Shri Prakashbhai Haribhai Ahir, Surat V. The Income Tax Officer, Ward-1(3), Surat

ITA 477/SRT/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1740 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 22-08-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 05-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Non-deduction of tax; TDS; FORM 26AS
• Section: 40(a)(ia); 201; 194A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 477/Srt/2018 (Assessment Year: 2014-15) (Virtual hearing) Shri Prakashbhai Haribhai Ahir, 23, Ashish Society, B/h Navyug College, Rander Road, Surat-395009. PAN No. ABFPA 9237 R Vs. I.T.O., Ward-1, (3)(8), Surat. Appellant/ assessee Respondent/ revenue Appellant represented by Shri Ashwin K Parekh, CA Respondent represented by Shri Vinod Kumar Sr. DR Date of hearing 23/08/2022 Date of pronouncement 23/08/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-2, Surat (in short, the ld. CIT(A) dated 26/04/2018 for the Assessment year 2014-15. The assessee has raised following grounds of appeal: “1. The learned CIT(A) has grievously erred in law and on facts in confirming the addition of Rs. 2,68,972/- u/s 40(a)(ia) of the Act made by Assessing Officer without appreciating the facts of Return of Income of Bajaj Finance Ltd. submitted to Assessing Officer. The addition of Rs. 2,68,972/- should therefore, be deleted. 2. The learned CIT(A) has grievously erred in law and on facts in confirming the addition of Rs. 8,50,913/- u/s 40(a)(ia) of the Act made by Assessing Officer without appreciating the facts ITA No.477/Srt/2018 Shri Prakashbhai Haribhai Ahir Vs ITO 2 of Return of Income of Bajaj Finance Ltd. submitted to Assessing Officer. The addition of Rs. 8,50,913/- should therefore, be deleted. 3. The learned CIT(A) has grievously erred in law and on facts in confirming the addition of Rs. 1,78,980/- made by Assessing Officer by disallowing depreciation of 2 cars without appreciating the facts that the cars were used by staff and investment is shown in personal balance Sheet of earlier years. The depreciating of Rs. 1,78,980/- should be allowed. The appellant reserves the right to add, alter, modify, amend or withdraw any of the grounds of appeal before hearing.” 2. At the outset of hearing, the learned authorised representative (ld. AR) of the assessee submits that he is not pressing ground No. 3 of appeal which relates to depreciation of cars/vehicles. The ld. Senior departmental representative (Sr. DR) for the revenue has raised no objection if the ld. AR does not wish to press ground No. 3, therefore, considering the submission of assessee, ground No. 3 of the assessee is dismissed as not pressed. 3. Brief facts of the case qua ground No. 1 and 2 are that during the assessment, the Assessing officer noted that the assessee has debited interest expenses of Rs. 2,68,972/- and Rs. 8,50,913/- to Bajaj Finance Ltd. (NBFC). The assessee was asked to explain as to why the expenses should not be disallowed and added back to the income of assessee in absence of deducting tax at source (TDS). The assessing officer recored that the assessee could not give any reason for non-deduction of tax. The Assessing ITA No.477/Srt/2018 Shri Prakashbhai Haribhai Ahir Vs ITO 3 officer treated Rs. 2,68,972/- and Rs. 9,50,913/- and disallowed the same under Section 40(a)(ia) of the Income Tax Act, 1961 (in short, the Act). 4. On appeal before the ld. CIT(A), the assessee submitted that the assessee has paid interest on car loan to HDFC of Rs. 1,18,357/- and interest to Bajaj finance of Rs. 1,50,615/- total of Rs. 2,68,972/-. The assessee stated that provision of Section 194A are not applicable to HDFC bank being a banking company. The assessee furnished interest account of HDFC bank, for remaining payment of interest of Rs. 1,50,615/-, the assessee filed a certificate from Bajaj Finance and claimed that non-banking finance company included the interest income in their total income and as per the decision of Special Bench of ITAT in Marilyn Shipping and Transporters 163 ITD 23 that no interest disallowance under Section 40(a)(ia) can be made. 5. For remaining interest disallowance of Rs. 8,50,913/-, the assessee furnished consolidated certificate from Bajaj Finance and submitted that interest paid has been included in the return of income by recipient. The ld. CIT(A) after considering the submissions of assessee held that the assessee has failed to file certificate from Chartered Accountant as per proviso to sub-Section (1) of Section 201 of the Act certifying that the payee i.e. M/s Bajaj Finance Ltd. has included interest income in their return of income and upheld the disallowance of interest expenses for the want of TDS of such payment to NBFC. So far as the addition qua the interest expenses of ITA No.477/Srt/2018 Shri Prakashbhai Haribhai Ahir Vs ITO 4 Rs. 1,85,357/- paid to the HDFC, the disallowance to that extent was deleted. Further aggrieved, the assessee has filed the present appeal before this Tribunal. 6. We have heard the submissions of the Ld. A.R of the assessee and the learned Sr. DR for the revenue and have gone through the orders of the authorities below. The ld. AR of the assessee submits that during the assessment as well as proceeding before the ld. CIT(A), the assessee could not obtain certificate from NBFC and Form 26AS about the claim that recipient has included the interest income in their total income and has paid tax thereon as per condition prescribed under First Proviso to sub- Section (1) of Section 201 of the Act. The assessee has now filed copy of such certificate of CA of payee and Form-26AS. The ld. AR of the assessee submits that the grounds of appeal may be restored back to the file of Assessing officer with clear direction to verify the fact that the recipient had included the interest income in its total and has paid tax thereon, and thus no disallowance under section 40(a)(ia) would survive against the assessee and to grant relief to the assessee. 7. On the other hand, the ld. Rd. for the revenue has supported the orders of the lower authorities. The ld. Sr. DR for the revenue submits that the issue may be restored to the file of assessing officer with direction to assessee ITA No.477/Srt/2018 Shri Prakashbhai Haribhai Ahir Vs ITO 5 to provide necessary certificate of Chartered Accountant and detail as per Form 26AS, so that the assessing officer may verify such claim. 8. We have considered the rival contentions of both the parties and have gone through the orders of authorities below carefully. We find that there is very limited controversy before us. The ld. AR of the assessee has placed on record the certificate of Chartered Accountant and the relevant Form 26AS certifying that the recipient/NBFC has included the interest income/interest expenses claimed by assessee in their total income and has paid tax thereon. Considering the decision of Merilyn Shipping & Transport (supra) we restore the issue to the file of Assessing Officer to verify the fact about inclusion of interest by recipient in their total income and to grant relief to the assessee in accordance with law. In the result, the grounds of appeal No.1 & 2 are allowed for statistical purpose. 9. In the result, this appeal of assessee is partly allowed. Order pronounced in the open court on 23 rd August, 2022 at the time of hearing of this appeal. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 29/08/2022 *Ranjan Copy to: 1. Assessee ITA No.477/Srt/2018 Shri Prakashbhai Haribhai Ahir Vs ITO 6 2. Revenue 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Sr. Private Secretary, ITAT, Surat