ABOVE REASONING OF THE AGRA BENCH OF ITAT AS REGARDS THE RATIONALE BEHIND THE INSER TION OF THE SECOND PROVISO TO SECTION 40(A) (IA) OF THE ACT AND ITS CONCLUSION THAT THE SAID PROVISO IS DECLARATORY AND CURATIVE AND HAS RETROSPECTIVE EFFECT FROM 1ST APRIL 2005, MERITS ACCEPTANCE. 15. IN THAT VIEW OF THE MATTER, THE COURT IS UNABLE TO FIND ANY LEGAL INFIRMITY IN THE IMPUGNED ORDER OF THE ITAT IN ADOPTING THE RATIO OF THE DECISION OF THE AGRA BENCH, ITAT IN ( RAJIV KUMAR AGARWAL V. ACIT ). 8. SIMILAR VIEW HAS BEEN TAKEN BY THE KOLKATA BENCH OF THE TRIBUNAL IN THE CASE OF NEW ALIGNMENT VS. INCOME TAX OFFICER (SUPRA) AND MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF RELIANCE COMMUNICATIONS LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX (SUPRA). IN BOTH THE ABOVE SAID CASES, THE TRIBUNAL HAS FOLLOWED THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ANSAL LAND MARK TOWNSHIP (P) LTD. (SUPRA). 9. ONE OF THE CONTENTIONS OF THE LD. DR IS THAT IN THE CASES CITED ON BEHALF OF THE ASSESSEE, THE DECISION RENDERED BY HON'BLE KERALA HIGH COURT HAS NOT BEEN CONSIDERED. WE FIND THAT RAIPUR BENCH OF THE TRIBUNAL IN THE CASE OF R K P COMPANY VS. INCOME TAX OFFICER (SUPRA) HAS CONSIDERED THE DECISION OF HON'BLE KERALA HIG H COURT IN THE CASE OF THOMAS GEORGE MUTHOOT VS. CIT (SUPRA), IN WHICH THE JUDGMENT RENDERED IN THE CASE OF PRUDENTIAL GEORGE MUTHOOT VS. CIT (SUPRA), IN WHICH THE JUDGMENT RENDERED IN THE CASE OF PRUDENTIAL LOGISTICS AND TRANSPORTS VS. INCOME TAX OFFICER (SUPRA) WAS CONSIDERED. THE RAIPUR BENCH BY FOLLOWING THE JUDGMENT OF HON'BLE DELHI HIGH COURT HELD THAT THE AMENDMENT IS RETROSPECTIVE IN NATURE. THE RELEVANT EXTRACT OF THE FINDINGS OF RAIPUR BENCH OF THE TRIBUNAL ARE REPRODUCED HERE - IN - BELOW : 4. WE FIND THAT HONBLE DELHI HIGH COURT HAS SPECIFICALLY APPROVED THE STAND TAKEN BY A COORDIN ATE BENCH OF THIS TRIBUNAL, IN THE CASE OF RAJEEV KUMAR AGARWAL VS ACIT [(2014) 149 ITD 363 (AGRA)], AND UPHELD THE ACTION OF THE TRIBUNAL IN FOLLOWING THE SAME. 9. . NOW THAT THE LEGISLATURE HAS BEEN COMPASSIONATE ENOUGH TO CURE THESE SHORTCOMING S OF PROVISION, AND THUS OBVIATE THE UNINTENDED HARDSHIPS, SUCH AN AMENDMENT IN LAW, IN VIEW OF THE WELL SETTLED LEGAL POSITION TO THE EFFECT THAT A CURATIVE AMENDMENT TO AVOID UNINTENDED CONSEQUENCES IS TO BE TREATED AS RETROSPECTIVE IN NATURE EVEN THOUGH IT MAY NOT STATE SO SPECIFICALLY, THE INSERTION OF SECOND PROVISO MUST BE GIVEN RETROSPECTIVE EFFECT FROM THE POINT OF TIME WHEN THE RELATED LEGAL PROVISION WAS INTRODUCED. IN VIEW OF THESE DISCUSSIONS, AS ALSO FOR THE DETAILED REASONS SET OUT EARLIER, WE CANNOT SUBSCRIBE TO THE VIEW THAT IT COULD HAVE BEEN AN INTENDED CONSEQUENCE TO PUNISH THE ASSESSEES FOR NON DEDUCTION OF TAX AT SOURCE BY DECLINING THE DEDUCTION IN RESPECT OF RELATED PAYMENTS, EVEN WHEN THE CORRESPONDING INCOME IS DULY BROUGHT TO TAX. THAT WILL BE GOING MUCH BEYOND THE OBVIOUS INTENTION OF THE SECTION. ACCORDINGLY, WE HOLD THAT THE INSERTION OF SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1ST APRIL, 2005, BEING THE DATE FROM WHICH SUB CLAUSE (IA) OF SECTION 40(A) WAS INSERTED BY THE FINANCE (NO. 2) ACT, 2004. 10. IN VIEW OF THE ABOVE DISCUSSIONS, WE DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND AFTER CARRYING OUT NECESSARY VERIFICATIONS REGARDING RELATED PAYMENTS HAVING BEEN TAKEN INTO ACCOUNT BY THE RECIPIENTS ITA NO. 2837 /PUN /201 7 - 8 - IN COMPUTATION OF THEIR INCOME, REGARDING PAYMENT OF TAXES IN RESPECT OF SUCH INCOME AND REGARDING FILING OF THE R ELATED INCOME TAX RETURNS BY THE RECIPIENTS. WHILE GIVING EFFECT TO THESE DIRECTIONS, THE ASSESSING OFFICER SHALL GIVE DUE AND FAIR OPPORTUNITY OF HEARING TO THE ASSESSEE, DECIDE THE MATTER IN ACCORDANCE WITH THE LAW AND BY WAY OF A SPEAKING ORDER. WE ORDE R SO 5. IN EFFECT THUS, THEIR LORDSHIPS HAVE APPROVED THE ACTION OF THE TRIBUNAL IN REMITTING THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO ASCERTAIN WHETHER THE RECIPIENT HAS TAKEN INTO ACCOUNT RELATED PAYMENTS INTO COMPUTATION OF HIS INCOME AND OFFERING THE SAME TO TAX, AND, IF SO, DELETE THE DISALLOWANCE UNDER SECTION 40(A)(IA) IN RESPECT OF THE SAME. 6. WHEN, HOWEVER, WE ASKED THE LEARNED DEPARTMENTAL REPRESENTATIVE AS TO WHY WE SHOULD ALSO NOT REMIT THE MATTER TO THE FILE OF T HE ASSESSING OFFICER, WITH THE SAME DIRECTIONS, HE, ALONGWITH HIS SENIOR COLLEAGUE SHRI DARHAN SINGH, WHO HAPPENS TO BE THE CIT(A) AUTHORING THE IMPUGNED ORDER AND WHO WAS ON DUTY AS CIT(DR) BEFORE US, HAD THREE POINTS TO MAKE - FIRST, THAT THERE ARE DECISI ONS IN SUPPORT OF THE STAND OF THE ASSESSING OFFICERS STAND, BY WAY OF HONBLE KERALA HIGH COURTS DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT VS CIT [(2015) 63 TAXMANN.COM 99 (KERALA)]; SECOND, THAT EVEN IF INSERTION OF SECOND PROVISO TO SECTION 40(A)( IA) CAN BE CONSTRUED AS RETROSPECTIVE IN EFFECT, THE CORRESPONDING RULE IN THE INCOME TAX RULES 1962 IS NOT, AND HAS NOT BEEN HELD TO BE, RETROSPECTIVE, AND THE SECOND PROVISO TO SECTION 40(A)(IA) CANNOT, THEREFORE, BE GIVE RETROSPECTIVE EFFECT; AND, THIRD , THAT THERE IS NO DECISION ON THIS ISSUE BY HONBLE JURISDICTIONAL HIGH COURT AND, AS SUCH, THE STAND OF THE ASSESSING OFFICER CANNOT BE FAULTED. 7. AS FOR HONBLE KERALA HIGH COURTS DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA), UNDOUBTEDLY, O UTSIDE THE JURISDICTION OF HONBLE KERALA HIGH COURT AND OUTSIDE THE JURISDICTION OF HONBLE DELHI HIGH COURT - WHICH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE, THERE ARE CONFLICTING DECISIONS ON THE ISSUE OF THE ISSUE IN FAVOUR OF THE ASSESSEE, THERE ARE CONFLICTING DECISIONS ON THE ISSUE OF RESTROSPECTIVITY OF SECOND PROVISO TO SECT ION 40(A)(IA). IT IS THUS EVIDENT THAT VIEWS OF THESE TWO HIGH COURTS ARE IN DIRECT CONFLICT WITH EACH OTHER. CLEARLY, THEREFORE, THERE IS NO MEETING GROUND BETWEEN THESE TWO JUDGMENTS. THE DIFFICULTY ARISES AS TO WHICH OF THE HONBLE NON JURISDICTIONAL HI GH COURT IS TO BE FOLLOWED BY US IN THE PRESENT SITUATION. IT WILL BE WHOLLY INAPPROPRIATE FOR US TO CHOOSE VIEWS OF ONE OF THE HIGH COURTS BASED ON OUR PERCEPTIONS ABOUT REASONABLENESS OF THE RESPECTIVE VIEWPOINTS, AS SUCH AN EXERCISE WILL DE FACTO AMOUNT TO SITTING IN JUDGMENT OVER THE VIEWS OF THE HIGH COURTS SOMETHING DIAMETRICALLY OPPOSED TO THE VERY BASIC PRINCIPLES OF HIERARCHICAL JUDICIAL SYSTEM. WE HAVE TO, WITH OUR HIGHEST RESPECT OF BOTH THE HONBLE HIGH COURTS, ADOPT AN OBJECTIVE CRITERION FOR D ECIDING AS TO WHICH OF THE HONBLE HIGH COURT SHOULD BE FOLLOWED BY US. WE FIND GUIDANCE FROM THE JUDGMENT OF HONBLE SUPREME COURT IN THE MATTER OF CIT VS. VEGETABLE PRODUCTS LTD. [(1972) 88 ITR 192 (SC)]. HONBLE SUPREME COURT HAS LAID DOWN A PRINCIPLE T HAT 'IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISIONS ARE POSSIBLE, THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED'. THIS PRINCIPLE HAS BEEN CONSISTENTLY FOLLOWED BY THE VARIOUS AUTHORITIES AS ALSO BY THE HONBLE SUPREME COURT ITSELF. I N ANOTHER SUPREME COURT JUDGMENT, PETRON ENGG. CONSTRUCTION (P) LTD. & ANR. VS. CBDT & ORS. (1988) 75 CTR (SC) 20 : (1989) 175 ITR 523 (SC), IT HAS BEEN REITERATED THAT THE ABOVE PRINCIPLE OF LAW IS WELL ESTABLISHED AND THERE IS NO DOUBT ABOUT THAT. HONBL E SUPREME COURT HAD, HOWEVER, SOME OCCASIONS TO DEVIATE FROM THIS GENERAL PRINCIPLE OF INTERPRETATION OF TAXING STATUTE WHICH CAN BE CONSTRUED AS EXCEPTIONS TO THIS GENERAL RULE. IT HAS BEEN HELD THAT THE RULE OF RESOLVING AMBIGUITIES IN FAVOUR OF TAXPAYER DOES NOT APPLY TO DEDUCTIONS, EXEMPTIONS AND EXCEPTIONS WHICH ARE ALLOWABLE ONLY WHEN PLAINLY AUTHORISED. THIS EXCEPTION, LAID DOWN IN LITTMAN VS. BARRON 1952(2) AIR 393 AND FOLLOWED BY APEX COURT IN MANGALORE CHEMICALS & FERTILIZERS LTD. VS. DY. COMMR. O F CT (1992) SUPPL. (1) SCC 21 AND NOVOPAN INDIA LTD. VS. CCE & C 1994 (73) ELT 769 (SC), HAS BEEN SUMMED UP IN THE WORDS OF LORD LOHEN, 'IN CASE OF AMBIGUITY, A TAXING STATUTE SHOULD BE CONSTRUED IN FAVOUR OF A TAX - PAYER DOES NOT APPLY TO A PROVISION GIVIN G TAX - PAYER RELIEF IN CERTAIN CASES FROM A SECTION CLEARLY IMPOSING LIABILITY'. THIS EXCEPTION, IN THE PRESENT CASE, HAS NO APPLICATION. THE RULE OF RESOLVING AMBIGUITY IN ITA NO. 2837 /PUN /201 7 - 9 - FAVOUR OF THE ASSESSEE DOES NOT ALSO APPLY WHERE THE INTERPRETATION IN FAVOUR OF ASS ESSEE WILL HAVE TO TREAT THE PROVISIONS UNCONSTITUTIONAL, AS HELD IN THE MATTER OF STATE OF M.P. VS. DADABHOYS NEW CHIRMIRY PONRI HILL COLLIERY CO. LTD. AIR 1972 (SC) 614. THEREFORE, WHAT FOLLOWS IS THAT IN THE PECULIAR CIRCUMSTANCES OF THE CASE AND LOOKI NG TO THE NATURE OF THE PROVISIONS WITH WHICH WE ARE PRESENTLY CONCERNED, THE VIEW EXPRESSED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL LANDMARK (SUPRA), WHICH IS IN FAVOUR OF ASSESSEE, IS REQUIRED TO BE FOLLOWED BY US. REVENUE DOES NOT, THEREFOR E, DERIVE ANY ADVANTAGE FROM HONBLE KERALA HIGH COURTS DECISION IN THE CASE OF THOMAS GEORGE MUTHOOT (SUPRA). 10. IT IS A WELL SETTLED LAW THAT WHERE TWO DIVERGENT VIEWS ARE POSSIBLE AND BOTH THE VIEWS ARE EQUALLY CONVINCING, THE VIEW IN FAVOUR OF THE A SSESSEE MUST BE ADOPTED. THUS, APPLYING THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CIT VS. VEGETABLE PRODUCTS LTD. (SUPRA) WE ACCEPT THE CONTENTIONS OF THE ASSESSEE AND HOLD THAT THE SECOND PROVISO TO SECTION 40(A)(IA) INSERT ED BY FINANCE ACT, 2012 IS APPLICABLE RETROSPECTIVELY W.E.F. 01 - 04 - 2005. 7. THUS, IN LIGHT OF THE ABOVE ORDER OF CO - ORDINATE BENCH, WE DEEM IT APPROPRIATE TO REMIT THIS ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR DE - NOVO CONSIDERATION. THE ASSESSEE S HALL FURNISH NECESSARY DOCUMENTS TO SHOW THAT THE RECIPIENTS OF INTEREST HAVE DISCLOSED THE INTEREST INCOME IN THEIR RESPECTIVE RETURNS. THE ASSESSING OFFICER AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING SHALL DECIDE THIS ISSUE AFRESH, IN ACCORDANCE WITH LAW. ACCORDINGLY, THE GROUND NO. 1 RAISED IN THE APPEAL FOR ASSESSMENT YEAR 2010 - 11 IS ALLOWED FOR STATISTICAL PURPOSE. 9 . BEFORE ME, T HE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT WHEN THE INCOME RECEIVED BY THE PAYEE SUFFER ED TAX ON THE SAID INC OME AS PER THE PROVISIONS SECTION 194A OF THE ACT , T HERE IS NO NEED FOR INVOKING THE PROVISIONS SECTION 194A OF THE ACT , T HERE IS NO NEED FOR INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. FURTHER, LD. AR SUBMITTED THAT THE ISSUE ON MERITS MAY BE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION . 10 . ON THE OTHER HAND, LD. DR HEAVILY RELIED ON THE ORDERS OF THE ASSESSING OFFICER/CIT(A). 11 . ON HEARING BOTH THE SIDES AND CONSIDER ED THE LEGAL PROPOSITION RELATING TO THE NON - INVOKING OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT IN CASES WHERE THE PAYEE IS ASSESSED TO TAX ON THE SAID INTEREST INCOME AS ITS TAXABLE INCOME . NO EVIDENCE IS PLACED BEFORE ME TO KNOW THE TAXATION OF THE SAID INCOME IN THE HANDS OF THE PAYEE. I FIND THE ARGUMENT RAISED BY THE LD. COUNSEL FOR THE ASSESSEE ON THE ISSUE OF REMANDING TO THE FILE OF THE ASSESSING OFFICER IS FAIR AND REASONABLE. ACCORDINGLY, I REMAND THIS ISSUE ITA NO. 2837 /PUN /201 7 - 10 - TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. THE ASSESSEE IS DIRECTED TO SUBMIT RELEVANT DOCUMENTS AND EVIDENCES IN SUPPORT OF H ER CA SE BEFORE THE ASSESSING OFFICER TO INTERFERE THE SAID INCOME SUFFERED TAX IN THE HANDS OF THE PAYEE. THE ASSESSING OFFICER IS DIRECTED TO GRANT REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE. ACCORD INGLY, THE GROUNDS RAISED BY THE ASSESSEE ON THIS ISSUE ARE ALLOWED FOR STATISTICAL PURPOSES. 12 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 20 TH D AY OF NOVEMBER , 2018 . SD/ - ( D. KARUNAKARA RAO ) / ACCOUNTANT MEMBER / ACCOUNTANT MEMBER / PUNE ; DATED : 20 TH NOVEMBER , 2018 . SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A) - 1 , NASHIK ; 4. THE CHIEF CIT, NASHIK ; 5. , , - / DR SMC , ITAT, PUNE; 6. / GUARD FILE . // TRUE COPY // / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE