N.L. Engineers Pvt. Ltd., Mohali V. ACIT, Mohali

ITA 347/CHANDI/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5179 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 21-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA,ACCOUNTANT MEMBER ITA NO. 347/CHD/2017 ASSESSMENT YEAR: 2010-11 M/S N.L. ENGINEERS P.LTD., VS THE ACIT, C-114, INDUSTRIAL AREA, CIRCLE 6(1), PHASE-VII, MOHALI. MOHALI. PAN: AAACN5006C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PARIKSHIT AGGARWAL RESPONDENT BY : SHRI S.K.MITTAL DATE OF HEARING : 11.04.2017 DATE OF PRONOUNCEMENT : 21.04.2017 O R D E R PER SANJAY GARG, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAINST ORDER OF LD. CIT (APPEALS)-2, GURGAON DATED 10.01.2017 RELATING TO ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE IS AGGRIEVED BY THE CONFIRMATION OF THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTIO N 40(A)(IA) OF INCOME TAX ACT, 1961 (IN SHORT THE AC T) FOR NON DEDUCTION OF TDS ON ACCOUNT OF INTEREST PAID TO VARIOUS NBFCS ( NON BANKING FINANCIAL COMPANIES ). THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS LI ABLE TO DEDUCT TAX ON INTEREST PAYMENTS AS NBFCS WERE NOT COVERED IN THE EXCEPTIONS PROVIDED UNDER SECTION 19 4A OF THE ACT. HE, THEREFORE, MADE A DISALLOWANCE OF RS. 2 7,79,246/- UNDER SECTION 40(A)(IA) OF THE ACT AND A DDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. 3. THE CIT (APPEALS) CONFIRMED THE ADDITION SO MADE BY THE ASSESSING OFFICER. THE ASSESSEE HAS, THUS, COME IN APPEAL BEFORE US. 4. THE ASSESSEE, BEFORE US, HAS TAKEN THE PLEA THAT THOUGH THE ASSESSEE HAD NOT DEDUCTED THE TAX AT SOU RCE, HOWEVER, RECIPIENTS HAVE OFFERED THE INCOME IN THE COMPUTATION IN THEIR RETURNS OF INCOME AND, THEREFO RE, THE DISALLOWANCE IS NOT ATTRACTED IN THE CASE OF THE AS SESSEE AS PER THE SECOND PROVISO TO SECTION 40(A)(IA) OF T HE ACT. HE, WHILE RELYING UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. (2015) 61 TAXMAN.COM 45 (DELHI) WHEREIN IT HAS BEEN HELD THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE AND I T HAS A RETROSPECTIVE EFFECT FROM 01.04.05. 5. WE HAVE CONSIDERED THE ABOVE SUBMISSION OF THE L D. A.R. AND HAVE ALSO GONE THROUGH THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AN SAL LAND MARK TOWNSHIP (P) LTD. (SUPRA). THE HONBLE DELHI HIGH COURT, CONSIDERING THE NATURE AND SCOPE OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, HAS CATEGORICALLY HELD THAT THE SECOND PROVISO IS DECLA RATORY AND CURATIVE AND HAS RETROSPECTIVE EFFECT. UNDER T HESE CIRCUMSTANCES, IF THE PAYEE HAS TAKEN INTO CONSIDER ATION THE INCOME RECEIVED FROM THE ASSESSEE WHILE FILING ITS 3 RETURN OF INCOME, THEN NO DISALLOWANCE WOULD BE ATT RACTED IN THE HANDS OF PAYER I.E. THE ASSESSEE BEFORE US. HOWEVER, THIS FACT NEEDS VERIFICATION AT THE HANDS OF THE AO. THE LD. A.R., AT THIS STAGE, HAS STATED THAT T HE PAYEES NBFCS HAVE ISSUED CERTIFICATES THAT THEY HA VE TAKEN INTO ACCOUNT THE AMOUNT OF INTEREST WHILE COM PUTING THEIR TAXABLE INCOME. HE IN THIS HAS RELIED UPON PA GES 7 TO 11 OF THE PAPER BOOK. WE, THEREFORE, DIRECT TH E AO TO VERIFY THAT IF THE AMOUNT RECEIVED FROM THE ASSESSE E HAS BEEN INCLUDED BY THE PAYEE IN THE RECEIPTS AND CONS IDERED AND ACCOUNTED FOR WHILE COMPUTING THE INCOME, THEN TO ALLOW THE CLAIM OF THE ASSESSEE ACCORDINGLY. THE AS SESSEE IS ALSO DIRECTED TO COMPLETE THE REQUIRED FORMALITI ES/ FURNISH THE NECESSARY FORMS/DOCUMENTS WHICH ARE REQUIRED TO BE SUBMITTED IN THIS RESPECT AS PER TH E PROVISIONS OF THE ACT. 6. WITH THE ABOVE OBSERVATION, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) ( SANJAY GARG) (ACCOUNTANT MEMBER) JUDICIAL MEMB ER DATED: 21 ST APRIL, 2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT/CHD