M/s. Pioneer Finance, Guntur V. The ITO., Guntur

ITA 459/VIZ/2016

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6448 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 23-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V MADHUVANI
• Keywords: Business expenditure
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 459 / VIZ /201 6 (ASST. YEAR : 20 12 - 13 ) M/S. PIONEER FINANCE, D.NO. 10 - 6 - 28/2, NAAZ CENTRE, STATION ROAD, GUNTUR. V S . PR. CIT, GUNTUR . PAN NO. AACFP 8005 A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SMT. V. MADHUVANI CIT DR DATE OF HEARING : 21 / 1 1 /201 7 . DATE OF PRONOUNCEMENT : 20 / 1 2 /201 7 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF PRINCIP A L COMMISSIONER OF INCOME TAX, GUNTUR , DATED 21 /0 9 /201 6 FOR THE ASSESSMENT YEAR 20 12 - 13 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE - FIRM , CARRYING ON FINANCE BUSINESS, FILED ITS RETURN OF INCOME BY ADMITTING TOTAL INCOME OF RS. 3,23,580/ - . THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'ACT') BY ACCEPTING THE INCOME RETURNED. 2 ITA NO. 459/VIZ/2016 ( M/S. PIONEER FINANCE ) 3 . SUBSEQUENTLY, BY VIRTUE OF POWERS VESTED WITH SECTION 263 OF THE ACT, THE PR. COMMISSIONER HAS CALLED AND EXAMINED THE RECORDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2012 - 13 , AND IT IS NOTICED FROM THE PROFIT & LOSS ACCOUNT THAT THE ASSESSEE FIRM HAS CLAIMED AN AMOUNT OF RS. 3,88,170/ - TOWARDS INTEREST PAID TO THE UNSECURED LOAN CREDITORS, BUT NO TDS UND ER SECTION 194A WAS DEDUCTED ON THE SAID PAYMENTS. THEREFORE, ASSESSING OFFICER WITHOUT EXAMIN ING THE ISSUE PROPERLY, ASSESSMENT ORDER PASSED , HAS TO BE CONSIDERED AS ERRONEOUS AND SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE , AND ISSUED SHO W - CAUSE NOTICE UNDER SECTION 263 , DATED 16/08/2006 TO THE ASSESSEE FOR HIS EXPLANATION. IN RESPONSE TO THE NOTICE ISSUED BY THE PR.COMMISSIONER, THE ASSESSEE HAS FILED A DETAILED REPLY. FOR THE SAKE OF CONVENIENCE, THE SAME IS REP R OD U CED HEREUNDER: - 'THE ASSESSEE CREDITED INTEREST IN ACCOUNTS OF THE FOLLOWING UNSECURED LOAN CREDITORS ON 31ST MARCH, 2012. TAX WAS NOT DEDUCTED AT SOURCE BASED ON THE INTIMATION FROM THE UNSECURED LOAN CREDITORS THAT THEIR TAXABLE INCOME FOR THE ASST. YEAR 2012 - 13 IS BELO W TAXABLE LIMITS. FORMS 15G /15H FOR NON - DEDUCTION OF TDS WERE OBTAINED FROM THEM AND DULY SUBMITTED BEFORE THE COMMISSIONER OF INCOME - TAX, GUNTUR ON 9TH APRIL, 2012 (7 TH & 8TH APRIL, 2012 BEING HOLIDAYS FOR THE OFFICE OF COMMISSIONER OF INCOME TAX, BEING SATURDAY AND SUNDAY) SI. NO. NAME OF THE PARTY INTEREST (RS.) 1 P ANUSHA, HYDERABAD 90,000 2 P UMA MAHESWARA RAO 28,170 3 N SUREKHA 22,500 4 K SAILAJA 37,500 5 K SWEETHA 15,000 3 ITA NO. 459/VIZ/2016 ( M/S. PIONEER FINANCE ) 6 CH. CHANDRA SEKHAR 15,000 7 P V RAMANA RAO 84,000 8 N AHALYA DEVI 96,000 TDS WAS NOT DEDUCTED BY THE ASSESSEE SINCE INTEREST PAID TO THE LOAN CREDITORS AS MENTIONED ABOVE IS COVERED BY DECLARATIONS IN FORMS 15G & 15G. HENCE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE AND NO DISALLOWANCE IS WARRANTED. WE HAD ALREADY SUBMITTED BEFORE THE ASSESSING OFFICER, AT THE TIME OF ASSESSMENT U/S 143(3), DETAILS OF FILING OF FORM 15H & 15G BEFORE THE COMMISSIONER OF INCOME - TAX, GUNTUR. WE ARE HEREWITH ENCLOSING PROOF OF SUBMISSION OF FORMS 15H & 15G ON 9 APRIL, 2012 BEFOR E THE COMMISSIONER OF INCOME - TAX, GUNTUR. CONSIDERING THIS WE REQUEST YOUR GOODSELF TO KINDLY DROP FURTHER PROCEEDINGS IN THIS REGARD.' 4 . THE PR. COMMISSIONER AFTER CONSIDERING THE ABOVE REPLY GIVEN BY THE ASSESSEE OBSERVED THAT THOUGH , ASSESSEE STATED THAT HE HAS OBTAINED FORMS NO. 15G/15H FROM ALL THE PAYEES AND FILED THEM BEFORE THE COMMISSIONER AND COPIES OF THE SAME WERE ENCLOSED TO HIS LETTER , O N A PERUSAL OF THEM, IT IS OBSERVED THAT THE ASSESSEE HAS TAKEN FORM NOS. 15G/15H IN EIGHT CASES ON 07/04/2012 FOR THE LOAN TAKEN OR WITHDRAWAL MADE DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2012 - 13 , WH I CH IS AFTER THE DUE DATE I.E. 13/03/2012 AND REQUIRE S FURTHER EXAMINATION. ACCORDINGLY, HE FOUND THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND SET ASIDE THE ORDER PASSED BY THE ASSESSING OFFICER AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT. 4 ITA NO. 459/VIZ/2016 ( M/S. PIONEER FINANCE ) 5. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 6 . LD . COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS OBTAINED FORMS NO. 15G/15H FROM ALL THE EIGHT PAYEES AND SUBMITTED BEFORE THE PR. COMMISSIONER O N 07/04/2012 AND WERE ALSO FILED BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSESSEE IS NOT UNDER OBLIGATION TO DEDUCT TDS UNDER SECTION 194A OF THE ACT. HE FURTHER SUBMITTED THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. THEREFORE, LD. PR. COMMISSIONER IS NOT CORRECT I N EXERCISING HIS POWERS CONFERRED UNDER SECTION 263 OF THE ACT. TO SUPPORT HIS ARGUMENT, HE RELIED ON THE DECISION OF THE ITAT, CHENNAI BENCH IN THE CASE OF NARASUS SPINNING MILLS VS. ACIT REPORTED IN (2016) 157 ITD 512 (CHENNAI) . 7 . ON THE OTHER HAND, LD . DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER PASSED BY THE LD. PR. COMMISSIONER. 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 9. THE ISSUE INVOLVED IN THIS APPEAL IS WHETHER ASSESSI NG OFFICER IS CORRECT IN PASSING THE ORDER UNDER SECTION 143(3) OF THE ACT THOUGH , THE ASSESSEE NOT DEDUCTED TDS UNDER SECTION 194A ON THE PAYMENTS MADE TO THE EIGHT PAYEES ON ACCOUNT OF FILING OF FORMS NO. 15G/15H BEFORE THE LD. PR. COMMISSIONER ON 07/04/2012. 5 ITA NO. 459/VIZ/2016 ( M/S. PIONEER FINANCE ) 10 . IN THIS CASE , THE ASSESSEE HAS MADE INTEREST PAYMENTS TO EI GHT PARTIES AND ALL THE EI GHT PARTIES HAVE SUBMITTED FORMS NO. 15G/15H TO THE ASSESSEE. THE ASSESSEE HAS FILED THE SAME BEFORE THE PR. COMMISSIONER ON 09/04/2012 AND WERE ALSO SUBMITTED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER UNDER SECTION 143(3) , DATED 25/02/2015. THE SAME FACTUAL POSITION IS EXPLAINED BY THE ASSESSEE BEFORE THE PR. CO MMISSIONER IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 263 OF THE ACT. THIS FACT IS NOT DISPUTED BY THE LD. PR. COMMISSIONER . THE PR.COMMISSIONER IS ONLY OF THE OP I NION THAT THE ASSESSING OFFICER HAS FAILED TO EXAMINE THE APPLICABILITY OF SECTION 194A. ONCE, ASSESSEE HAS FILED FORMS NO. 15H / 15G FROM THE PAYEES BEFORE THE PR.COMMISSIONER AND THE ASSESSING OFFICER BY CONSIDERING THE SAME , ASSESSMENT IS COMPLETED , T HEREFORE, IN OUR OP I NION, THE ORDER PASSED BY THE ASSESSING OFFICER IS NEI THER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. IN THIS CONTEXT, THE COORDINATE BENCH OF THE TRIBUNAL HAS CONSIDERED THE ISSUE ON MERITS WHICH READS AS UNDER: - BUSINESS EXPENDITURE INTEREST, COMMISSION, BROKERAGE ETC. TO A RESIDENT DISALLO WANCE U/S 40(A)(I) TOWARDS PAYMENT OF INTEREST NON - PAYMENT OF TDS AO MADE DISALLOWANCE OF RS.71,016/ - U/S 40(A)(IA) ON GROUND THAT A SSESSEE HAD NOT MADE ANY TDS AT TIME OF PAYMENT AND RECIPIENT OF AMOUNT HAD SUBMITTED FORM 15H SINCE ASSESSEE WAS INFORMED IN ADVANCE, TDS WAS NOT MADE AND IN FACT, ASSESSEE FILED TDS CERTIFICATE SUBSEQUENTLY HELD, SECTION 40(A)(IA) CLEARLY SAYS THAT WHEN TAX IS DEDUCTIBLE AT SOURCE AND SUCH TAX HAS NOT BEEN DEDUCTED OR 6 ITA NO. 459/VIZ/2016 ( M/S. PIONEER FINANCE ) AFTER DEDUCTION IT WAS NOT PAID BEFORE DUE DATE FOR FILI NG THE RETURN OF INCOME, THEN EXPENDITURE, WHICH WAS OTHERWISE ALLOWABLE UNDER THE PROVISIONS OF INCOME - TAX ACT, HAD TO BE DISALLOWED INTEREST PAYMENT OF RS.71,016/ - WAS CLAIMED AS EXPENDITURE A SSESSEE WAS MAKING SIMILAR PAYMENT TO VERY RECIPIENT IN EARL IER ASSESSMENT YEAR AND TAX WAS NOT DEDUCTED AS REQUIRED U/S40(A)(IA) ON BASIS OF FORM 15H FILED BY RECIPIENT RECIPIENT OF INTEREST AMOUNT INFORMED ASSESSEE THAT SHE WOULD FILE FORM 15H ACCORDINGLY, AT TIME OF CREDIT, TAX WAS NOT DEDUCTED SUBSEQUENTLY FOR M 15H WAS FILED ON 10.04.2011, BEFORE DUE DATE FOR DEPOSITING AMOUNT IN GOVERNMENT ACCOUNT WHEN RECIPIENT FILED FORM 15H, THERE WAS NO LIABILITY ON PART OF THE ASSESSEE TO DEDUCT TAX ADMITTEDLY, TAX WAS NOT DEDUCTED AT TIME OF CREDIT HOWEVER, BEFORE DUE D ATE FOR FILING RETURN OF INCOME, RECIPIENT FILED FORM 15H THEREFORE, ON DATE OF FILING OF RETURN OF INCOME, TAX WAS NOT DEDUCTIBLE ON AMOUNT PAID TO RECIPIENT SINCE FORM 15H WAS FILED WHEN THERE WAS NO REQUIREMENT FOR DEDUCTION OF TAX IN VIEW OF FILING OF FORM 15H BY RECIPIENT ON 10.04.2011, THIS TRIBUNAL WAS OF CONSIDERED OPINION THAT THERE COULD NOT BE ANY DISALLOWANCE U/S 40(A)(IA) TRIBUNAL WAS UNABLE TO UPHOLD ORDER OF LOWER AUTHORITY AND ACCORDINGLY, ORDER OF LOWER AUTHORITY WAS SET ASIDE AND ADDIT ION OF RS.71,016/ WAS DELETED A SSESSEE'S APPEAL PARTLY ALLOWED. 11 . KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND BY FOLLOWING THE DECISION OF THE ITAT, CHENNAI BENCH IN THE CASE OF NARASUS SPINNING MILLS (SUPRA) , WE ARE OF THE OPINION THAT IT IS NOT A FIT CASE TO EXERCISE POWERS UNDER SECTION 263 OF THE ACT. THEREFORE, WE SET ASIDE THE ORDER PASSED BY THE PR. COMMISSIONER A ND RESTORE THE ORDER PASSED BY THE ASSESSING OFFICER. 1 2 . IN THE RESULT, APPEAL FILED BY T HE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 0 T H DAY OF DEC. , 201 7 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 0 T H DECEMBER , 201 7 . VR/ - COPY TO: 7 ITA NO. 459/VIZ/2016 ( M/S. PIONEER FINANCE ) 1. THE ASSESSEE - M/S. PIONEER FINANCE, D.NO. 10 - 6 - 28/2, NAAZ CENTRE, STATION ROAD, GUNTUR. 2. THE REVENUE PR. CIT, GUNTUR. 3. THE D.R . , VISAKHAPATNAM. 4. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.