ITO WD 9(3)(1), MUMBAI V. SHRAM RESOURCES P.LTD, MUMBAI

ITA 4872/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83900 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 24-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Assessee Lawyers: V G GINDE
• Keywords: Non compliance

Judgement Text

`IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 4872/MUM/2013 ASSESSMENT YEAR: 2006-07 ITO WD-9(3)(1) R.NO. 227 AAYAKAR BHAVAN M.K. ROAD MUMBAI VS. M/S. SHRAM RESOURCES PVT. LTD. KOSHAL, ROW HOUSE NO. 1, BEHIND STATE BANK OF INDIA, KANDIVALI WEST, MUMBAI- 400 067 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.G. GINDE REVENUE BY : SHRI NEIL PHILIP DATE OF HEARING : 14.10.2014 DATE OF PRONOUNCEMENT : 14.10.2014 O R D E R PER I.P. BANSAL, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER THE PASSED BY THE LD.CIT(A)-20, MUMBAI DATED 19.04.2013 OF A.Y. 2 006-07. 2. GROUNDS OF APPEAL ARE READ AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD.CIT(A) IS JUSTIFIED IN ALLOWING THE APPEAL OF TH E ASSESSEE BY HOLDING THAT THE NON-SUBMISSION OF FORM 15G AND 15H BEFORE THE P RESCRIBED AUTHORITIES AS PER RULE 29C OF THE INCOME-TAX RULES ACT 1962 AND U NDER SECTION 197C IS A TECHNICAL BREACH AND NOT ANY VIOLATION OF LAW. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD.CIT(A) IS JUSTIFIED IN ALLOWING THE APPEAL OF TH E ASSESSEE BY HOLDING THAT THE DISALLOWANCE OF INTEREST EXPENSES OF RS.10,13,2 95/- UNDER SECTION 40(A)(IA) OF THE INCOME-TAX ACT 1961 IS NOT WARRANT ED DESPITE VIOLATION OF RULE 29C OF THE INCOME-TAX RULES ACT 1962 AND NON-D EDUCTION OF TAX UNDER SECTION 197C OF THE ACT. 3. IN THE PRESENT CASE THE INTEREST PAID BY THE AS SESSEE WAS DISALLOWED BY THE AO U/S 40(A)(IA) OF THE INCOME-TAX ACT 1961. IT WAS NOTICED BY THE AO THAT THE COPIES OF FORM 15G/15H RECEIVED BY THE ASSESSEE IN THE MONTH OF APRIL 2005 LATEST ITA NO. 4872/MUM/2013 M/S. SHRAM RESOURCES PVT. LTD. ASSESSMENT YEAR: 2006-07 2 BY 15 TH APRIL, 2005 WERE SUBMITTED TO THE CHIEF COMMISSION ER VIDE LETTER DATED 07.07.2012 WHICH WERE REQUIRED TO BE FURNISHED ON OR BEFORE 07.05.2005, THEREFORE, THE ASSESSEE HAS VIOLATED THE PROVISION RELATING TO DEDUCTION OF TAX. ACCORDINGLY DISALLOWANCE U/S 40(A)(IA) WAS MADE. TH E DISALLOWANCE MADE BY THE AO WAS AGITATED IN APPEAL FILED BEFORE THE LD.CIT(A) W HO HAS DELETED THE DISALLOWANCE FOLLOWING THE DECISION OF ITAT IN ASSESSEES OWN CA SE IN RESPECT OF A.Y. 2005-06 WHERE SIMILAR DISALLOWANCE WAS DELETED. THE DEPARTM ENT IS AGGRIEVED AND HAS FILED AFOREMENTIONED GROUNDS OF APPEAL. 4. AT THE OUTSET IT WAS THE CASE OF THE LD.AR THAT IN PRECEDING ASSESSMENT ORDER ON SIMILAR ISSUE RELIEF WAS GRANTED BY THE LD.CIT(A ) AND HIS ORDER WAS UPHELD BY TRIBUNAL. THE REFERENCE WAS MADE TO THE ORDER DATED 18.09.2009 PASSED IN ITA NO. 5066/MUM/2008. THE COPY OF ORDER WAS PLACED IN OUR RECORD AND WAS ALSO GIVEN TO LD. DR. 5. LD. DR DID NOT OBJECT TO SUCH SUBMISSION OF THE ASSESSEE. 6. WE HAVE HEARD BOTH THE PARTIES AT THEIR CONTENTI ONS HAVE CAREFULLY CONSIDERED. THE DELETION OF SIMILAR ADDITION WAS U PHELD BY THE TRIBUNAL IN RESPECT OF A.Y. 2005-06. THE RELEVANT OBSERVATIONS OF THE T RIBUNAL ON THE SAID DECISION ARE AS UNDER:- AS REGARDS TO GROUND NO.2, IT IS OBSERVED THAT INT EREST PAID BY THE ASSESSEE TO 14 PARTIES AGGREGATING TO RS.5,22,025/- WAS DISALLOWED BY THE A.O. U/S.40(A)(IA) ON THE GROUND THAT THE SAID PAYM ENT WAS MADE WITHOUT DEDUCTING TAX AT SOURCE. IN THIS REGARD, THE CONTEN TION OF THE ASSESSEE AS RAISED BEFORE THE A.O. WAS WITH THE CONCERNED PERSO NS HAVING SUBMITTED FORM NO.15G, THERE WAS NO TAX DEDUCTIBLE U/S.194A A S PER THE PROVISIONS OF SECTION 197(LA). THE A.O. HOWEVER NOTED THAT THE DE CLARATIONS FILED BY THE CONCERNED PERSONS IN FORM NO.15G WERE NOT FILED BY THE ASSESSEE WITH THE CONCERNED CIT, AS REQUIRED BY THE SECTION 197 A(2). HE THEREFORE DISALLOWED THE INTEREST PAYMENT MADE BY THE ASSESSEE BY APPLYI NG PROVISIONS OF SECTION 40(A)(IA). THE MATTER WAS CARRIED BEFORE THE LEARNE D CIT(A) WHO DELETED THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF INTERES T OBSERVING THAT THE CONCERNED PERSONS HAVING SUBMITTED THEIR DECLARATIO NS IN FORM NO.15G, NO TAX WAS DEDUCTIBLE BY THE ASSESSEE FROM INTEREST PA ID TO THEM AND FURNISHING THE SAID. DECLARATION TO THE CONCERNED CLT WAS MERE LY A PROCEDURAL DEFAULT FOR WHICH DISALLOWANCE U/S.40(A)(IA) WAS NOT JUSTIFIED . AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSIN G THE RELEVANT MATERIAL ON RECORD, WE FIND NO INFIRMITY IN THE IMP UGNED ORDER OF THE LEARNED CLT(A) DELETING THE DISALLOWANCE MADE BY THE A.O. O N ACCOUNT OF THE INTEREST ITA NO. 4872/MUM/2013 M/S. SHRAM RESOURCES PVT. LTD. ASSESSMENT YEAR: 2006-07 3 PAYMENT BY INVOKING PROVISIONS OF SECTION 40(A)(IA) . IT IS NO DOUBT TRUE THAT THE DEDUCTION ON ACCOUNT INTEREST CANNOT BE ALLOWED IF TAX IS DEDUCTIBLE AT SOURCE THEREFROM AND SUCH TAX HAS EITHER BEEN NOT D EDUCTED OR HAVING DEDUCTED, HAS NOT BEEN PAID AS PER THE RELEVANT PRO VISIONS OF SECTION 194A. HOWEVER AS PER SUB SECTION (1A) OF SECTION 197 A, N O TAX IS DEDUCTIBLE FROM INTEREST PAYABLE TO A PERSON (NOT BEING A COMPANY O R FIRM) IF SUCH PER ON FURNISHES TO THE PERSON RESPONSIBLE FOR PAYING THE INTEREST A DECLARATION -N WRITING IS THE PRESCRIBED FORM NO.15G. IN PRESENT C ASE, SUCH DECLARATIONS IN FORM 15G WERE FURNISHED BY ALL THE CONCERNED PARTIE S TO THE ASSESSEE A: THIS BEING THE ADMITTED POSITION, NO TAX WAS DEDUCTIBLE U/S.194A FROM INTEREST PAYABLE BY THE ASSESSEE TO THE SAID PERSONS AS PER THE PROVISIONS 0- SUB SECTION (1A) OF SECTION 197 A WHICH ARE OVERRIDING. THE PROVISIONS OF SECTION 40(A)(IA) THUS WERE NOT ATTRACTED AND THE AO, IN OU R OPINION, WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE ON ACCOUNT OF INTEREST B Y INVOKING THE SAID PROVISIONS NOTWITHSTANDING THE FACT THAT DECLARATIO NS RECEIVE THE ASSESSEE IN FORM 15G WERE NOT SENT BY IT TO THE CONCERNED COMMI SSIONER AS PER THE REQUIREMENT OF SECTION 197 A(2) WHICH IS PROCEDURAL IN NATURE NON COMPLIANCE OF WHICH IS INDEPENDENTLY LIABLE FOR PENALTY U/S.27 2A(2)(F). IN THAT VIEW OF THE MATTER, WE UPHOLD THE IMPUGNED ORDER OF THE LEARNED CIT A) DELETING THE DISALLOWANCE MADE BY THE A.O. ON THIS ISSUE AND DIS MISS GROUND NO.2 OF THE REVENUE'S APPEAL. 7. AS THE FACTS AND CIRCUMSTANCES OF THE PRESENT CA SE ARE SAME, RESPECTFULLY FOLLOWING THE AFOREMENTIONED ORDER PASSED BY TRIBUN AL IN ASSESSEES OWN CASE WE DECLINE TO INTERFERE IN THE RELIEF GRANTED BY THE L D.CIT(A). ACCORDINGLY, APPEAL FILED BY THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 0 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF OCTOBER, 2014. SD/- SD/- (R. C. SHARMA) (I. P. BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 14.10.2014 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR E BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.