DCIT, C-1(1), Chandigarh v. M/s KLG Finance Pvt. Ltd., Chandigarh

ITA 1032/CHANDI/2017 | 2012-2013
Pronouncement Date: 27-11-2017 | Result: Dismissed

Appeal Details

RSA Number 103221514 RSA 2017
Assessee PAN AAACK5706C
Bench Chandigarh
Appeal Number ITA 1032/CHANDI/2017
Duration Of Justice 5 month(s) 5 day(s)
Appellant DCIT, C-1(1), Chandigarh
Respondent M/s KLG Finance Pvt. Ltd., Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2017
Appeal Filed By Department
Tags No record found
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 27-11-2017
Last Hearing Date 09-11-2017
First Hearing Date 09-11-2017
Assessment Year 2012-2013
Appeal Filed On 21-06-2017
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI SANJAY GARG JUDICIAL MEMBER & DR. B.R.R. KUMAR ACCOUNTANT MEMBER ITA NO. 1032/CHD/2017 ASSESSMENT YEAR: 2012-13 THE DCIT VS. M/S KLG FINANCE PVT. LTD. CIRCLE-1(1) CHANDIGARH PANCHKULA PAN NO. AAACK5706C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. CHANDERKANTA RESPONDENT BY : SH. PARISKHIT AGGARWAL DATE OF HEARING : 27.11.2017 DATE OF PRONOUNCEMENT : 27.11.2017 ORDER PER SANJAY GARG JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS CIT(A)]-1 CHANDIGARH DATED 28.03.2017 RELATING TO ASSESSMENT YEAR 2012-13. 2. IN THIS APPEAL THE REVENUE IS AGGRIEVED BY THE ACTION OF THE CIT(A) IN DELETING THE ADDITION ON ACCOUNT OF PAYMENT MADE WITHOUT DEDUCTING TDS U/S 194A BY RELYING ON THE PROVISIONS OF SECTI ON 201 OF THE INCOME- TAX ACT 1961 (IN SHORT 'THE ACT'). 2 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE REL EVANT ASSESSMENT YEAR THE ASSESSEE CLAIMED EXPENSES ON ACCOUNT OF INTERES T AMOUNTING TO RS. 31 69 507/- IN PROFIT & LOSS ACCOUNT. OUT OF THES E RS. 12 90 662/- WAS THE INTEREST PAID TO M/S BAJAJ AUTO FINANCE LTD AND RS. 18 78 845/- TO M/S GE MONEY FINANCIAL SERVICES LTD WHICH WERE NON-BANK ING FINANCE COMPANIES (NFBC). AS THE ASSESSEE FAILED TO DEDUCT TDS ON THE INTEREST PAID TO THESE NBFCS AS PER PROVISIONS OF SECTION 19 4 A OF THE ACT THE ASSESSING OFFICER MADE DISALLOWANCE OF INTEREST U/S 40(A)(IA) OF THE ACT. 4. BEFORE CIT(A) IT WAS SUBMITTED BY THE ASSESSEE THAT NBFCS HAVE TAKEN INTEREST IN THEIR INCOME WHILE CALCULATING TH E TAX LIABILITY AND THUS THERE WAS NO LOSS OF REVENUE TO THE DEPARTMENT WHI CH HAD BEEN PAID BEFORE 31.3.2012. IN SUPPORT ASSESSEE HAD FILED C ERTIFICATES FROM THE SAID TWO CONCERNS CONFIRMING THAT THEY HAD RECEIVED INTE REST FROM THE ASSESSEE AND THE SAID AMOUNT WAS INCLUDED IN THE INCOME FOR THE RELEVANT PERIOD. IT WAS SUBMITTED THAT THE CASE OF THE ASSESSEE IS COVE RED BY THE DECISION OF HON'BLE APEX COURT IN THE CASE OF HINDUSTAN COCA CO LA BEVERAGES (P) LTD. IT WAS FURTHER SUBMITTED THAT THE SECOND PROVISION TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETRO SPECTIVE EFFECT FROM 1.4.2005. THE LD. CIT(A) DELETED THE ADDITION AFTER CONSIDERI NG THE SUBMISSIONS AND MATERIAL AVAILABLE ON RECORD RELEV ANT PROVISIONS OF THE ACT AND CERTIFICATES FILED BY THE SAID CONCERNS NAM ELY M/S BAJAJ AUTO FINANCE LTD. AND GE MONEY FINANCE SERVICE LTD WHERE IN IT WAS CERTIFIED THAT THE COMPANIES WERE IN RECEIPT OF INTEREST INCO ME WHICH HAD DULY ACCOUNTED IN THEIR BOOKS OF ACCOUNT AND ALSO FILED THEIR RETURNS FOR THE 3 RELEVANT YEAR AND PAID TAXES ON THE INTEREST RECEIV ED. THEREFORE THE ADDITION ON ACCOUNT OF INTEREST PAYMENT AMOUNTING T O RS. 31 69 507/- U/S 40(A)(IA) OF THE ACT HAD BEEN DELETED BY THE CIT(A) AS THE ASSESSEE HAS COMPLIED WITH THE REQUIREMENTS OF THE RELEVANT SECT IONS OF THE ACT. THE REVENUE IS THUS AGGRIEVED AGAINST THE ABOVE ACTIO N OF THE CIT(A) AND IS IN APPEAL BEFORE US. 5. THE ASSESSEE BEFORE US HAS TAKEN THE PLEA THAT THOUGH THE ASSESSEE HAD NOT DEDUCTED THE TAX AT SOURCE HOWEVE R RECIPIENTS HAVE OFFERED THE INCOME IN THE COMPUTATION IN THEIR RETU RNS OF INCOME AND THEREFORE THE ADDITION IS NOT ATTRACTED IN THE CA SE OF THE ASSESSEE AS PER THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT. HE IN THIS RESPECT HAS RELIED UPON THE DECISION OF THE HONBL E DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P ) LTD. (2015) 61 TAXMAN.COM 45 (DELHI) WHEREIN IT HAS BEEN HELD T HAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CUR ATIVE AND IT HAS A RETROSPECTIVE EFFECT FROM 01.04.05. THE LD. DR HO WEVER SUPPORTED THE ASSESSMENT ORDER. 5. WE HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE LD. A.R. AND HAVE ALSO GONE THROUGH THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P ) LTD. (SUPRA). THE HONBLE DELHI HIGH COURT CONSIDERING THE NATUR E AND SCOPE OF THE SECOND PROVISO TO SECTION 40(A)(IA) OF THE ACT HAS CATEGORICALLY HELD THAT THE SECOND PROVISO IS DECLARATORY AND CUR ATIVE AND HAS RETROSPECTIVE EFFECT. UNDER THESE CIRCUMSTANCES I F THE PAYEE HAS 4 TAKEN INTO CONSIDERATION THE INCOME RECEIVED FROM T HE ASSESSEE WHILE FILING ITS RETURN OF INCOME THEN NO ADDITION WOULD BE ATTRACTED. WE FIND THAT SIMILAR ISSUE RAISED BY THE REVENUE IN AN APPEAL RELATING TO NON-DEDUCTION OF TDS ON ACCOUNT OF INTE REST PAID TO VARIOUS NBFCS HAD BEEN ADJUDICATED BY THE COORDINAT E BENCH OF THE TRIBUNAL IN THE CASE OF M/S N.L. ENGINEERS P. LTD VS. ACIT IN ITA NO. 347/CHD/2017 WHEREIN THE TRIBUNAL RELYING UPON THE DECISION OF THE HON'BLE DELHI COURT IN THE CASE OF CIT VS. ANSA L LAND MARK TOWNSHIP (P) LTD [2015] 61 TAXMAN.COM 45 (DELHI) HE LD THAT IF THE PAYEE HAS TAKEN INTO CONSIDERATION THE INCOME RECEI VED FROM THE ASSESSEE WHILE FILING ITS RETURN OF INCOME THEN NO DISALLOWANCE WOULD BE ATTRACTED IN THE HANDS OF THE PAYER I.E. A SSESSEE. IN VIEW OF THE ABOVE DECISIONS WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND WE CONFIRM THE SAME . 5. IN THE RESULT APPEAL PREFERRED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.11.2017 SD/- SD/- (DR. B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27.11.2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR