M/S SHREE KRISHNA ABODES PVT. LTD., JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR

ITA 905/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6010 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 20-07-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANURADHA JCIT A
• Assessee Lawyers: N S VYAS
• Keywords: Retrospective amendment; Non-deduction of tax
• Section: 40(a)(ia)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 905/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2014-15 M/S SHREE KRISHNA ABODES PVT. LTD., F-6, TIRATHRAJ APARTMENT, JECOB ROAD, CIVIL LINES, JAIPUR. CUKE VS. THE DCIT, CIRCLE-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAJCS 3346 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI N.S. VYAS (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ANURADHA (JCIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 22/01/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 23/01/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), JAIPUR DATED 28.05.2018 WHEREIN THE SOLE GR OUND OF APPEAL RELATES TO ADDITION U/S 40(A)(IA) OF THE ACT ON ACC OUNT OF NON-DEDUCTION OF TAX ON PAYMENTS MADE BY THE ASSESSEE. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASS ESSEE HAS PAID INTEREST TO M/S VOLKSWAGEN FINANCE PVT. LTD. & M/S KOTAK MAHINDRA ITA NO. 905/JP/2018 M/S SHREE KRISHNA ABODES PVT. LTD. VS. DCIT 2 LTD. WITHOUT DEDUCTION OF TAX AT SOURCE. THE AO INV OKED THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT AND HAS DISALLOWED A SUM OF RS. 3,23,059/- AND THE SAME WAS BROUGHT TO TAX IN THE H ANDS OF THE ASSESSEE COMPANY. 3. ON APPEAL, IT WAS CONTENDED BEFORE THE LD. CIT(A ) THAT THESE TWO ENTITIES ARE NON-BANKING FINANCIAL COMPANIES AND TH EY HAVE FILED THEIR RESPECTIVE RETURN OF INCOME INCLUDING THE AMOUNT PA ID BY THE ASSESSEE AND HAVE PAID THE TAX DUE ON THEIR INCOME. IN VIEW OF THE SAME, IT WAS SUBMITTED THAT THE ASSESSEE HAS DEDUCTED AND PAID T HE TAX ON SUCH SUM ON THE DATE OF FURNISHING THE RETURN BY THE RES PECTIVE PAYEE ENTITIES AND NO DISALLOWANCE SHOULD BE MADE IN THE HANDS OF THE ASSESSEE. THE LD. CIT(A) REFERRING TO THE PROVISO TO SECTION 201 INSERTED W.E.F. 01.07.2012 HAS HELD THAT SINCE THE ASSESSEE HAS NOT SUBMITTED ANY CERTIFICATE FROM A CHARTERED ACCOUN TANT IN FORM NO. 26A, THE AO WAS JUSTIFIED IN INVOKING THE PROVISION S OF SECTION 40(A)(IA) OF THE ACT AND DISALLOWANCE SO MADE BY THE AO WAS C ONFIRMED. 4. DURING THE COURSE OF HEARING, THE LD. AR REITERA TED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. IT W AS SUBMITTED THAT THE ASSESSEE WAS FACING LOT OF DIFFICULTIES IN OBTA INING THE CERTIFICATES FROM THESE COMPANIES AND THESE NBFC COMPANIES HAVE BEEN FILING THEIR RETURN OF INCOME AND THE SAME CAN BE VERIFIED BY TH E DEPARTMENT. WITHOUT PREJUDICE, IT WAS SUBMITTED THAT WITH LOT O F DIFFICULTIES, THE ASSESSEE HAS OBTAINED A CERTIFICATE FROM M/S VOLKSW AGEN FINANCE PVT. LTD. WHEREIN IT HAS CONFIRMED THE RECEIPT OF INTERE ST AMOUNTING TO RS. 2,25,816/- FROM THE ASSESSEE COMPANY AND WHICH HAS BEEN DULLY ITA NO. 905/JP/2018 M/S SHREE KRISHNA ABODES PVT. LTD. VS. DCIT 3 DECLARED IN ITS RETURN OF INCOME AND TAXES PAID THE REON AND THE DISALLOWANCE SO MADE BY THE ASSESSING OFFICER TO TH AT EXTENT MAY BE DELETED. FURTHER, RELIANCE WAS PLACED ON THE COORDI NATE BENCH DECISION IN CASE OF SHRI AZMATH ULLA VS. ACIT IN ITA NO. 144 /BANG/2017 DATED 07.06.2017 WHEREIN IT WAS HELD AS UNDER:- 6. HAVING HELD THAT THE SECOND PROVISO TO SECTION 40(A)(IA) SHALL HAVE RETROSPECTIVE EFFECT THE QUESTION ARISES THAT IF THE RECIPIENTS OF INTEREST IN QUESTION HAVE ALREADY CONSIDERED THE SAME FOR COMPUTING THEIR INCOME OFFERED TO TAX THEN THE DISA LLOWANCE U/S. 40(A)(IA) IS NOT ATTRACTED. IN THIS CASE THOUGH THE ASSESSEE DID NOT FILE THE RELEVANT MATERIAL BEFORE THE AO IN THI S REGARD HOWEVER, IT IS A FACT WHICH EXISTED RIGHT FROM THE BEGINNING AND THE RELEVANT DETAILS ARE AVAILABLE WITH THE REVENUE REGARDING THE INCOME OFFERED BY THESE NBFCS. THEREFORE, IN VIEW O F THE FACTS AND CIRCUMSTANCES OF THE CASE IF THE CERTIFICATES F ILED IN SUPPORT OF THE CLAIM THAT THE NBFCS HAVE INCLUDED THIS AMOUNT OF INTEREST IN COMPUTATION OF THEIR INCOME OFFERED TO TAX ARE FOUN D TO BE CORRECT THEN THE COMPLIANCE U/S. 40(A)(IA) IS DEEME D TO HAVE BEEN MADE AND NO DISALLOWANCE IS CALLED FOR. THEREF ORE THIS ISSUE IS SET ASIDE TO THE RECORD OF THE AO FOR VERIFICATI ON OF THE FACT THAT THE RECIPIENT NBFCS HAVE ALREADY TAKEN INTO ACCOUNT THE AMOUNT OF INTEREST RECEIVED BY THEM FOR COMPUTING THE INCO ME IN THEIR RETURN OF INCOME. IN CASE THE AO IS SATISFIED THAT THE NBFCS HAVE CONSIDERED THIS AMOUNT FOR COMPUTATION OF INCOME IN THEIR RETURN OF INCOME THEN NO DISALLOWANCE IS CALLED FOR U/S. 4 0(A)(IA). ITA NO. 905/JP/2018 M/S SHREE KRISHNA ABODES PVT. LTD. VS. DCIT 4 5. THE LD. DR IS HEARD WHO HAS SUBMITTED THAT SINC E THE ASSESSEE HAS NOT SUBMITTED ANY CERTIFICATE FROM THE RESPECTI VE PAYEES BEFORE THE LOWER AUTHORITIES, THERE IS NO BASIS FOR DELETING T HE DISALLOWANCE IN THE HANDS OF THE ASSESSEE COMPANY. IT WAS ACCORDINGLY S UBMITTED THAT THE ORDER PASSED BY THE LD CIT(A) BE CONFIRMED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE SECOND PROVISO TO SECTION 40(A)(IA) PROVIDES THAT IF THE RECIPIENTS OF INTEREST IN QUESTION HAVE ALREADY CONSIDERED THE SAME FOR COMPUTING THEIR INCOME OFFERED TO TAX THEN THE DISALLOWANCE U/S. 40(A)(IA) IS NOT ATTRACTED. IN THE INSTANT CAS E, THOUGH THE ASSESSEE DID NOT FILE ANY CERTIFICATE BEFORE THE ASSESSING O FFICER, HOWEVER, THE FACT OF THE MATTER IS THAT A CERTIFICATE HAS NOW BE EN FILED IN RESPECT OF ONE OF THE ENTITIES NAMELY M/S VOLKSWAGEN FINANCE P VT. LTD. WHEREIN IT HAS STATED THAT IT HAS INCLUDED THE AMOUNT OF INTER EST OF RS. 2,25,816/- IN ITS RETURN OF INCOME FILED FOR A.Y. 2014-15 AND HAS PAID THE TAXES DUE THEREON. THEREFORE, WHERE THE CERTIFICATE SO FILED IN SUPPORT OF THE CLAIM THAT THE SAID NBFC HAS INCLUDED THIS AMOUNT OF INTE REST IN COMPUTATION OF ITS INCOME OFFERED TO TAX IS FOUND TO BE CORRECT , THEN THE COMPLIANCE U/S. 40(A)(IA) IS DEEMED TO HAVE BEEN MADE AND NO D ISALLOWANCE IS CALLED FOR. THEREFORE THIS ISSUE IS SET ASIDE TO TH E RECORD OF THE AO FOR VERIFICATION OF THE FACT THAT THE RECIPIENT NBFC HA S ALREADY TAKEN INTO ACCOUNT THE AMOUNT OF INTEREST RECEIVED BY IT FOR C OMPUTING THE INCOME IN ITS RETURN OF INCOME. IN CASE THE AO IS SATISFIE D THAT THE NBFC HAS CONSIDERED THIS AMOUNT FOR COMPUTATION OF INCOME IN THEIR RETURN OF INCOME, THEN NO DISALLOWANCE IS CALLED FOR U/S. 40( A)(IA). IN RESPECT OF OTHER NBFC, NEITHER ANY CERTIFICATE NOR ANY OTHER D ETAILS HAVE BEEN FILED ITA NO. 905/JP/2018 M/S SHREE KRISHNA ABODES PVT. LTD. VS. DCIT 5 BY THE ASSESSEE THEREFORE, IN ABSENCE OF THE SAME, WE ARE UNABLE TO ACCEDE TO THE CONTENTION OF THE LD AR THAT THE AO C AN VERY WELL VERIFY THE FACT THAT SAID NBFC HAS INCLUDED THE AMOUNT SO PAID BY THE ASSESSEE IN ITS RETURN OF INCOME. THE ADDITION SO M ADE U/S 40(A)(IA) IN RESPECT OF THE OTHER NBFC IS HEREBY CONFIRMED. IN THE RESULT, THE GROUND IS PARTLY ALLOWED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/01/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23/01/2019. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S SHREE KRISHNA ABODES PVT. LTD., JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CIRCLE-2, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 905/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR