MR. SHEKHAR DADARKAR , MUMBAI V. ACIT-31(3), MUMBAI

ITA 5335/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5539 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 14-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GURBINDER SINGH
• Keywords: Opportunity of being heard; TDS
• Section: 143(3); 40(a)(ia); 144C; 194A; 6

Judgement Text

ITA NO. 5335/MUM/2019 ASSESSMENT YEAR: 2007 - 08 PAGE 1 OF 4 INCOME TAX APPELLATE TRIBUNAL MUMBAI H BENCH, MUMBAI [CORAM: PRAMOD KUMAR (VICE PRESIDENT) AND RAVISH SOOD (JUDICIAL MEMBER)] ITA NO. 5335 /MUM/2019 ASSESSMENT YEAR: 2007 - 08 MR. SHEKHAR DADARKAR PROP. .....APPELLANT M/S. S.D. CONSTRUCTION GEETANJALI CHS LTD., PLOT NO. 11, SHASTRI NAGAR, GOREGAON (W), MUMBAI 400104 [PAN: ADAPD8694G ] VS. ASSISTANT COMMISSIONER OF INCOME - TAX .. RESPONDENT CIRCLE 31(3 ), MUMBAI APPEARANCES: SUNIL A. DESAI FOR THE APPELLANT GURBINDER SINGH FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: : SEPTEMBER 16 , 2021 DATE OF PRONOUNCEMENT : SEP TEMBER 2 1 , 2021 O R D E R PER PRAMOD KUMAR VP: 1. BY WAY OF THIS APPEAL, THE ASSESSEE - APPELLANT HAS CHALLENGED THE CORRECTNESS OF THE ORDER DATED 31 ST MAY 2019 , PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT U/S. 143(3) R.W.S. 144C OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2007 - 08 . 2. GRIEVANCES RAISED BY THE APPELLA NT ARE AS FOLLOW: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING ACTION OF THE LEARNED AO OF INVOKING PROVISIONS OF SECTION 194A IN RESPECT OF INTEREST PAID BY THE APPELLANT TO NON - BANKING FINANCE COMPANIES (NBFC) REQUIRING DEDUCTION OF TDS FROM INTEREST. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 821,658/ - U/S. 40(A) (IA) TOWARDS INTEREST PAID TO NBFCS FOR NON - DEDUCTION OF TDS. ITA NO. 5335/MUM/2019 ASSESSMENT YEAR: 2007 - 08 PAGE 2 OF 4 3. WHEN THIS APPEAL CAME UP FOR HEARING LEARNED REPRESENTATIVE FOR THE ASSESSEE FAIRLY AGREED THAT THE APPEAL IS COVERED BY ORDER DATED 09.04.2018 IN ASSESSES OWN CASE FOR THE ASSESSMENT YEARS 2009 - 10 TO 2013 - 14 , WHEREIN THE CO - ORDINATE BENCH HA S INTER ALIA OBSERVED AS FOLLOWS: - 4. THE ISSUE INVOLVED IN GROUND NO.1 IS AGAINST THE CONFIRMATION OF ADDITION OF RS.88,85,487/ - AS MADE BY THE AO UNDER SECTION 40(A)(IA) OF THE ACT ON ACCOUNT OF NON DEDUCTION OF TDS ON THE PAYMENTS MADE TO NON BANKING FINANCE COMPANIES TOWARDS INTEREST ON LOANS. 5. THE BRIEF FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAS CHARGED A SUM OF RS.88,85,487/ - AS PAYMENT OF INTEREST TO NON BANKING FINANCE COMPANIES NAMELY RELIGARE FINVEST LTD., RELIANCE CAPITAL LTD., INDIABULLS HSG. FIN. LTD., INDIABULLS HSG. LOANS AND CHOLAMANGLAM DBS FINANCE LTD. WHICH WAS DEBITED UNDER THE HEAD INTEREST CHARGES WHILE NO TDS WAS DEDUCTED ON THESE PAYMENTS. UPON AN ENQUIRY FROM THE AO THE ASSESSEE REPLIED THAT THE PROVISIONS OF DEDUCTION OF TDS AT SOURCE AS CONTAINED IN SECTION 194 OF THE ACT ARE NOT APPLICABLE AS NBFCS ARE CARRYING ON BANKING BUSINESS. THE AO WAS NOT CONVINCED WITH THE REPLY OF THE ASSESSEE AND ADDED THE SAID SUM OF RS.88, 85,487/ - ON ACCOUNT OF NON DEDUCTION OF TDS BY APPLYING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT WHICH WAS ALSO CONFIRMED BY THE LD. CIT(A) IN THE APPELLATE PROCEEDINGS BY HOLDING THAT THE NBFCS ARE NOT EXEMPTED FROM THE APPLICATION OF PROVISIONS OF S ECTION 193 & 194 OF THE ACT. 6. HAVING HEARD THE LD. D.R. AND CONSIDERING THE FACTS ON RECORD, WE FIND THAT THE ASSESSEE HAS MADE PAYMENT OF RS.88,85,487/ - AS PER DETAILS EXTRACTED BELOW WHICH REPRESENTED THE PAYMENT OF INTEREST TO NON BANKING FINANCE COM PANIES ON WHICH NO TDS WAS DEDUCTED BY THE ASSESSEE. M/S. RELIGARE FINVEST LTD. : RS.11,27,176/ - M/S. RELIANCE CAPITAL LTD. : RS.47,12,509/ - M/S. INDIABULLS HSG. FIN. LTD. : RS. 9,45,794/ - M/S. INDIABULLS HSG. LOAN : RS.19,92,710/ - M/S. CHOLAMANDALAM DBS : RS. 1,07,298/ - FINANCE LTD. ____________ RS.88,85,487/ - ========= 7. WE ARE IN AGREEMENT WITH THE CONCLUSION OF FIRST APPELLATE AUTHORITY THAT THE PROVISIONS OF TAX DEDUCTION AT SOURCE ARE APPLICABLE TO THE INTEREST PAYMENTS MADE TO NBFCS AS THESE COMPANIES ARE NOT EXCLUDED FROM THE APPLICATION OF PROVISIONS OF SECTION 193 AND 194 OF THE ACT. HOWEVER, IN VIEW OF THE 2 ND PROVISO TO SECTION 40(A)(IA) OF THE ACT, WE ARE OF THE VIEW THAT IF THE PAYEES OF THE INTE REST I.E. THE ABOVE STATED NBFCS HAVE DISCLOSED THE SAID INCOME IN THEIR RESPECTIVE RETURNS OF INCOME AND PAID INCOME TAX AS PER THE APPLICABLE PROVISION OF LAW THEN THERE WAS NO REQUIREMENT OF DEDUCTION OF TAX AT SOURCE AS THE PAYEES HAVE PAID THE TAX ON THE SAID RECEIPTS AND THE ASSESSEE CAN NOT BE TREATED AS ASSESSEE IN DEFAULT. THUS THIS MATTER NEEDS FURTHER EXAMINATION AND VERIFICATION AT THE LEVEL OF THE AO WHETHER THE PAYEES HAVE DISCLOSED THESE PAYMENTS AS RECEIPTS IN THEIR RESPECTIVE RETURNS OF INC OME. THEREFORE, WE, IN THE INTEREST OF JUSTICE AND FAIRPLAY RESTORE THE MATTER BACK TO THE FILE OF AO TO DECIDE THE ISSUE AS PER THE 2ND PROVISO TO SECTION 40(A)(IA) AFTER AFFORDING A ITA NO. 5335/MUM/2019 ASSESSMENT YEAR: 2007 - 08 PAGE 3 OF 4 REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. NEEDLESS TO SAY T HAT IF THE PAYEES HAVE SHOWN THE SAID RECEIPTS OF INCOME THEN THESE PAYMENTS SHOULD BE ALLOWED TO THE ASSESSEE. THE GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 4. WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER THAN THE VIEW SO TAKEN BY THE CO - ORDINATE BENCH - WHICH HAS ALSO BEEN REPRODUCED BY THE LEARNED CIT(A) IN THE IMPUGNED ORDER. RESPECTFULLY FOLLOWING THE SAME, WE APPROVE, THE CONCLUSIONS ARRIVED AT BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 5 . IN THE RESULT, THIS APPEAL IS ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 2 1 S T DAY OF SEPTEMBER 2021. S D / - S D / - RAVISH SOOD PRAMOD KUMAR (JUDICIAL MEMBER) (VICE PRESIDENT) MUMBAI, DATED THE 2 1 S T DAY OF SEPTEMBER 2021. COPIES TO: (1) THE APPLICANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI ITA NO. 5335/MUM/2019 ASSESSMENT YEAR: 2007 - 08 PAGE 4 OF 4 SR. NO DESCRIPTION DATE INITIAL 1. DRAFT DICTATED NO 2 DRAFT PLACED BEFORE AUTHOR ON 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 5 APPROVED DRAFT COMES TO THE SR PS 6 KEPT FOR PRONOUNCEMENT ON 7 FILE SENT TO THE BENCH CLERK 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE ON WHICH FILE GOES TO THE AR 10 DATE OF DISPATCH