Muthoot Fincorp Ltd, Trivandrum V. ACIT, Trivandrum

ITA 62/COCH/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77459 (ITAT-COCHIN)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 19-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-02-2014
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Section: 143(3); 194C; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NOS. 61&62/COCH/2014 ASSESSMENT YEARS : 2006-07 & 2007-08 M/S. MUTHOOT FINCORP LTD., TC 14/2074-7, MUTHOOT CENTRE, PUNNEN ROAD, JACOBS JUNCTION, TRIVANDRUM. [PAN: AACCM 1453E] VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), TRIVANDRUM. (ASSESSEE -APPELLANT) (REVENUE-RESPONDEN T) ASSESSEE BY SHRI R. SREENIVASAN, CA REVENUE BY SHRI M. ANIL KUMAR, CIT(DR) DATE OF HEARING 19/06/2014 DATE OF PRONOUNCEMENT 27/06/2014 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECT ED AGAINST THE ORDER OF THE CIT(A), TRIVANDRUM DATED 15-01-2014 FOR THE ASS ESSMENT YEARS 2006-07 AND 2007-08. 2. I.T.A. NO. 61/COCH/2014 THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF NON- BANKING FINANCIAL COMPANY (NBFC). ORIGINAL ASSESSM ENT U/S. 143(3) OF THE ACT WAS DONE ON 23/12/2008, DETERMINING TOTAL INCOME AT RS. 11,65,970/-. SINCE TAX ON BOOK PROFIT WAS FOUND TO BE MORE, BOOK PROFIT AS PER SECTION 115J WAS TAKEN I.T.A. NOS. 61&62/COCH/2014 2 AS TOTAL INCOME AT RS. 8,24,14,402/-. LATER THE ASS ESSMENT WAS REOPENED U/S. 147 OF THE IT ACT FOR WHICH NOTICE U/S. 148 WAS ISS UED ON 30/03/2012. THE REASON FOR ESCAPEMENT OF INCOME HAS BEEN NON-DEDUCT ION OF TDS ON AN AMOUNT OF RS. 7,33,77,497/- PAID TO THE FIRM M/S. MUTHOOT PAPPACHAN CONSULTANCY AND MANAGEMENT SERVICES (MPCMS) ON ACCOUNT OF ADMINISTR ATIVE CHARGES. IT HAS BEEN OBSERVED BY THE ASSESSING OFFICER THAT SUCH PA YMENT, I.E., PAYMENT ON ADMINISTRATIVE CHARGES ATTRACTS THE TDS U/S. 194C O F THE ACT AND FALLS WITHIN THE EXPLANATION PROVIDED VIDE CBDT CIRCULAR NO. 681 DAT ED 8/3/114 AND CIRCULAR NO. 715 DATED 8/8/1995. NON DEDUCTION OF TDS U/S. 194C INTER-ALIA ATTRACTS THE PROVISIONS OF SECTION 40A(IA) OF THE ACT. AFTER DE TAILED EXAMINATION, THE ASSESSING OFFICER HAD ADDED THE ENTIRE AMOUNT OF AD MINISTRATIVE CHARGES PAID TO THE EXTENT OF RS. 7,33,77,497/- TO THE TOTAL INCOME . ON APPEAL, THE CIT(A) HAS CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 3. AT THE TIME OF HEARING, THE LD. AR SUBMITTED THA T A SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE HONBLE JURISDICTIONAL HIGH COURT FOR THE ASSESSMENT YEAR 2008-09 WHEREIN THE HONBLE JURISDICTIONAL HIG H COURT REMITTED THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING OBSERVATIONS: 5. THE ENTIRE ISSUE REVOLVES ROUND THE FACT THAT WHETHER THIS AMOUNT OF RS. 8.53 CRORES IS IN RESPECT OF AMOUNTS REIMBURSE D TO M/S. MPCMS ON CONTRACT AS ALLEGED BY THE ASSESSEE OR OTHERWISE. WHILE CONSIDERING THE MATTER AFRESH BY THE ASSESSING OFFICER, THE EXERCI SE HE HAS TO DO IS TO TAKE INTO CONSIDERATION THE PROVISIONS UNDER INCOME TAX ACT PERTAINING TO THE TAX DEDUCTION AT SOURCE WHETHER IT IS WITH REFEREN CE TO SECTION 40(A)(IA) OR OTHER PROVISIONS. THEREFORE, THE EXERCISE TO BE U NDERTAKEN BY THE I.T.A. NOS. 61&62/COCH/2014 3 ASSESSING OFFICER AS INDICATED BY THE TRIBUNAL IS TO BE UNTRAMMELED BY ANY OF THE OPINIONS EXPRESSED BY THE COMMISSIONER WHIC H IS CONFIRMED BY THE TRIBUNAL. IN OTHER WORDS, BY APPLICATION OF MIND INDEPENDENTLY TO THE FACTS OF THE CASE WITH REFERENCE TO THE PROVISIONS OF TDS UNDER THE ACT, ASSESSING OFFICER HAS TO PROCEED FURTHER. 4. CONSIDERING THE FINDINGS OF THE TRIBUNAL AND THE HONBLE JURISDICTIONAL HIGH COURT, WE ARE INCLINED TO REMIT THE MATTER BAC K TO THE FILE OF THE ASSESSING OFFICER ON SIMILAR OBSERVATIONS. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN I.T.A. NO. 61/COCH/2014 IS ALLOWED FOR STATISTICAL PURPOSES. 6. I.T.A. NO. 62/COCH/2014 THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS ENG AGED IN MAKING PAYMENTS OF INTEREST ON SECURED DEBENTURES ETC. THE ORIGINAL AS SESSMENT U/S. 143(3) OF THE ACT WAS MADE ON 28/12/2009 BY DETERMINING TOTAL INC OME AT RS. 10,90,87,305/-. LATER, IT WAS FOUND BY THE ASSESSING OFFICER THAT T DS WAS NOT DEDUCTED IN RESPECT OF INTEREST PAID/PAYABLE ON DEBENTURES, AMOUNTING T O RS. 16,79,48,391/-TREATING SUCH FAILURE ON THE PART OF THE ASSESSEE AS ESCAPEM ENT OF INCOME, FOR THE FACT THAT SUCH PAYMENT OF INTEREST WERE LIABLE TO TDS AN D ON ACCOUNT OF ANY FAILURE FOR DOING SO, THE PROVISIONS OF SECTION 40A(IA) WAS INVOKABLE. NOTICE U/S. 148 WAS ISSUED ON 27/3/2012 AND AFTER CONSIDERING THE R EPLY OF THE ASSESSEE THAT IN RESPECT OF THE PAYMENT OF INTEREST ON SECURED DEBEN TURES, DECLARATION IN FORM NO. 15G AND 15H WERE ALREADY FURNISHED, THE ASSESSI NG OFFICER WANTED A COPY OF I.T.A. NOS. 61&62/COCH/2014 4 DUPLICATE OF SUCH FORMS TO BE SUBMITTED FOR VERIFIC ATION. THE ASSESSEE FAILED TO SUBMIT THE DUPLICATE AND PLEADED THAT DUPLICATES WE RE NOT AVAILABLE. IN VIEW OF THIS DEFICIENCY, THE ASSESSING OFFICER RESORTED TO INVOKE THE PROVISIONS OF SECTION 40A(IA) AND ADDED A SUM OF RS. 16,79,48,391/-. AGG RIEVED BY THE ADDITION, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE CIT (A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER. AGAINST THIS, THE ASSESSEE HAS RAISED FOLLOWING GROUNDS BEFORE US: 1. THE OFFICERS BELOW WERE NOT JUSTIFIED IN CONFIR MING THE ADDITION MADE U/S. 40A(IA) ON THE INTEREST PAYMENT SINCE THE APP ELLANT HAD OBTAINED FORM 15G/15H FROM THE PAYEES AND FILED WITH THE CO MMISSIONER OF INCOME TAX AS STATED IN THE STATUTE. 2. HAVING FILED COPIES OF THE DECLARATION WITH TH E COMMISSIONER OF INCOME TAX, IT WAS ONLY PROPER THAT THE OFFICER SHOULD HA VE CHECKED ABOUT THE VERACITY WITH THE COMMISSIONER OF INCOME TAX, RATH ER THAN INVOKING THE PROVISIONS OF SECTION 40A(IA). 3. THE OFFICERS BELOW DID NOT APPRECIATE THE FACT THAT FILING OF DECLARATION IS ONLY DIRECTORY AND NOT MANDATORY. 4. THE OFFICERS BELOW ALSO WENT WRONG IN COMPUTING SURCHARGE AND EDUCATIONAL CESS BEFORE GIVING CREDIT TO THE TAX P AID U/S. 115JAA. 5. THE OFFICERS BELOW HAVE TAKEN A NARROW INTERP RETATION OF THE MEANING OF TAX AS GIVEN IN SECTION 2(43). 7. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT P ROPERLY FILED FORM NOS. 15G AND 15H IN RESPECT OF PAYMENT OF INTEREST ON SE CURED DEBENTURES AND THE COPY OF FORM NO. 15G/H WAS NOT MADE AVAILABLE FOR V ERIFICATION IN THE CASE OF I.T.A. NOS. 61&62/COCH/2014 5 NON-DEDUCTION OF TDS. THE LD. AR SUBMITTED THAT AN OPPORTUNITY TO PRODUCE THESE FORMS MAY BE GIVEN TO THE ASSESSEE. 8. WE HAVE HEARD BOTH THE PARTIES. WE ARE INCLINED TO REMIT THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER AND DIRECT HIM TO CALL FOR THE ASSESSEE TO PRODUCE COPY OF FORM 15G/H BEFORE HIM. THE ASSESS ING OFFICER, AFTER PERUSAL OF THE COPY OF FORM 15G/H SHALL DECIDE THE ISSUE AFRES H. 9. RELATING TO COMPUTATION OF SURCHARGE AND EDUCATI ONAL CESS BEFORE GIVING CREDIT TO THE TAX PAID U/S. 115JAA, THIS ISSUE IS A LSO REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER AS THE MAIN ISSUE HAS GONE BA CK TO THE ASSESSING OFFICER FOR FRESH EXAMINATION. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN I.T.A. NO. 62/COCH/2014 IS ALSO ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 27-06-2014. SD/- SD/- (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 27TH JUNE, 2014 GJ I.T.A. NOS. 61&62/COCH/2014 6 COPY TO: 1. M/S. MUTHOOT FINCORP LTD., TC 14/2074-7, MUTHOOT CENTRE, PUNNEN ROAD, JACOBS JUNCTION, TRIVANDRUM. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCL E-1(1), TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS),, TRIVAN DRUM. 4. THE COMMISSIONER OF INCOME-TAX, TRIVANDRUM. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN