VASAI ROLLER FLOUR MILLS P.LTD, MUMBAI V. DCIT 13(3)(2), MUMBAI

ITA 5437/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3917 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 26-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A RAMCHANDRAN
• Section: 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 5437/ MUM/20 15 ( / ASSESSMENT YEAR : 2012 - 1 3 ) VASAI ROLLER FLOUR MILLS PVT LTD., PLOT NO.9, GANESH PLOT OWNER ASSOCIATION, RAM CHANDRA LANE,KACHPADA, MALAD WEST, MUMBAI - 400064 / VS. DY .COMMISSIONER OF INCOME TAX - 1 3(3)( 2), ROOM NO. 229 , AYAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAACV1783G / APPELLANT BY: SHRI ASHOK BANSAL / RESPONDENT BY SHRI A RAMCHANDRAN / DATE OF HEAR ING : 26.7 .201 6 / DATE OF PRONOUNCEMENT : 08. 08. 2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 21 , MU MBAI D ATED 18.9.2015 PERTAINING TO A.Y. 2012 - 13 . 2. ONLY ISSUE RAISED IN THE SOLE GROUND OF APPEAL IS AGAINST THE SUSTAINING T HE DISALLOWANCE OF RS.2 , 65 , 445/ - BY LD.CIT(A) AS MADE BY THE AO UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT , 1961. ITA NO .5437/ M/1 5 2 3 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 29.9.2012 DECLARING TOTAL INCOME OF RS.97 , 82 , 430/ - . THE RETURN SO FILED BY THE ASSESSEE WAS PROCESSED U/S 143( 1 ) OF THE ACT . THEREAFTER, SCRUTINY PROCEEDINGS WERE INIT IATED AGAINST THE ASSESSEE AND STATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HA S CHARGED INTEREST ON LOAN S OF RS.3,23,56 7 / - PAID TO M/S KOTAK MAHINDRA PRIME LTD , M/S MAGMA FINANCE LTD AND TO M/S RELIANCE CAPITAL LTD ON WHICH THE ASSESSEE HAD NOT DEDUCED ANY TAX AT SOURCE . T HUS THE ASSESSEE COMMITTED DEFAULT IN NOT COMPLYING WITH THE PROVISIONS OF SECTION 194A OF THE INCOME TAX A CT A ND ACCORDINGLY DISALLOWED THE SAID AMOUNT UNDER SECT I O N 40(A)(IA) OF THE ACT BY FRAMING THE ASSESSMENT UNDER SECTION 143(3), VIDE ORDER DATED 11. 2 .2015 AT AN INCOME OF RS.1,01, 0 6 , 000/ - . AGGRIEVED BY THE ORDER OF THE AO , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) WHO PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER : 4.4 AND 4.5 4.4 I HAVE CONSIDERED THE SUBMISSION, THE FACTS ON RECORD AND ASSESSMENT ORDER, CAREFULLY. IT IS CLEAR THAT THE APPELLANT WAS IN ERR OR IN TREATING THE INTEREST PAID TO NBFC AS EXEMPTED FROM REQUIREMENT OF TDS. THE ARGUMENT THAT THE NBFC MUST HAVE PAID TAXES ON THE INTEREST RECEIVED FROM APPELLANT IS MERE PRESUMPTION AND NOT A SUBSTITUTE FOR EVIDENCE. HAVING NOT MADE AND EFFECTED THE TD S THE PRAYER FOR THIS OFFICE TO CALL FOR NECESSARY CERTIFICATE FROM THE PAYEES IS NOT ACCEPTABLE. THE APPROACH OF THE A. R. TO CONTEND THAT NO TDS WAS LIABLE SINCE INTEREST WAS ALREADY PAID AS ON 31.03.2012 AND NO AMOUNT WAS PAYABLE AT THE END OF THE YEAR IS ALSO NOT ACCEPTABLE. IT IS NOT O UT OF PLACE TO NOTE THAT THE DECISION REFERRED TO BY THE A PPELLANT WERE SUBSEQUENT TO THE PAYMENT OF INTEREST AND FILING OF RETURN OF INCOME BY AP PELLANT AND COULD NOT HAVE BEEN BASIS FOR NON DEDUCTION OF TAX AT SOURCE. IT ALSO NOTED THAT THE TAX AUDIT REPORT DID NOT MADE ANY MENTION OF ANY SUCH BE LIEF OR OPINION OF THE AUDITOR THAT TDS IS NOT TO ITA NO .5437/ M/1 5 3 BE EFFECTED ON THE GROUND AT INTEREST IS ALREADY PAID. IT IS ALSO NOTED FROM THE PAPERS FILED BEFORE ME TH AT THE RELIANCE CAPI TAL LTD. HAD INFORMED THE APPELLANT ITS PAN FOR DE DUCTION OF TDS, BUT THE APPELLANT DID NOT MAKE TDS. IN THE CASE OF P.M.S. DI ESELS VS CIT (2015) 119 DTR (P & H) 212, AND (2015) 60 TAXMANN.COM 54 (PUNE TRIB), THE ARGUMENT THAT SECTION 40(A)(IA) APPLIES ONL Y TO THE AMOUNT PA YABLE AT THE END OF THE FINANCIAL YEAR WAS REJECTED. 4. 5 HOWEVER, THE A.R. HAS ALSO POINTED OUT THAT THE INTEREST PAID TO KOTAK M AHINDRA PRIME LIMITED IS RS. 1,44,524/ - AND TO THAT EXTENT THE ASSESSING OFFICER IS WRONG IN CONSIDERING RS. 2,02,645/ - AS THE AMOUNT OF INTEREST DI SALLOWABLE IN RESPECT OF CAR LOAN. THE ASSESSING OFFICER SUBMITTED THAT THE AMO UNT OF RS. 323,567/ - INCLUDES INTEREST OF RS. 58,121/ - IN RESPECT OF LOAN FROM FEDERAL BANK WHICH SHOULD BE EXCLUDED. ACCORDINGLY, THE DISAL LOWANCE CONFIRMED TO THE EXTENT OF RS . 265,445/ - ONLY. 4. THE LD. AR VEHEMENTLY SUBMITTED BEFORE THAT THE ADDITION S AS SUSTAINED BY THE LD. CIT(A) TO TH E TUNE OF RS. 2,65,445/ - WERE WRONG AND AGAINST THE PROVISIONS OF LAW. HE RELIED UPON THE DECISION OF T HE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF JITENDRA MANSUKHLAL SHAH V/S DCIT IN ITA NO.2293 AND 2294/MUM/2013 (AYS - 2005 - 06 AND 2006 - 07) DATED 4.3.2015 WHEREIN IT HAS BEEN DECIDED THAT IN CASE THE EXPENSES A R E INCURRED BY THE ASSESSEE WHICH WERE NOT OUTSTANDING AT THE YEAR END THEN THE PROVISION OF SECTION 40(A)(IA) WERE N OT APPLICABLE . T HE ASSESSEE SUBMITTED THAT T HE INTER E ST PAYMENT TO THE ABOVE NON BANKING FINANCE COMPANIES WAS NOT OUTSTANDING AT THE YEAR END AND DISALLOWANCE AS MADE U/S 40(A) (IA) BE DELETED BY ALLOWING THE APPEAL OF THE ASSESSEE. 5 . THE LD. DR, ON THE CONTRARY RELIED UPON THE ORDERS OF AUTHORITIES BELOW. ITA NO .5437/ M/1 5 4 6 . WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW . WE FIND THAT THE ASSESSEE HAS PAID INTEREST TO N B FC S , COMPRISING OF RS. RS. 1,44,52 TO KOTAK MAHINDRA PRIME LIMITED, RS.37,378/ - TO M/S RELIANCE CAPITAL LTD, RS.83,544/ - AND RS.37,378/ - TO M/S MAGMA FINANCE LTD ON WHICH NO TDS WAS DEDUCTED AND WHICH WAS PAID BEFORE THE END OF THE FINANCIAL YEAR. THE LD.AR SUBMITTED BEFORE US THAT SINCE THE PAYMENT WAS NOT OUTSTANDING AT THE YEAR END THE PROVISIONS OF SECTION 40(A)(IA) WERE NOT APPLICABLE. WE ARE NOT IN AGREEMENT WITH T HE SUBMISSION S AND ARGUMENTS OF T HE LD.AR THAT TAX IS NOT DEDUCTIBLE ON THE PAYMENT WHICH ARE NOT OUTSTANDING AT THE YEAR END AS HAS BEEN HELD BY VARIOUS HIGH COURT S THAT IN DIFFERENT MANNER AND THERE IS NO AGREEMENT ON THIS ISSUE. HOWEVER, WE ARE OF THE CONSIDERED VI EW THAT IN VIEW OF SECOND PROVIS O TO SECTION 40 (A)(IA) OF THE ACT APPLICABLE TO THE FACTS OF THE CASE , THEN PROVISIONS OF TDS ARE NOT APPLICABLE . THEREFORE, WE RESTORE THE MATTER TO THE FILE OF THE AO TO VERIFY WHETHER THE RECIPIENT S OF INTEREST I.E. THREE PARTIES I.E . HAVE RETURNED THE RECEIPT OF INTEREST IN THEIR RETURN FOR THE RESPECTIVE ASSESSMENT YEAR THEN THE DISALLOWANCE U/S 40(A)(IA) TO THE EXTENT OF RS.2,65,445/ - DESERVED TO BE DELETED. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY WHETHER THE RECIPIENT HAVE SHOWN THE SAID AMOUNT IN THEIR RETURN OF INCOME AND IF SO, DELETE THE ADDITION OF RS.2,65,445/ - . ITA NO .5437/ M/1 5 5 7 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8TH AUG , 2016 . 8TH AUG, 2016 S D SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 8TH AUG , 2016 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONC ERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, T RUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI