Shree Satguru Agro And Oil Products Pvt.Ltd, Pune V. Income-tax Officer, Ward - 6 (1), Pune

ITA 590/PUN/2019

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2557 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 16-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF EX PARTE PASSED
• Keywords: Non-deduction of tax; Set aside
• Section: 40(a)(ia); 201(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO.590/PUN/2019 / ASSESSMENT YEAR : 2014-15 SHREE SATGURU AGRO AND OIL PRODUCTS PRIVATE LIMITED, 667, GULTEKDI, MARKET YARD, NEAR RAJENDRA ROADLINE, PUNE 411 037 MAHARASHTRA PAN : AALCS9101Q VS. ITO, WARD-6(1), PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE EX PARTE ORDER PASSED BY THE CIT(A)-13, PUNE ON 19-02-2019 IN RELATION TO THE ASSESSMENT YEAR 2014-15. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.4,50,770/- MADE BY THE ASSESSING OFFICER (AO) U/S.40(A)(IA) OF THE INCOME-TAX A CT, 1961 (HEREAFTER ALSO CALLED THE ACT). APPELLANT BY NONE RESPONDENT BY SHRI M.K. VERMA DATE OF HEARING 17-06-2019 DATE OF PRONOUNCEMENT 18-06-2019 ITA NO.590/PUN/2019 SHREE SATGURU AGRO AND OIL PRODUCTS PVT. LTD., 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGAGED IN THE BUSINESS OF TRADING IN EDIBLE OIL. CERTAIN SUMS OF MONEY WERE BORROWED FROM FOUR NON-BANKING FINANCE COMPANIES, NAMELY, BAJAJ FINSERVE, ECL FINANCE, HDB FINANCIAL SERVICES LTD., AND CHOLAMANDALAM INVESTMENT AND FINANCE CO. LTD. THE ASSESSEE PAID TOTAL INTEREST OF RS.6,77,797/- IN RESPECT OF THE ABOVE REFERRED 4 BORRO WINGS. ON BEING CALLED UPON TO EXPLAIN AS TO WHY NO DEDUCTION OF TAX AT SOURCE WAS MADE, THE ASSESSEE SUBMITTED THAT FORM NO.26A ISSUED BY CHOLAMANDALAM INVESTMENT AND FINANCE CO. LTD. FO R NON-DEDUCTION OF TAX AT SOURCE TO THE TUNE OF RS.2,27,02 7/-. IN THE ABSENCE OF ANY FURTHER EVIDENCE, THE AO MADE DISALLOWA NCE OF RS.4,50,770/- (RS.6,77,797 RS.2,27,027) U/S.40( A)(IA) OF THE ACT. THE LD. CIT(A) CONFIRMED THE ADDITION. 4. I HAVE HEARD THE LD. DR AND GONE THROUGH THE RELEVAN T MATERIAL ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF THE ASSESSEE. IT IS SEEN FROM THE STATEMENT OF FACTS FURNISHED ALONG WITH THE MEMORANDUM OF APPEAL THAT THE ASSESSEE REQUESTED TH E ABOVE REFERRED COMPANIES TO FURNISH EVIDENCE OF INCLUDIN G THE INTEREST INCOME RECEIVED FROM THE ASSESSEE IN THEIR TOTAL INCOME . ITA NO.590/PUN/2019 SHREE SATGURU AGRO AND OIL PRODUCTS PVT. LTD., 3 IN THIS REGARD, IT IS RELEVANT TO NOTE THAT SECOND PROVISO TO S ECTION 40(A)(IA) PROVIDES THAT WHERE AN ASSESSEE FAILS TO DEDUCT TH E WHOLE OR ANY PART OF THE TAX BUT IS NOT DEEMED TO BE AN A SSESSEE IN DEFAULT UNDER THE FIRST PROVISO OF SECTION 201(1), THEN FO R THE PURPOSES OF THIS PROVISION IT SHALL BE DEEMED THAT THE ASSESSE E HAS DEDUCTED AND PAID TAX ON SUCH SUM. SUBSTANTIVE PART OF THE FIRST PROVISO TO SECTION 201(1) PROVIDES THAT A PERSON RESP ONSIBLE FOR DEDUCTING TAX AT SOURCE, SHALL NOT BE DEEMED TO BE AN A SSESSEE IN DEFAULT IF NO SUCH DEDUCTION IS MADE PROVIDED THE RECIPIENT RESIDENT HAS FURNISHED HIS RETURN OF INCOME AND TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING HIS TOTAL INCOME. ON GOING THROUGH SECTION 40(A)(IA) IN JUXTAPOSITION TO SECTION 201(1) IN THE PRESENT CONTEXT, IT CLEARLY EMERGES THAT EVEN IF THE PERSON RESPONSIBLE FOR PAYING INTEREST HAS FAILED TO DEDUCT TAX AT SOU RCE, STILL NO DISALLOWANCE CAN BE MADE U/S.40(A)(IA) IF EVIDENCE IS PLACED BEFORE THE AO THAT THE RECIPIENT OF INTEREST INCLUDED SU CH INTEREST INCOME IN HIS TOTAL INCOME. ALL THE FOUR PARTIES ARE NON - BANKING FINANCE COMPANIES. EX FACIE , IT APPEARS THAT THE AMOUNT OF INTEREST, IF GENUINELY PAID BY THE ASSESSEE TO SUCH COMP ANIES, OUGHT TO HAVE BEEN INCLUDED IN THEIR RESPECTIVE TOTAL INCOME. HOWEVER, IN THE ABSENCE OF ANY SUCH EVIDENCE HAVING BEE N ITA NO.590/PUN/2019 SHREE SATGURU AGRO AND OIL PRODUCTS PVT. LTD., 4 BROUGHT ON RECORD, I AM OF THE CONSIDERED OPINION THAT IT W OULD BE IN THE FITNESS OF THE THINGS IF THE IMPUGNED ORDER IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF AO. I ORDER ACCOR DINGLY AND DIRECT HIM TO EXAMINE THIS ASPECT AGAIN IN THE LIGHT OF MY ABOVE OBSERVATIONS. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2019. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 18 TH JUNE, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-13, PUNE 4. THE PR. CIT-3, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY // / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.590/PUN/2019 SHREE SATGURU AGRO AND OIL PRODUCTS PVT. LTD., 5 DATE 1. DRAFT DICTATED ON 17-06-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 17-06-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *