THOMAS JOHN MUTHOOT,THIRUVANANTHAPURAM V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1 , THIRUVALLA, TRIVANDRUM

ITA 896/COCH/2023

AI Insights

The case involves Thomas John Muthoot, the appellant, who appealed against the order of the National Faceless Appeal Centre, Delhi, which confirmed the disallowance of Rs. 31,77,000 by the Assessing Officer. This disallowance was due to the non-deduction of TDS on interest expenses incurred by the assessee. The interest was paid to a firm where the assessee was a partner, and the firm had already taxed the interest income. The appellant argued that the TDS deduction should not apply as the income was already taxed at the recipient's end. However, the respondent countered that the relevant legal provision for non-deduction of TDS was not applicable retrospectively, as it came into effect after the relevant assessment year. The Tribunal agreed with the respondent and dismissed the appeal.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 31383 (ITAT-COCHIN)
• Duration Of Justice: 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 28-12-2023
• Other Referred Cases: Thomas George Muthoot v. CIT [2015] 63 taxmann.com 99 (Ker.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJIT KUMAR DAS
• Assessee Lawyers: SRINIVASAN
• Keywords: TDS
• Section: 194A; 40(a)(ia)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN Before Shri Waseem Ahmed, Accountant Member and Shri Soundararajan K., Judicial Member ITA No. 896/Coch/2023 (Assessment Year: 2008-09) Thomas John Muthoot Muthoot Centre, Punnen Road Thiruvananthapuram 695001 [PAN: ABNPT4694B] vs. DCIT, Circle - 1 Thiruvalla (Appellant) (Respondent) Appellant by: Shri Srinivasan, CA Respondent by: Shri Sanjit Kumar Das Date of Hearing: 01.10.2024 Date of Pronouncement: 21.10.2024 O R D E R Per Bench This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre, Delhi [CIT(A)] dated 20.11.2023 for Assessment Year (AY) 2008-09. 2. The only issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowance made by the AO on account of non-deduction of TDS under the provisions of section 194A r.w.s. 40(a)(ia) of the Income Tax Act, 1961 the Act amounting to Rs.31,77,000/- only. 3. The Assessing Officer (AO) during the course of assessment proceedings found that the assessee has incurred interest expenses amounting to Rs. 31,77,000/- without deducting TDS under the provisions of section 194A r.w.s. 40(a)(ia) of the Act. Therefore. the AO disallowed the same and 2 ITA No. 896/Coch/2023 Thomas John Muthoot added to the total income of the assessee. The action of the AO was subsequently confirmed by the learned CIT(A). 4. Being aggrieved by the order of the learned CIT(A), the assessee is in appeal before us. 5. The learned A.R. before us submitted that interest was paid by the assessee to a firm in which he is a partner, and the firm has already suffered tax on the interest received from the partner. Therefore, the claim of the assessee cannot be denied on account of non-deduction of TDS under the provisions of section 194A r.w.s. 40(a)(ia) of the Act. 6. On the other hand, the learned CIT-DR submitted that the assessee cannot take the benefit of the second proviso to section 40(a)(ia) of the Act which was made effective from 01.04.2013 prospectively whereas the year in dispute is much prior to such amendment. Therefore, the assessee cannot be absolved from the deduction of TDS in the year under consideration on the ground that the recipient of interest income has accounted such interest as income in its books of account.The learned Sr. DR vehemently supported the orders of the authorities below. 7. We have heard the rival contentions of both the parties and perused the materials available on record. The Finance Act, 2012 has brought an amendment in the second proviso to section 40(a)(ia) of the Act stating that there cannot be any disallowance of the expenses on account of non- deduction of TDS if the recipient of such amount has offered the same as income in its return of income. Admittedly such amendment was effective from 01.04.2013 whereas the year before us relates to AY 2008-09. The 3 ITA No. 896/Coch/2023 Thomas John Muthoot Hon'ble Kerala High Court in the case of Thomas George Muthoot v. CIT reported in [2015] 63 taxmann.com 99 (Ker.) held as under: - “15. A statutory provision, unless otherwise expressly stated to be retrospective or by intendment shown to be retrospective, is always prospective in operation, Finance Act, 2012 shows that the second proviso to Section 40 (a)(ia) has been introduced with effect from 01.04.2013. Reading of the second proviso does not show that it was meant or intended to be curative or remedial in nature, and even the appellants did not have such a case. Instead, by this proviso, an additional benefit was conferred on the assessees. Such a provision can only beprospective as held by this Court in Prudential Logistics and Transports (supra). Therefore, this contention raised also cannot be accepted.” 8. In view of the above we hold that the assessee cannot be given the benefit of the amendment as claimed by the assessee. Accordingly, we do not find any infirmity in the order of the learned CIT(A). Hence the ground of appeal of the assessee is hereby dismissed. 9. In the result, appeal filed by the assessee is dismissed. Order pronounced on 21st October, 2024 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (Soundararajan K.) JudicialMember (Waseem Ahmed) AccountantMember Cochin, Dated: 21st October, 2024 n.p. Copy to: 1. The Appellant 2. The Respondent 3. The Pr. CIT concerned 4. The Sr. DR, ITAT, Cochin 5. Guard File Assistant Registrar ITAT, Cochin "