Jagdish Kevalram Prithiyani, Jalna V. ACIT, Circle 1, Aurangabad

ITA 739/PUN/2013

• Counselvise Citation: 73924514 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 26-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE: SHRI G. S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO. 739 /PN/20 1 3 ASSESSMENT YEAR : 200 9 - 10 JAGDISH KEVALRAM PRITHIYANI, KADRAB AD, JALNA VS. ACIT, CIRCLE 1, AURANGABAD (APPELLANT) (RESPONDENT) PAN NO. AAVPP3362P APPELLANT BY: SHRI P.D. KUDVA RESPONDENT BY: SHRI S.P. WALIMBE DATE OF HEARING : 26 - 06 - 2014 DATE OF PRONOUNCEMENT : 12 - 0 9 - 2014 ORDER PER R.S . PADVEK AR , JM : - THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT, AURANGABAD PASSED U/S. 263 OF THE I.T. ACT DATED 04 - 02 - 2013 FOR THE A.Y. 2009 - 10. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS IN THE APPEAL: 1. UNDER THE FACTS & CIRCUMSTANCES OF THE APPELLANT, THE LEARNED COMMISSIONER OF INCOME TAX, AURANGABAD ERRED IN PASSING THE ORDER U/S. 263 OF THE INCOME TAX ACT, 1961. 2. THE LEARNED COMMISSIONER OF INCOME TAX, AURANGABAD FURTHER ERRED IN DISALLOWING THE INTEREST PAYMENT SMT. R EKHA HARESH PRITHIYANI OF RS.169080/ - AND TO SMT. VANDANA JAGDISH PRITHIYANI OF RS.243990/ - TOTALING RS.413070/ - U/S. 40(IA) R.W.S. 194A OF THE INCOME TAX ACT, 1961. 2. THE FACTS WHICH ARE REVEALED FROM THE RECORD AS UNDER. THE ASSESSEE IS A N INDIVIDUAL AND HE IS IN THE BUSINESS OF GOLD AND SILVER ORNAMENTS AND GOLD AND SILVER BULLION TRADING ETC. THE ASSESSEE FILED THE RETURN OF INCOME FOR THE A.Y. 200 9 - 10 WHICH WAS SELECTED FOR 2 ITA NO. 739/PN/2013, JAGDISH KEVALRAM PRITHIYANI, JALNA SCRUTINY AND ASSESSMENT OF THE ASSESSEE HAS BEEN COMPLETED U/S. 143(3) OF THE INCOME - TAX ACT VIDE ORDER DATED 22 - 03 - 2011 . DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS PAID INTEREST ON UNSECURED LOAN TO RELATIVES @ 18%. HE, THEREFORE, MADE THE DISALLOWANCE U/S. 40(A)(2 ) OF THE ACT RESTRICTING THE SAME @ 15%. SUBSEQUENTLY, THE LD. COMMISSIONER EXERCISING HIS POWERS U/S. 263 OF THE ACT SET ASIDE THE ASSESSMENT ORDER ON THE ISSUE OF NON - DEDUCTION OF THE TAX AT SOURCE U/S. 194A ON THE INTEREST PAYMENT AND APPLICATION OF TH E PROVISIONS OF SEC. 40 (A)(IA) OF THE ACT. THE ASSESSEE HAS PAID THE INTEREST TO THE FOLLOWING PERSONS ON THEIR LOANS: SL. NO. NAME OF THE PERSONS AMOUNT 1 SMT. REKHA HARISH PRITHIYANI RS.1,69,080/ - 2 SHRI HARISH KEWALRAM PRITHYANI RS.58,392/ - 3 SMT. V ANDANA JAGDISH PRITHIYANI RS.2,43,990/ - 3. THE LD. COMMISSIONER WAS OF THE OPINION THAT AS THE ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE IN RESPECT OF THE TWO PARTIES I.E. SMT. REKHA HARISH PRITHIYANI AND SMT. VANDANA JAGDISH PRITHIYANI U/S. 194A OF TH E ACT, APPLYING THE PROVISIONS OF SEC. 40(A)(IA) OF THE ACT THE ENTIRE DISALLOWANCE TO THE EXTENT OF RS.4,13,070/ - SHOULD BE MADE ACCORDINGLY G AVE THE DIRECTIONS TO THE ASSESSING OFFICER. 4. THE LD. COUNSEL SUBMITS THAT WHILE COMPLETING THE ASSESSMENT T HE ASSESSING OFFICER HAS DISALLOWED THE INTEREST U/S. 40A(2)(A) OF THE ACT AS UNDER: I. REKHA PRITHYANI RS.28,180/ - II. VANDANA PRITHYANI RS.40,665/ - TOTAL RS.68,845/ - HE SUBMITS THAT THE ASSESSMENT ORDER IS NOT ERRONEOUS AS THERE WAS NO LEGAL LIABIL ITY ON THE ASSESSEE TO DEDUCT THE TAX AT SOURCE FROM INTEREST 3 ITA NO. 739/PN/2013, JAGDISH KEVALRAM PRITHIYANI, JALNA PAID TO ABOVE THREE PARTIES . HE FURTHER SUBMITS THAT IF THE ORDER OF THE LD. COMMISSIONER IS TO BE UPHELD THEN TO THE EXTENT OF REKHA PRITHIYANI THERE WAS NO LIABILITY ON THE ASSESSEE TO DEDUCT THE TAX AT SOURCE AS HER INCOME IS BELOW RS.1,80,000/ - AND IF THE DISALLOWANCE IN THE CASE OF VANDANA PRITHIYANI IS TO BE CONFIRMED THEN TO THE EXTENT OF RS.40,665/ - WHICH WAS DISALLOWED BY THE ASSESSING OFFICER AN AMOUNT IS TO BE REDUCED . NO TOTAL DISAL LOWANCE SHOULD BE MADE AS IT WILL AMOUNT TO DOUBLE DISALLOWANCE. WE HAVE ALSO HEARD THE LD. DR. 5. IN THIS CASE AFTER HEARING THE PARTIES W E FIND THAT SO FAR AS THE VANDANA PRITHIYANI IS CONCERNED , SHE HAS BEEN PAID THE INTEREST OF RS.2,43,990/ - . T HE ASSESSING OFFICER ALLOWED THE INTEREST TO THE EXTENT OF RS.2,03,325/ - AND AN AMOUNT OF RS.40,665/ - WAS DISALLOWED BY INVOKING THE PROVISIONS OF SEC. 40A(2(A) OF THE ACT. AS PER THE FINANCE ACT, 2008 SO FAR AS THE INDIVIDUAL FEMALE ASSESSEE IS CONCERNED TH E NON - TAXABLE LIMIT WAS RS.1,80,000/ - HENCE, IN THE CASE OF VANDANA PRITHIYANI THE ASSESSEE WAS REQUIRED TO DEDUCT THE TAX AT SOURCE . THE LD. COMMISSIONER HAS RIGHTLY HELD THAT THE SAID PAYMENT ATTRACTS THE PROVISIONS OF SEC. 40A(1)(A) OF THE ACT AND NON - CONSIDERATION OF THE STATUTORY PROVISIONS WHILE COMPLETING THE ASSESSMENT MAKE THE ORDER ERRONEOUS. SO FAR AS THE PLEA O F THE ASSESSEE THAT AS THE ASSESSING OFFICER HAS ALREADY DISALLOWED RS.40,665/ - AND THE DISALLOWANCE SHOULD BE RESTRICTED TO RS.2,03,32 5/ - WE, ACCORDINGLY, MODIFY THE ORDER AND DIRECT THE ASSESSING OFFICER TO MAKE THE ADDITION OF RS.2,03,325/ - INSTEAD OF RS.2,43,990/ - . 6. IN RESPECT OF ANOTHER PART Y REKHA PRITHIYANI , THE ASSESSING OFFICER HAS ONLY ALLOWED THE INTEREST TO THE EXTENT OF RS.1,40,900/ - . ADMITTEDLY, EVEN IF CONSIDER THE PAYMENT OF RS.1,40,900/ - THE SAID PAYMENT IS MORE THAN RS.5,000/ - AS PER THE PROVISIONS OF SEC. 194A(3)(A) OF THE ACT. IN THE CASE OF REKHA PRITHIYANI, WE FIND THAT THE ASSESSEE HAS SUBMITTED 4 ITA NO. 739/PN/2013, JAGDISH KEVALRAM PRITHIYANI, JALNA FORM NO. 15G H ENCE, THERE IS NO REQUIREMENT TO DEDUCT TAX AT SOURCE. ACCORDINGLY, PROVISIONS OF SEC. 40(A)(IA) CANNOT BE APPLIED TO THE PAYMENT MADE TO REKSHA PRITHIYANI AND NO ADDITION SHOULD BE MADE. WITH THIS MODIFICATION WE UPHOLD THE ORDER AND GROUNDS TAKEN BY TH E ASSESSEE ARE PARTLY ALLOWED. 7 . IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 12 - 0 9 - 2014 SD/ - SD/ - ( G.S. PANNU ) ( R.S. PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER RK /PS PUNE , DATED : 12 TH SEPTEMBER, 2014 COPY TO 1 ASSESSEE 2 DEPARTMENT 3 4 5 THE CIT, AURANGABAD THE DR, ITAT, B BENCH, PUNE. GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE