Sampath Raj Karnaraj, CHENNAI V. ITO Non Corporate Ward 5(1), CHENNAI

ITA 571/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9653 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 06-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: LALMALSAWMA PACHUAU
• Assessee Lawyers: K RAVI
• Keywords: Reopening of assessment; Set aside
• Section: 40(a)(ia); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! ' , $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.571/CHNY/2019 ( )( / ASSESSMENT YEAR : 2012-13 SHRI SAMPATH RAJ KARANRAJ, PROP: RAJ BIKES, NO.64, MADHAVARAM HIGH ROAD, MOOLAKADAI, CHENNAI - 600 118. PAN : AQYPK 9636 Q V. THE INCOME TAX OFFICER, NON CORPORATE WARD 5(1), CHENNAI. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI K. RAVI, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI LALMALSAWMA PACHUAU, JCIT 1 / 2$ / DATE OF HEARING : 18.06.2019 34) / 2$ / DATE OF PRONOUNCEMENT : 19.06.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -5, CHENNA I, DATED 29.06.2018 AND PERTAINS TO ASSESSMENT YEAR 2012-13. 2. SHRI K. RAVI, THE LD.COUNSEL FOR THE ASSESSEE, S UBMITTED THAT THE FIRST ISSUE RAISED BY THE ASSESSEE IS REGARDING REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT 2 I.T.A. NO.571/CHNY/19 'THE ACT'). THE LD.COUNSEL SUBMITTED THAT THE ASSE SSEE INSTRUCTED HIM NOT TO PRESS THE ISSUE OF REOPENING. THE LD.CO UNSEL HAS ALSO MADE ENDORSEMENT TO THAT EFFECT. THE LD. DEPARTMEN TAL REPRESENTATIVE HAS NO OBJECTION TO DISMISS THE GROU ND OF REOPENING OF ASSESSMENT AS NOT PRESSED. IN VIEW OF THE ABOVE , THE GROUND RELATING TO REOPENING OF ASSESSMENT IS DISMISSED AS NOT PRESSED. 3. NOW COMING TO THE ISSUE OF DISALLOWANCE UNDER SE CTION 40(A)(IA) OF THE ACT. 3. SHRI K. RAVI, THE LD.COUNSEL FOR THE ASSESSEE, S UBMITTED THAT THE ASSESSEE PAID INTEREST TO M/S SUNDARAM PNB PARI BAS HOME FINANCE LTD. WITHOUT DEDUCTING TAX. ACCORDING TO T HE LD. COUNSEL, THE RECIPIENT NON-BANKING FINANCE COMPANY DISCLOSED THE INTEREST INCOME RECEIVED FROM THE ASSESSEE AND PAID TAXES TH EREON. THEREFORE, ACCORDING TO THE LD. COUNSEL, IN VIEW OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, THERE CANN OT BE ANY DISALLOWANCE. PLACING RELIANCE ON THE ORDER OF THI S TRIBUNAL IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2013-14 IN I.T.A. NO.2447/MDS/2017, THE LD.COUNSEL SUBMITTED THAT ON IDENTICAL CIRCUMSTANCES, IN RESPECT OF SIMILAR PAYMENT OF INT EREST TO THE VERY SAME COMPANY WAS REMITTED BACK TO THE FILE OF THE A SSESSING 3 I.T.A. NO.571/CHNY/19 OFFICER FOR RECONSIDERATION. THEREFORE, ACCORDING TO THE LD. COUNSEL, THE MATTER MAY BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION FOR THE YEAR UNDER CONSIDERATIO N ALSO. 4. WE HEARD SHRI LALMALSAWMA PACHUAU, THE LD. DEPAR TMENTAL REPRESENTATIVE ALSO. THE LD. D.R. SUBMITTED THAT S ECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WAS INTRODUCED WITH EF FECT FROM 2016. THEREFORE, THIS MAY NOT BE APPLICABLE DURING THE YE AR UNDER CONSIDERATION. HENCE, ACCORDING TO THE LD. D.R., T HE ASSESSEE IS LIABLE TO DEDUCT TAX. HAVING FAILED TO DEDUCT TAX AS REQUIRED UNDER SECTION 194A OF THE ACT, ACCORDING TO THE LD. D.R., THE PAYMENT OF INTEREST CANNOT BE ALLOWED AS DEDUCTION WHILE COMPU TING TAXABLE INCOME. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ONLY OBJECTION OF THE LD. D.R. IS THAT SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT WAS INTRODUCED WITH EFFECT FROM 2016, TH EREFORE, IT IS NOT APPLICABLE DURING THE YEAR UNDER CONSIDERATION. TH E SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT, NO DOUBT, WAS INTR ODUCED BY THE FINANCE ACT, 2016. THE DELHI HIGH COURT IN CIT V. ANSAL LANDMARK TOWNSHIP PVT. LTD. (2015) 377 ITR 635 EXAMINED THE ISSUE AND HELD 4 I.T.A. NO.571/CHNY/19 THAT SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT HAS RETROSPECTIVE OPERATION, THEREFORE, APPLICABLE TO THE EARLIER ASS ESSMENT YEARS ALSO. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF T HE CONSIDERED OPINION THAT IF THE RECIPIENT DISCLOSES THE INTERES T INCOME IN HIS RETURN OF INCOME AND PAID TAXES THEREON, THERE CANN OT BE ANY DISALLOWANCE IN THE HANDS OF THE ASSESSEE. ON AN I DENTICAL SITUATION, THE INTEREST PAID BY THE ASSESSEE TO THE VERY SAME COMPANY, FOR ASSESSMENT YEAR 2013-14, WAS EXAMINED BY THIS TRIBUNAL AND REMITTED THE MATTER BACK TO THE FILE O F THE ASSESSING OFFICER FOR RE-EXAMINATION. FOR THE PURPOSE OF CON VENIENCE, WE ARE REPRODUCING THE RELEVANT PARAGRAPH OF THE ORDER OF THIS TRIBUNAL DATED 05.01.2018 AS FOLLOWS:- 5. WE HEARD SMT. RUBY GEORGE, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. SINCE THE ASSESSEE CLAIMS THA T THE RECIPIENT, NAMELY, M/S SUNDARAM PNB PARIBAS HOME FINANCE LTD. PAID THE TAXES ON THE INTEREST INCOME RECEIVED FROM THE ASSESSEE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS RE-EXAMINAT ION BY THE ASSESSING OFFICER. ACCORDINGLY, ORDERS OF B OTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ISSUE O F DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE ACT IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AND FI ND OUT WHETHER THE RECIPIENT, NAMELY, M/S SUNDARAM PNB PARIBAS HOME FINANCE LTD. HAS DISCLOSED THE INTERES T INCOME AND PAID TAXES, AND THEREAFTER DECIDE THE ISS UE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASO NABLE OPPORTUNITY TO THE ASSESSEE. 5 I.T.A. NO.571/CHNY/19 6. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CO NSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-EXAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITI ES BELOW ARE SET ASIDE AND THE ISSUE OF DISALLOWANCE MADE UNDER SECT ION 40(A)(IA) OF THE ACT IS REMITTED BACK TO THE FILE OF THE ASSESSI NG OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER AND F IND OUT WHETHER THE RECIPIENT, NAMELY, M/S SUNDARAM PNB PARIBAS HOM E FINANCE LTD. HAS DISCLOSED THE INTEREST INCOME AND PAID TAX ES THEREON AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WI TH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 19 TH JUNE, 2019 AT CHENNAI. SD/- SD/- ( ! ' ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 19 TH JUNE, 2019. KRI. 6 I.T.A. NO.571/CHNY/19 / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 :2 () /CIT(A)-5, CHENNAI-34 4. PRINCIPAL CIT- 9, CHENNAI 5. 8; -2 /DR 6. <( = /GF.