ITO, New Delhi V. Sh. Vikas Vasudeva, New Delhi

ITA 6525/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7215 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 3
• Next Hearing Date: 22-08-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: VINOD KUMAR GOYAL
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 6525/DEL/2015 ASSESSMENT YEAR: 2012-13 ITO, WARD 41(1), VS. SH. VIKAS VASUDEVA ROOM NO. 1709, 1, PAL MOHAN APARTMENTS, E-2 BLOCK, PUNJABI BAGH, CIVIC CENTRE, NEW DELHI NEW DELHI (PAN: ABJPV8423F) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. FR MEENA, SR. DR ASSESSEE BY : SHRI VINOD KUMAR GOY AL, ADV. DATE OF HEARING : 22-08-2016 DATE OF ORDER : 30-08-2016 ORDER PER H.S. SIDHU, J.M. THE DEPARTMENT HAS FILED THE APPEAL AGAINST THE IM PUGNED ORDER DATED 10.9.2015 OF LD. CIT(A)-14, NEW DELHI PERTAIN ING TO ASSESSMENT YEAR 2012-13. THE GROUNDS RAISED IN THE REVENUES A PPEAL READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAWS CIT(A) HAS ERRED IN- 1. DELETING THE ADDITION OF RS. 35,06,062/- MADE BY TH E AO ON ACCOUNT OF DISALLOWANCE OF INTEREST PAID U/S. 40(A) (IA) OF THE I.T. ACT, 1961 WRONGLY INTERPRETING THAT THE INTEREST PA ID ON LOAN TO NON BANKING FINANCIAL COMPANY IS COVERED IN EXCEPTI ON UNDER SECTION 194(3)(III) OF THE I.T. ACT, THUS HOLDING T HAT NO TAX IS LIABLE TO BE DEDUCTED AT SOURCE. 2. THE APPELLANT CRAVES THE RIGHT TO ADD, ALTER OR AME ND ANY GROUND OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE HAD FILED HIS RETURN OF INCOME DECLARING AN INCOME OF RS. 9,80,230/- ON 30.9.2012. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF H ANDLOOM ITEMS UNDER ITA NO.6525/DEL/2015 2 THE NAME AND STYLE OF M/S AMBICA ASSOCIATES. THE CA SE WAS SELECTED FOR SCRUTINY UNDER CASS. DURING THE ASSESSMENT PROCEE DINGS THE AO HAS RAISED VARIOUS QUERIES AND THE ASSESSEE FILED REPLY BEFORE THE AO FROM TIME TO TIME. AFTER DISCUSSION THE AO HAS COMPLETED THE ASSESSMENT BY MAKING THE VARIOUS ADDITIONS VIDE HIS ORDER DATED 31.12. 2014 PASSED U/S. 143(3) OF THE I.T. ACT, 1961. 3. AGGRIEVED WITH THE AFORESAID ASSESSMENT ORDER, A SSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUG NED ORDER DATED 31.12.2014 HAS DELETED THE ADDITION IN DISPUTE AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNE D ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL AND STA TED THAT ORDER OF THE LD. CIT(A) MAY BE SET ASIDE AND APPEAL OF THE REVEN UE MAY BE ALLOWED. 6. ON THE CONTRARY, LD. COUNSEL OF THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED THAT LD. CIT(A) HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, HENCE, THE SAME MAY BE UPHELD AND ACCORDINGLY, THE APPEAL OF THE REVENUE MAY BE DISMISSED. 7. I HAVE HEARD THE LD. COUNSEL OF THE ASSESSEE AN D PERUSED THE RECORDS, ESPECIALLY THE IMPUGNED ORDER PASSED BY TH E LD. CIT(A). I FIND THAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED THE ISSUE IN DISPUTE BY CONSIDERING THE SUBMISSIONS OF THE ASSES SEE AND ADJUDICATED ITA NO.6525/DEL/2015 3 THE ISSUE AS UNDER VIDE PAGES 2 TO 3 OF THE IMPUGNE D ORDER. THE SAID RELEVANT PARAS ARE REPRODUCED AS UNDER:- GROUND NO.1:- THAT THE ADDITION IS MADE ON ACCOUNT OF NON DEDUCTION OF TDS ON ACCOUNT OF INTEREST PAID ON LOAN FROM BANKING CONCERN OF RS. 35,06,062/- IS ILL EGAL, UNJUST AND WITHOUT PREJUDICE. DURING THE COURSE OF APPELLATE PROCEEDING THE LD. A R SUBMITTED AS UNDER: - 'ISSUE NO.1: [ADDITION OF RS. 35,06,062/- ON ALC. O F U/S 40(A)(IA)] A.O. OBSERVATION: IN THIS REGARD, LD. AO OBSERVED AS UNDER: FROM THE PERUSAL OF PROFIT AND LOSS ACCOUNT IT IS F OUND THAT THE ASSESSEE HAS CLAIMED INTEREST ON LOAN AT R S. 35,06,062/- ON SECURED LOAN WHERE NO TDS HAS BEEN DEDUCTED AS PER THE PROVISION OF SECTION 194A OF I. T. ACT WHICH ATTRACTS THE PROVISIONS OF DISALLOWANCE U /S 40(A)(IA) OF I.T. ACT. THEREFORE, THE INTEREST PAID ON LOAN AMOUNTING TO RS. 35,06,062/- IS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. ASSESSEE'S SUBMISSION: THAT THE INTEREST ON LOANS A/C HAS ALREADY BEEN FIL ED WITH YOU HOWEVER THE STATEMENT OF WHICH ARE HEREBY ENCLOSED, THAT AS REGARDS DURING THE YEAR IN QUESTI ON THE ASSESSEE TOP-UP HIS LOAN FROM ANOTHER BANKER F OR ITA NO.6525/DEL/2015 4 WHICH THE PROCESSING FEES WAS PAID. THAT THE LOANS WERE TAKEN FOR HIS BUSINESS. THAT THE PROPORTIONATE INTE REST OF HOUSING AT THE RATE OF 15% WAS SEPARATELY SHOWN AGAINST THE RENTAL INCOME. THAT A DEMAND OF RS.15,30,000/- HAS BEEN CREDITED U /S 143(3) OF I.T. ACT, 1961 FOR THE ABOVE SAID ASSESSM ENT YEAR. THAT THE ASSESSEE HAS FILED AN APPEAL BEFORE THE HIGHER AUTHORITIES AGAINST THE SAID ASSESSMENT ORDE R. HOWEVER, THE ASSESSEE DIRECTED TO PAY THE ABOVE SAI D DEMAND WITHIN 30-DAYS. IN RESPECT OF WHICH THE ASSESSEE PAID RS. 4,00,000/- (I.E., MORE THAN 25% O F THE TOTAL DEMAND) ON 30-01-2015 IN CORPORATION BANK LTD. CHALLAN OF WHICH IS ENCLOSED FOR YOUR RECORD. THAT AS PER YOUR LETTER DATED 03-02-2015 FIXING FOR 12-02-2015 FOR PAYMENT OF DEMAND OF 50% OUT OF TAX. PLEASE GRANT A PERIOD OF MINIMUM 6 MONTHS TO MAKE PAYMENT OF 50% TAX OUTSTANDING. AS NO TAX IS LIABLE TO DEDUCT ON ACCOUNT OF LOAN AN D INTEREST PAYMENT TO THE BANK. THEREFORE, THE ASSESS EE HAS NOT DEDUCT TAX. THIS IS EXCEPTION AS PER SUB-, SECTION IIIRD OF SECTION 3 OF 194A OF I.T. ACT. TH EREFORE, THE ASSESSEE IS NOT LIABLE TO TREAT AS DEFAULTER AS PER PROVISO 40(A) OF I.T. ACT AND A.O. IS IN ERROR IN DISALLOWING THE INTEREST PAYMENT TO THE BANK WITHOU T DEDUCTION TAX.' ITA NO.6525/DEL/2015 5 KEEPING INTO CONSIDERATION THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FINDINGS OF THE LD. AO, I INCLINE TO AGREE WITH THE CONTENTION OF THE APPELLANT THAT NO TAX IS LIABLE TO DEDUCT ON ACCOUNT OF LOAN AND INTEREST PAYMENT TO THE BANK. THEREFORE, THE ASSESSEE HAS NO T DEDUCTED TAX. THIS IS EXCEPTION AS PER SUB-SECTION IIIRD OF SECTION 3 OF 194A OF I.T. ACT. THEREFORE, THE AS SESSEE IS NOT LIABLE TO TREAT AS DEFAULTER AS PER PROVISO 40(A) OF I.T. ACT AND A.O. IS NOT JUSTIFIED IN DISALLOWING T HE INTEREST PAYMENT TO THE BANK WITHOUT DEDUCTION TAX. ACCORDINGLY, THE ADDITION MADE ON ACCOUNT OF NON DEDUCTION OF TDS ON ACCOUNT OF INTEREST PAID ON LOA N FROM BANKING CONCERN OF RS. 35,06,062/- IS DELETED. HENCE, THIS GROUND OF APPEAL IS ALLOWED. 8.1 AFTER GOING THROUGH THE FINDINGS OF THE LD.CIT( A), AS AFORESAID, I FIND THAT THE AO OBSERVED FROM THE P ERUSAL OF PROFIT AND LOSS ACCOUNT THAT THE ASSESSEE HAS CLAIMED INTE REST ON LOAN AT RS. 35,06,062/- ON SECURED LOAN WHERE NO TDS HAS BE EN DEDUCTED AS PER THE PROVISION OF SECTION 194A OF I.T. ACT WH ICH ATTRACTS THE PROVISIONS OF DISALLOWANCE U/S 40(A)(IA) OF I.T. AC T. THEREFORE, THE INTEREST PAID ON LOAN AMOUNTING TO RS. 35,06,062/- WAS DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. HOWEVER, A S PER ASSESSEE THE INTEREST ON LOANS A/C HAS ALREADY BEEN FILED WI TH THE AO. DURING THE YEAR IN QUESTION THE ASSESSEE TOP-UP HIS LOAN FROM ANOTHER BANKER FOR WHICH THE PROCESSING FEES WAS PAID. THAT THE LOANS WERE ITA NO.6525/DEL/2015 6 TAKEN FOR HIS BUSINESS. THAT THE PROPORTIONATE INTE REST OF HOUSING AT THE RATE OF 15% WAS SEPARATELY SHOWN AGAINST THE RE NTAL INCOME. THAT A DEMAND OF RS.15,30,000/- HAS BEEN CREDITED U /S 143(3) OF I.T. ACT, 1961 FOR THE ABOVE SAID ASSESSMENT YEAR. THAT THE ASSESSEE HAS FILED AN APPEAL BEFORE THE HIGHER AUTH ORITIES AGAINST THE SAID ASSESSMENT ORDER. HOWEVER, THE ASSESSEE DI RECTED TO PAY THE ABOVE SAID DEMAND WITHIN 30-DAYS. IN RESPECT OF WHICH THE ASSESSEE PAID RS. 4,00,000/- (I.E., MORE THAN 25% O F THE TOTAL DEMAND) ON 30-01-2015 IN CORPORATION BANK LTD. CHAL LAN. AS NO TAX IS LIABLE TO DEDUCT ON ACCOUNT OF LOAN AND INTE REST PAYMENT TO THE BANK. THEREFORE, THE ASSESSEE HAS NOT DEDUCTED TAX. IN MY VIEW, THIS IS EXCEPTION AS PER SUB-SECTION III OF SECTION 3 OF 194A OF I.T. ACT. THEREFORE, THE ASSESSEE IS NOT LIABLE TO TREAT AS DEFAULTER AS PER PROVISO 40(A) OF I.T. ACT AND A.O. WAS IN ER ROR IN DISALLOWING THE INTEREST PAYMENT TO THE BANK WITHOUT DEDUCTION TAX. 8.2 I ALSO FIND THAT LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESEE AS WELL AS THE FINDINGS OF THE LD. A O, RIGHTLY INCLINED TO AGREE WITH THE CONTENTION OF THE ASSESSEE THAT N O TAX IS LIABLE TO DEDUCT ON ACCOUNT OF LOAN AND INTEREST PAYMENT TO T HE BANK. THEREFORE, THE ASSESSEE HAS NOT DEDUCTED TAX. THIS IS EXCEPTION AS PER SUB-SECTION III OF SECTION 3 OF 194A OF I.T. AC T. THEREFORE, THE ASSESSEE IS NOT LIABLE TO TREAT AS DEFAULTER AS PER PROVISO 40(A) OF I.T. ACT AND A.O. WAS NOT JUSTIFIED IN DISALLOWING THE INTEREST PAYMENT TO THE BANK WITHOUT DEDUCTION TAX. ACCORDIN GLY, THE ADDITION MADE ON ACCOUNT OF NON DEDUCTION OF TDS ON ACCOUNT OF ITA NO.6525/DEL/2015 7 INTEREST PAID ON LOAN FROM BANKING CONCERN OF RS. 3 5,06,062/- WAS RIGHTLY DELETED BY THE LD. CIT(A), WHICH DOES NOT N EED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE SAME A ND ACCORDINGLY, THE GROUND RAISED BY THE REVENUE STANDS DISMISSED . 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30/08/2016. SD/- (H.S. SIDHU) JUDICIAL MEMBER DATED: 30/8/2016 *SR BHATNAGAR* COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR