PADAM CHAND JAIN, Jaipur V. JCIT(OSD), Jaipur

ITA 913/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5600 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

ITA NO. 913/JP/14 SH. PADAMCHAND JAIN VS. JCIT(OSD),CIRCLE-4, JAIPUR 1 IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 913/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 LQUOKBZ DH RKJH[K DATE OF HEARING : 17 . 12.2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 08/01/2016 VKNS'K@ ORDER FU/KKZFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJENDRA SINGH(JCIT) PER SHRI VIKRAM SINGH YADAV, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-II, JAIPUR DATED 28.11.2014 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL:- SHRI PADAMCHAND JAIN, B - 301,ROYAL ENCLAVE, SECTOR- 1,VIDHYADHAR NAGAR, JAIPUR CUKE V/S. JCIT (OSD), CIRCLE - 4, JAIPUR. LFKK;H YS[KK LA-@THVKJBZVKJ LA-@ PAN NO. ABXPL 6675 Q ITA NO. 913/JP/14 SH. PADAMCHAND JAIN VS. JCIT(OSD),CIRCLE-4, JAIPUR 2 (1) THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF INTERES T EXPENSES OF RS. 7,38,970/- U/S 40-(A)(IA) OF INCOME TAX ACT, 196 1 ON THE GROUND THAT ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON THE INTEREST PAID TO FOLLOWING FINANCIAL INSTITUTIONS: NAME OF FINANCIAL INSTITUTION AMOUNT PAID AU FINANCIERS 19,877/ - RELIANCE CAPITAL LTD. 3,05,44/ - INDIA BULLS 3,67,106/ - , GE COUNTERY WIDE 46,244/ - TOTAL 7,38,970/ - 2. THE BRIEF FACTS RELEVANT FOR THE ISSUE UNDER CONSID ERATION IS THAT THE ASSESSEE WHO IS ENGAGED IN THE BUSINESS OF DIGGING & INSTALLATION OF TUBE WELL FOR PHED DEPARTMENT HAS MADE PAYMENT OF INTERE ST OF RS. 7,38,970/- TO FOUR NBFCS NAMELY AU FINANCIERS, REL IANCE CAPITAL LTD, INDIA BULLS AND GE COUNTRY WIDE. THE AO OBSERVED T HAT THE ASSESSEE HAS NOT DEDUCTED TAX AT SOURCE ON PAYMENT OF SUCH I NTEREST TO THE NBFCS, THEREFORE HE MADE DISALLOWANCE OF RS. 7,38,9 70/- U/S 40(A)(IA) OF THE ACT. THE ASSESSEE CARRIED THE MATTER IN APP EAL BEFORE THE LD. CIT(A) WHO HAS SUSTAINED THE DISALLOWANCE FOLLOWING CBDT CIRCULAR NO. 10/DV/2013 DATED 16.12.2013. ITA NO. 913/JP/14 SH. PADAMCHAND JAIN VS. JCIT(OSD),CIRCLE-4, JAIPUR 3 2.1 DURING THE COURSE OF HEARING, THE LD. AR SUBMI TTED THAT THE ASSESSEE HAS PAID THE WHOLE OF THE INTEREST DURING THE RELEVANT FINANCIAL YEAR AND THERE WAS NO AMOUNT WHICH WAS OUTSTANDING AT THE YEAR END. THE LD. AR FURTHER SUBMITTED THAT GIVEN THAT THERE IS NO AMOUNT OUTSTANDING AT THE YEAR END, PROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE NOT APPLICABLE. IN SUPPORT, THE LD. AR RELIED UPON THE DECISION OF SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & T RANSPORT VS. ACIT 16 ITR (TRIB.)1 AND ALSO MENTIONED THAT THE JAIPUR BENCH OF THE ITAT HAS CONSISTENTLY TAKEN THE VIEW IN THE PAST THAT WHERE THE AMOUNT IS PAID DURING THE YEAR, THE PROVISIONS OF SECTION 40( A)(IA) ARE NOT APPLICABLE. REFERENCE WAS DRAWN TO THE DECISION OF GIRDHARILAL BARGOTI ITA NO.757/JP/12 A.Y.2009-10 ORDER DATED 10.04.2015 AND AMIT KAUSHIK VS. ITO, ITA NO.45/JP/2014 A.Y. 2009-10 ORD ER DATED 06.11.2015. IT IS FURTHER SUBMITTED THAT ALL FOUR NBFCS TO WHICH THE ASSESSEE HAS PAID INTEREST ARE LARGE COMPANIES AND ASSESSED TO TAX AND THEREFORE PRESUMPTION CAN BE DRAWN THAT THESE COMPA NIES HAVE INCLUDED INTEREST RECEIVED IN THEIR RESPECTIVE INCOME, TA X RETURN AND PAID TAX THEREON. IN LIGHT OF SETTLED LAW THAT SECOND PROVI SO TO SECTION 40(A)(IA) ITA NO. 913/JP/14 SH. PADAMCHAND JAIN VS. JCIT(OSD),CIRCLE-4, JAIPUR 4 INSERTED W.E.F. 01.04.2013 HAS RETROSPECTIVE EFFEC T AS HELD IN DELHI HIGH COURTS DECISION IN CASE OF CIT V. ANSAL LAND MARK TOWNSHIP PT. LTD. (2015)124 DTR 185, THE BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) SHOULD BE ALLOWED TO THE ASSESSEE. 2.2 THE LD. DR IS HEARD WHO HAS RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 2.3 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE CASE OF AMIT KAUSHIK VS. ITO (SUPRA), WE HAVE ALREADY TAKEN A VIEW THAT PROVISIONS OF SECTIO N 40(A)(IA) ARE NOT APPLICABLE WHERE THE AMOUNT HAS BEEN DULY PAID DUR ING THE YEAR AND NO AMOUNT IS OUTSTANDING AT THE YEAR END. THE RELEVAN T OBSERVATIONS ARE REPRODUCED AS UNDER:- WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. ON SP ECIFIC QUERY FROM THE BENCH, IT WAS INFORMED THAT THERE IS NO DECISION OF THE HONBLE RAJASTHAN HIGH COURT ON THE SUBJECT MATTER. FURTHE R, IT IS NOTED THAT THE DIFFERENT HONBLE HIGH COURTS HAVE TAKEN DIFFERENT VIEW IN THE MATTER AND THE COORDINATE BENCH IN THE CASE OF ACIT VS. G IRDHRILAL BARGOTI (SUPRA) HAS FOLLOWED THE VIEW FAVOURABLE TO THE A SSESSEE. THEREFORE BY RESPECTFULLY FOLLOWING COORDINATE BENCH DECISION I N THE CASE OF ACIT VS. GIRDHARILAL BARGOTI (SUPRA) WE ARE OF THE VIEW THAT THE DISALLOWANCE OF COMMISSION AND RENT U/S 40(A)(IA) OF THE ACT DOE S NOT STAND AS THE ITA NO. 913/JP/14 SH. PADAMCHAND JAIN VS. JCIT(OSD),CIRCLE-4, JAIPUR 5 SAME HAS BEEN DULY PAID DURING THE YEAR AND IT IS NOT OUTSTANDING AT THE YEAR END. THEREFORE, THIS GROUND OF ASSESSEES APP EAL IS ALLOWED. FOLLOWING OUR EARLIER DECISION IN CASE OF AMIT KAUS HIK VS. ITO THE DISALLOWANCE OF INTEREST EXPENSES OF RS. 7,38,.970 /- U/S 40(A)(IA) PAID TO THE NBFC COMPANIES ARE DELETED. HENCE THE GROUND TA KEN BY THE ASSESSEE IS ALLOWED. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/ 01/2016. SD/- SD/ VKJ-IH-RKSYKUH FOE FLAG ;KNO (R.P.TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 08/01 /2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT SHRI PADAMCHAND JAIN, JAIPUR 2. THE RESPONDENT THE JCIT(OSD), CIRCLE-4, JAIPU R 3. THE CIT(A)-II, JAIPUR. 4. THE CIT-II. JAIPUR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO.913/JP/14) VKNS'KKUQLKJ@ BY ORDER, ;D IATHDKJ@ ASSISTANT. REGISTRAR ITA NO. 913/JP/14 SH. PADAMCHAND JAIN VS. JCIT(OSD),CIRCLE-4, JAIPUR 6