M/s. R.J. Buildcon Pvt. Ltd.,, Pune v. Deputy Commissioner of Income-tax,,

ITA 23/PUN/2016 | 2011-2012
Pronouncement Date: 30-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 2324514 RSA 2016
Assessee PAN AAFFP5139G
Bench Pune
Appeal Number ITA 23/PUN/2016
Duration Of Justice 1 year(s) 10 month(s) 24 day(s)
Appellant M/s. R.J. Buildcon Pvt. Ltd.,, Pune
Respondent Deputy Commissioner of Income-tax,,
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 30-11-2017
Date Of Final Hearing 30-11-2017
Next Hearing Date 30-11-2017
Last Hearing Date 30-11-2017
First Hearing Date 10-10-2017
Assessment Year 2011-2012
Appeal Filed On 05-01-2016
Judgment Text
] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE MS. SUSHMA CHOWLA JM AND SHRI ANIL CHATURVEDI AM . / ITA NOS.1370 AND 1371/PUN/2015 / ASSESSMENT YEARS : 2009-10 AND 2012-13 M/S. R. J. BUILDCON PVT. LTD. SHOP NO.9 PARMAR TRADE CENTER SADHU VASWANI CHOWDK PUNE 411 001. PAN : AAFFP5139G. . / APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL AURANGABAD. . / RESPONDENT . / ITA NOS.22 AND 23/PUN/2016 / ASSESSMENT YEARS : 2010-11 AND 2011-12 M/S. R. J. BUILDCON PVT. LTD. SHOP NO.9 PARMAR TRADE CENTER SADHU VASWANI CHOWDK PUNE 411 001. PAN : AAFFP5139G. . / APPELLANT V/S DY.COMMISSIONER OF INCOME TAX CENTRAL AURANGABAD. . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK REVENUE BY : MS. NIRUPAMA KOTRU & SHRI MUKESH JHA. / ORDER PER ANIL CHATURVEDI AM : 1. THE APPEALS FILED BY THE ASSESSEE ARE EMANATING OUT OF SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (A) - 12 PUNE DT.14.09.2015 AND DT.01.10.2015 FOR THE ASSESSMENT YEARS 2009- 10 TO 2012-13 RESPECTIVELY. / DATE OF HEARING : 30.11.2017 / DATE OF PRONOUNCEMENT: 30.11.2017 2 2. BEFORE US AT THE OUTSET LD.A.R. SUBMITTED THAT THOUGH THE APPEALS OF THE ASSESSEE ARE FOR FOUR DIFFERENT ASSESSMENT YEARS BUT THE ISSUES AND FACTS INVOLVED IN ALL THE APPEALS ARE IDENTIC AL EXCEPT FOR THE YEAR AND AMOUNTS AND THEREFORE HE HAS COMMON SUBMISSION TO MAKE FOR ALL THE YEARS. LD.D.R. DID NOT CONTR OVERT THE AFORESAID SUBMISSION OF LD.A.R. WE THEREFORE FOR THE SAK E OF CONVENIENCE PROPOSE TO DISPOSE OF ALL THE APPEALS BY A CONSOLIDATED ORDER. 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUS INESS OF CONSTRUCTION AND EXECUTION OF WORKS CONTRACTS. ASSE SSEE FILED ITS RETURN OF INCOME FOR A.Y. 2009-10 ON 27.09.2009 DECLARIN G TOTAL INCOME AT RS.2 38 02 310/-. A SEARCH ACTION U/S 132 OF THE ACT WAS CONDUCTED ON 24.11.2011 AT THE BUSINESS AND RE SIDENTIAL PREMISES OF M.B. PATIL GROUP AT AURANGABAD / PUNE. DURIN G THE COURSE OF SEARCH VARIOUS REGISTERED DOCUMENTS BELONGING TO THE ASSESSEE WERE SEIZED. CONSEQUENTLY A NOTICE U/S 153C OF THE ACT WAS ISSUED ON 27.09.2013 REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME. IN RESPONSE TO NOTICE ASSESSEE INTER-ALIA SUBM ITTED THAT THE RETURN OF INCOME ORIGINALLY FILED U/S 139 OF THE A CT BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S 153C OF TH E ACT. THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 153(C) OF THE ACT AND THE TOTAL INCOME WAS DETERMINED AT RS.2 41 70 8 76/-. AGGRIEVED BY THE ORDER OF AO ASSESSEE CARRIED THE MAT TER BEFORE LD.CIT(A) WHO VIDE ORDER DT.14.09.2015 (IN APPEAL NO.PN/CIT(A)- 12/DCIT CEN. CIR. AURANGABAD/1130/2014-15) GRANTED PAR TIAL 3 RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CI T(A) ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FO LLOWING GROUNDS : 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADHO C DISALLOWANCE OF AMOUNTING TO RS.3 18 870/- OUT OF THE LABOUR EXPENS ES. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE EXPENSES WERE REASONABLE AND JUST BECAUSE SOME OF THE VOUCHERS WE RE SELF MADE THERE WAS NO NEED FOR ANY DISALLOWANCE. 3. THE APPELLANT REQUESTS FOR ADMISSION OF ADDITION AL EVIDENCES IF ANY REQUIRED IN SUPPORT OF THE ABOVE GROUNDS OF APP EAL. 4. AT THE OUTSET LD.A.R. SUBMITTED THAT HE DOES NOT WISH TO PRESS GROUNDS RAISED IN THE APPEAL. LD.D.R. DID NOT OBJECT TO THE AFORESAID SUBMISSION OF THE LD.A.R. WE THEREFORE DISMISS THE GROUNDS AS NOT PRESSED. 5. IN THE RESULT THE APPEAL OF THE ASSESSEE IN ITA.NO.1370/PUN/2015 FOR A.Y. 2009-10 IS DISMISSED AS NOT PRESSED. 6. NOW WE TAKE UP THE REMAINING APPEALS OF THE ASSESSE E I.E. ITA NO.22/PUN/2016 FOR A.Y. 2010-11 ITA.NO.23/PUN/2016 FO R A.Y. 2011-12 AND ITA NO.1371/PUN/2015 FOR A.Y. 2012-13. 6.1 THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- A SEARCH ACTION U/S 132 OF THE ACT WAS CONDUCTED ON 24.11.2011 AT THE BUSINESS AND RESIDENTIAL PREMISES OF M.B. PATIL GROUP AT AURANGABAD / PUNE. DURING THE COURSE OF SEAR CH VARIOUS REGISTERED DOCUMENTS BELONGING TO THE ASSESSEE WERE SE IZED. CONSEQUENTLY A NOTICE U/S 153C OF THE ACT WAS ISSUED O N 27.09.2013 REQUIRING THE ASSESSEE TO FILE THE RETURN OF INC OME. IN 4 RESPONSE TO THE AFORESAID NOTICE ASSESSEE INTER-ALIA SUBM ITTED THAT THE RETURN OF INCOME ORIGINALLY FILED U/S 139 OF THE ACT BE TREATED AS RETURN IN RESPONSE TO NOTICE U/S 153C OF THE ACT. T HEREAFTER THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT S WERE FRAMED U/S 143(3) R.W.S. 153(C) OF THE ACT FOR VARIOUS YEARS AND THE TOTAL INCOME FOR VARIOUS YEARS WERE DETERMINED AS UNDER : A.Y. DATE OF ASSESSMENT ORDER ORDER PASSED U/S ASSESSED INCOME 2010-11 18-03-2014 143(3) R.W.S 153C RS.2 21 36 560 /- 2011-12 -DO- -DO- RS.2 05 10 280/- 2012-13 -DO- -DO- RS.3 01 73 770/- AGGRIEVED BY THE ORDERS OF AO ASSESSEE CARRIED THE MAT TER BEFORE LD.CIT(A) WHO VIDE ORDER DT.01.10.2015 IN APPEAL NO.PN/CIT(A)-12/DCIT CEN. CIR. 1 AURANGABAD/846/2014-15 FOR A.Y. 2010-11 APPEAL NO. PN/CIT(A)-12/DCIT CEN. CIR. 1 AURANGABAD/1131/2014-15 FOR A.Y. 2011-12 AND VIDE ORD ER DT.14.09.2015 IN APPEAL NO.PN/CIT(A)-12/847/2014-15 FOR A.Y . 2012-13 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVE D BY THE ORDERS OF LD.CIT(A) ASSESSEE IS NOW IN APPEAL BEFORE US. F OR A.Y. 2010-11 ASSESSEE IN APPEAL NO.22/PUN/2016 HAS RAISED TH E FOLLOWING GROUNDS : 1. THE ASST. COMPLETED U/S 143(3) R.W.S. 153C BE D ECLARED NULL AND VOID SINCE THE NOTICE ISSUED U/S 153C WAS BAD IN LA W. 2. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCE U/S 40(A)(IA) OF RS7 68 310/- WITHOUT APPRECIATING THAT NO INCRIMINATING EVIDENCE WAS FOUND AS A RESULT OF SEARCH IN RESPECT OF THE SAID ISSUE AND THEREFORE NO DISALLOWANCE U/S 40(A)(IA) WAS WA RRANTED. 2.1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE DI SALLOWANCE U/S 40(A)(IA) ON ACCOUNT OF THE INTEREST PAID OF RS.7 6 8 310/- ON THE GROUND THAT THE ASSESSEE HAD FAILED TO DEDUCT TDS I N RESPECT OF THE INTEREST PAID ON THE FUNDS BORROWED FROM NBFCS. 5 2.2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT N O DISALLOWANCE COULD BE MADE U/S 40(A)(IA) IN RESPECT OF THE INTE REST PAID OF RS.7 68 310/- TO THE NBFCS IN VIEW OF THE SECOND PR OVISO TO U/S 40(A)(IA). 7. FOR A.Y. 2011-12 IN APPEAL NO.ITA NO.23/PUN/2016 TH E GROUNDS RAISED BY THE ASSESSEE READS AS UNDER : 1. THE ASST. COMPLETED U/S 143(3) R.W.S. 153C BE DECLARED NULL AND VOID SINCE THE NOTICE ISSUED U/S 153C WAS BAD IN LAW. 2. THE LEARNED CIT(A). ERRED IN CONFIRMING THE DISA LLOWANCE U/S 40(A)(IA) OF RS.49 59 341/- WITHOUT APPRECIATING TH AT NO INCRIMINATING EVIDENCE WAS FOUND AS A RESULT OF SEAR CH IN RESPECT OF THE SAID ISSUE AND THEREFORE NO DISALLOWANCE U/S. 40(A)(IA) WAS WARRANTED. 3.THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALL OWANCE U/S 40(A)(IA) ON ACCOUNT OF THE INTEREST PAID OF RS. 49 59 341/- ON THE GROUND THAT THE ASSESSEE HAD FAILED TO DEDUCT TDS I N RESPECT OF THE INTEREST PAID ON THE FUNDS BORROWED FROM NBFCS. 4.THE LEARNED CIT(A) FAILED TO APPRECIATE THAT NO D ISALLOWANCE COULD BE MADE U/S 40(A)(IA) IN RESPECT OF THE INTEREST PAID OF RS. 49 59 341/- TO THE NBFCS IN VIEW OF THE SECOND PROV ISO TO U/S 40(A)(IA). 7.1 FOR A.Y. 2012-13 IN APPEAL NO.1371/PUN/2015 THE GROUN DS RAISED BY THE ASSESSEE READS AS UNDER : 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADH OC DISALLOWANCE OF AMOUNTING TO RS.1 79 930/- OUT OF THE LABOUR EXP ENSES. 2] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE EXPENSES WERE REASONABLE AND JUST BECAUSE SOME OF THE VOUCHERS WE RE SELF MADE THERE WAS NO NEED ANY DISALLOWANCE. 3] THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISAL LOWANCE U/S 40(A)(IA) OF RS.67 68 277/- ON ACCOUNT OF THE INTER EST PAYABLE TO THE FINANCE COMPANIES ON THE GROUND THAT THE APPELLANT HAD NOT DEDUCTED TDS THEREON. 4] THE LEARNED CIT(A) FAILED TO APPRECIATE THAT - A. HAVING ESTIMATED THE INCOME BY DISALLOWING ADHO C LABOUR EXPENSES THERE WAS NO WARRANT TO DISALLOW T HE INTEREST U/S 40(A)(IA) SEPARATELY. B. IF THE PAYEE COMPANIES HAD PAID THE TAXES ON THE IR INCOME FOR THIS YEAR WHICH INCLUDED THE INTEREST RE CEIVABLE 6 FROM THE ASSESSEE THERE WAS NO REASON FOR DISALLOW ANCE U/S 40(A)(IA). C. THE APPELLANT HAD NO ACCESS TO THE RECORDS OF TH E PAYEE COMPANIES AND THEREFORE HAVING MADE THE CONT ENTION THE A.O. COULD HAVE BEEN DIRECTED TO MAKE ENQUIRIES FROM THE PAYEE COMPANIES AND CHECK WHETHER THEY HAD PAID THE TAXES OR NOT INSTEAD OF DISALLOWING THE CLAIM OF THE ASSE SSEE. D. THE SECOND PROVISO TO SECTION 40(A)(IA) IS RETRO SPECTIVE IN NATURE AND HENCE IT WAS APPLICABLE TO THE CASE OF THE ASSESSEE AND BECAUSE OF WHICH THE DISALLOWANCE IS N OT WARRANTED. 5] THE APPELLANT REQUESTS FOR ADMISSION OF ADDITIO NAL EVIDENCES IF ANY REQUIRED IN SUPPORT OF THE ABOVE GROUNDS OF APPEAL. 8. BEFORE US AT THE OUTSET LD.A.R. SUBMITTED THAT HE DOES NOT WISH TO PRESS GROUND NO.1 IN A.Y. 2010-11 AND 2011-12 A ND GROUND NOS.1 AND 2 IN A.Y. 2012-13. LD.A.R. SUBMITTED THAT T HE REMAINING GROUNDS IN ALL THE APPEALS ARE IDENTICAL EXCEPT F OR THE AMOUNTS. LD.D.R. DID NOT OBJECT TO THE AFORESAID SUBMISSION AND THEREFORE GROUND NO.1 IN A.Y. 2010-11 AND 2011-12 AND GR OUND NOS.1 AND 2 IN A.Y. 2012-13 ARE DISMISSED AS NOT PRESSED. 9. WE NOW TAKE UP THE OTHER GROUND WHICH IS WITH RESPE CT TO DISALLOWANCE U/S 40(A)(IA) OF THE ACT. 9.1. DURING THE COURSE OF ASSESSMENT AO ON PERUSING THE PROFIT AND LOSS ACCOUNT OF ASSESSEE NOTICED THAT ASSESSEE HA S BORROWED LOANS FROM NON-BANKING FINANCIAL CORPORATIONS (NBFCS). IN A.Y . 2010-11 ASSESSEE HAD BORROWED LOANS FROM SREI EQUIPMEN T FINANCE LTD AND TATA MOTORS FINANCE LIMITED AND DURING THE ASSESSMENT YEAR ASSESSEE HAS PAID INTEREST OF RS.5 76 066 /- AND RS.1 92 244/- INTEREST AGGREGATING TO RS.7 68 310/- TO THE AFORESAID NBFCS BUT HAD NOT DEDUCTED TDS U/S 194A OF THE ACT. 7 THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE DISALLOW ANCE NOT BE MADE U/S 40(A)(IA) OF THE ACT TO WHICH ASSESSEE INTER-ALIA SUBMITTED THAT BOTH THE AFORESAID NBFCS MIGHT HAVE DEPO SITED THE TAX DUES ON SUCH INCOME AND THEREFORE NO DISALLOWANCE BE MADE IN ASSESSEES HAND. THE SUBMISSION OF THE ASSESSEE WAS NO T FOUND ACCEPTABLE TO THE AO. AO CONCLUDED THAT SINCE THE ASSE SSEE HAS NOT DEDUCTED TDS THE AGGREGATE INTEREST OF RS.7 68 310/- WAS LIABLE FOR DISALLOWANCE U/S 40(A)(IA) OF THE ACT AND ACCORDINGLY DISALLOWED THE SAME. AGGRIEVED BY THE ORDER OF AO ASSESS EE CARRIED THE MATTER BEFORE LD.CIT(A) WHO UPHELD THE ORDER OF AO BY HOLDING AS UNDER : 6.3 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLAN T AND ALSO GONE THROUGH THE ASSESSMENT O R DER AND JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT . BR I EF FACTS ARE THAT DURING THE COU R SE OF PROCEEDINGS U/S 153C AO GATHERED THAT APPELLANT BORROWED FUNDS F R OM NBFCS NAMELY SREI EQUIPMENT FINANCE LTD . AND TATA MOTORS FINANCE L T D. FO R PURCHASE OF MACHINERY I TRUCKS AND DEBITED INTEREST OF RS . 5 76 06 6 / - A N D R S . 1 92 2 44/- RESPECTIVELY WITHOUT DEDUCTING TAX AT SOURCE U/S 194A OF THE AC T . TH E A PPE LLA NT BEFORE THE AO CONTENDED THAT DEDUCTEE COMPANIES M I GHT HAVE PA I D T A X E S ON TH E IR I NCOME . THE AO FURTHER GATHERED INFORMATION FROM T HE D E D U CTEE C O M PANIES I . E . NBFCS WHO EXPRESSED INABIL I TY TO FU R N I SH COPY OF ITR -V . THE AO TH EREFORE D I SA L LOWED SUCH INTEREST EXPENDITURE TOTAL I NG TO RS . 7 68 310/ - U /S 40 ( A ) ( IA ) OF THE AC T . 6 . 4 AS D I SCUSSED EARLIER TH I S DISALLOWANCE U/S 40(A ) ( I A ) ALTHOUGH NOT BASED ON THE SE I ZED DOCUMENTS BUT IT IS DEF I N I TELY BASED ON THE INFORMATION GATHERED BY THE AO IN THE COU R SE OF ASSESSMENT PROCEEDINGS . THE FAILURE OF APPELLAN T TO DEDUCT T AX WOULD DEFINITELY HAVE GIVEN JURISDICTION TO INITIATE PROCEEDINGS U/S 147 AND SINCE ASSESSMENT U/S 153C BEING CONSOLIDATED PROCEEDING W HICH INCLUDES REASSESSMENT TOTAL INCO ME AS WE L L THE DISALLOWANCE FALLS UNDER THE SCOPE OF ASSESSMENT U/S 153C IN VIE W O F TH E RA TIO OF BOMBAY HIGH COURT I N CASE OF M/S. MURLI AGRO PRO DUCTS (S U PRA) . 6 . 4.1 ON CA R EF UL R E ADI NG O F THE FINDING OF THE A . O. I N T HE ASSESSMENT ORDER I T I S FOUND T HA T T HE APPEL L A N T HAS FAILED TO DEDUCT THE TAX AT SOURCE F ROM THE INT EREST PAYMEN T TO NBFC AT THE ORIG I NAL STAGE ITSELF AND HAS NOT TAKEN PROPE R CARE T O SEE T HAT PROV I S I ONS OF THE ACT ARE STRICTLY ADHERED TO . AT THE ASSESSMENT STAGE ALSO I T HAS REPL I ED THAT THE TAX MIGHT HAVE BEEN PAID BY THE RECIPIE NT AND THEN BROUGHT THE CONFIRMATION ABOUT FILING OF THE RETURN S BY THOSE COMPANIES . DUR I NG THE COU R SE OF APPELLATE PROCEEDINGS IT WAS NOTED THAT AS PER CERTIFICATE OF CHARTERED ACCOUNTANT ALL THE INTEREST PAYMENT MADE BY THE APPELLANT WAS NOT OFFERED TO TA X BY THE NBFC NAMELY TATA MOTOR FINANCE . APPELLANT FURTHER CONTENDED THAT 8 BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) INSERTED W.E.F. 1.4.14 WAS TO BE ALLOWED AS SAME BEING CURATIVE AMENDMENT. IT IS ALSO A SETTLED LEGAL POSITION THAT WHEREVER LEGISLATURE IN TENDS RETROSPECTIVE OPERATION OF THE PARTICULAR PROVISION THE SAME IS SPECIFICALLY GIVEN IN STATUTE ITSELF. IT IS ONLY CLARIFICATORY OR DECL ARATORY PROVISION WHICH APPLIES WITH EFFECT FROM DATE FROM WHICH PROVISION WAS INSERTED. IN LINE OF THIS LEGAL POSITION THE CLAIM OF THE APPEL LANT THAT BENEFIT OF THE SECOND PROVISO TO SECTION 40(A)(IA) WOULD APPLY RETROSPECTIVELY IS NOT ACCEPTABLE AND SAME HAS BEEN HELD BY THE HON'BL E HIGH COURT OF KERALA IN THE CASE OF PRUDENTIAL LOGISTICS AND TRANSPORTS (2014) TAXMAN .COM 426 ( KERALA) 'BENEFIT OF SECOND PROVISO TO SECTION 40(A)(IA) GIV ING CONCESSION TO ASSESSEE FROM DEDUCTING TDS IN CASE R ECIPIENT OF AMOUNT IN QUESTION HAD OF ALREADY PAID TAXES ON SUCH AMOUNT WOULD BE AVAILABLE WITH EFFECT FROM 1.4.2013 ONLY.' IN VIEW OF THE ABOVE I AM OF THE OPINION THAT THE APPELLANT DO NOT DESERVE RELIEF ON THIS GROUND AND GROUND OF APPEAL RAISED BY THE APPELLANT IS DISMISSED. SIMILAR DISALLOWANCE OF INTEREST EXPENSES WERE MADE BY AO IN A.YS. 2011-12 AND 2012-13 AND THE DISALLOWANCE MADE BY AO WE RE UPHELD BY LD.CIT(A). A GGRIEVED BY THE ORDERS OF LD.CIT(A) ASSESSEE IS NOW IN APPEAL BEFORE US. 10. BEFORE US LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT ALTHOUGH NO T AX HAS BEEN DEDUCTED AT SOURCE ON THE PAYMENT OF INTEREST TH E ASSESSEE CANNOT BE HELD AS ASSESSEE IN DEFAULT AS THE INTEREST PAID BY THE ASSESSEE HAVE ALREADY BEEN OFFERED TO TAX BY THE RESPE CTIVE RECIPIENTS OF INTEREST AND THEREFORE IN VIEW OF THE SECOND PROVISO TO SEC.40(A)(IA) INSERTED BY THE FINANCE ACT 2012 WHICH IS RETROSPECTIVE IN NATURE NO DISALLOWANCE OF INTEREST IS CALLED FOR IN THE HANDS OF ASSESSEE. IN SUPPORT OF HIS CONTENTION THA T THE PROVISO TO SEC. 40(A)(IA) IS RETROSPECTIVE IN NATURE HE RELIE D ON THE DECISION OF CIT VS. ANSAL LAND MARK TOWNSHIP (P) LTD. 37 7 ITR 635 (DEL) WHICH HAD UPHELD THE VIEW OF THE AGRA BENCH OF TH E TRIBUNAL HOLDING THAT THE 2 ND PROVISO TO SEC.40(A)(IA) IS DECLARATORY 9 AND CURATIVE AND HAS RETROSPECTIVE EFFECT FROM 01.04.2005. IN SUPPORT OF HIS CONTENTION THAT THE RESPECTIVE RECIPIENTS HAVE OFFERE D THE INTEREST RECEIVED FROM ASSESSEE IN THEIR RESPECTIVE IN COME HE POINTED TO THE C.A. CERTIFICATE OF THE RECIPIENT OF INCOME WHI CH ARE PLACED IN THE PAPER BOOK. HE FURTHER SUBMITTED THAT TH E LD.CIT(A) WHILE UPHOLDING THE ORDER OF AO HAD RELIED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF PRUDENTIAL LOGISTIC S AND TRANSPORTS VS. INCOME TAX OFFICER [(2014) 364 ITR 689 (KER)] . HE SUBMITTED THAT PUNE TRIBUNAL IN THE CASE OF YAMAZAKI MAZ AK INDIA PVT. LTD VS. PCIT IN ITA NO.153/PN/2016 DT.28.10.2016 AFTER CONSIDERING THE AFORESAID DECISION OF KERALA HIGH COURT IN TH E CASE OF PRUDENTIAL LOGISTICS (SUPRA) AND THE DECISION OF HONBLE DE LHI HIGH COURT IN THE CASE OF ANSAL LAND MARK TOWNSHIP (SUPRA ) HAS HELD THAT THE SECOND PROVISO TO SEC. 40(A)(IA) IS RETROSPE CTIVE IN NATURE. HE FURTHER SUBMITTED THAT BEFORE LD.CIT(A) ASSESS EE HAD PLACED CHART OF INTEREST EXPENSE AS CLAIMED BY ASSESSEE AND THAT WAS OFFERED AS INCOME BY RESPECTIVE NBFCS ALONG WITH THE CERTIFICATE OF C.A. CERTIFYING THE FURNISHING OF RETURN OF INCOM E BY THE PAYEE BUT THE SAME WERE IGNORED BY LD.CIT(A). HE ALSO POINTED TO THE STATEMENT OF RECONCILIATION PLACED AT PAGE 7 OF TH E PAPER BOOK AND POINTED TO THE RECONCILIATION OF INTEREST PAID BY THE ASSESSEE AND OFFERED TO TAX BY NBFC IN THEIR RESPECTIVE RETURN OF INCOME. FROM THE AFORESAID RECONCILIATION STATEMENT HE POIN TED OUT FOR A.Y. 2010-11 THAT IN CASE OF SREI EQUIPMENT FINANCE LTD THERE IS NO DIFFERENCE AND IN THE CASE OF TATA MOTORS FIN ANCE LIMITED THERE IS A DIFFERENCE OF RS.84 299/-. HE FAIRLY SUBMIT TED THAT SINCE THE ASSESSEE COULD NOT RECONCILE THE DIFFERENC E OF RS.84 299/- THEREFORE TO THE EXTENT THE AMOUNT WHICH HA S BEEN 10 RECONCILED AND THE AMOUNT OFFERED BY TATA MOTORS FINANCE LIMITED AS THEIR INCOME NO DISALLOWANCE U/S 40(A)(IA) BE MADE IN THE HANDS OF THE ASSESSEE. HE POINTED TO THE SIMILAR RECO NCILIATION STATEMENT FOR OTHER ASSESSMENT YEARS PLACED IN PAPER BOOK AND FROM THE RECONCILIATION STATEMENT SUBMITTED THAT TO THE E XTENT ASSESSEE HAS BEEN ABLE TO RECONCILE THE AMOUNT OF INTERE ST PAID WITH THOSE OFFERED BY THE RESPECTIVE RECIPIENTS OF INTEREST THE EXPENSE BE ALLOWED THE ASSESSEE. HE AS AN ALTERNATIVE CONTENTION SUBMITTED THAT THE MATTER MAY BE REMITTED BACK TO AO FOR VERIFICATION OF HIS CONTENTION AND THEREAFTER THE AO BE DIRE CTED TO DELETE THE ADDITION. THE LD.D.R. ON THE OTHER HAND STRONG LY SUPPORTED THE ORDER OF LD.CIT(A) AND SUBMITTED THAT IN VIE W OF THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF PRUDEN TIAL LOGISTICS (SUPRA) RELIED UPON BY LD.CIT(A) NO INTERFERENCE TO THE ORDER OF LD.CIT(A) IS CALLED FOR. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO DISALLOWANCE OF EXPENDITURE U/S 40(A)(IA) OF THE ACT. IT IS A N UNDISPUTED FACT THAT ASSESSEE HAD NOT DEDUCTED TDS U/ S 194A OF THE ACT BEFORE MAKING THE PAYMENT OF INTEREST AND THE REFORE THE EXPENDITURE WAS DISALLOWED BY AO U/S 40(A)(IA) OF THE ACT. HOWEVER IT IS ASSESSEES CONTENTION THAT THE AMOUNTS O F INTEREST PAID BY THE ASSESSEE HAVE BEEN OFFERED TO TAX BY THE R ESPECTIVE RECIPIENTS AND AS PROOF OF THE AMOUNT OFFERED BY THE RES PECTIVE RECIPIENT TO TAX IS ALSO CERTIFIED BY THEIR CHARTERED ACCOU NTANTS AND THE NECESSARY C.A. CERTIFICATES WERE ALSO FILED BY THE AS SESSEE BEFORE LD.CIT(A) AND ALSO BEFORE US. WE FIND THAT THERE IS NO 11 FINDING OF LD.CIT(A) ON THE AFORESAID ISSUE. WE FURTHER FIND THAT LD.CIT(A) WHILE UPHOLDING THE ORDER OF AO HAD RELIED ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF PRUDEN TIAL LOGISTICS (SUPRA) WHEREBY IT HAS HELD THAT AMENDMENT MADE TO PROVISO TO SEC. 40(A)(IA) IS PROSPECTIVE. ON THE OTHER HA ND WE FIND THAT HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL LAN D MARK TOWNSHIP (SUPRA) HAS HELD THAT THE INSERTION OF THE SECOND PROVISO TO SEC.40(A)(IA) IS DECLARATORY AND CURABLE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 1 ST APRIL 2005 BEING THE DATE FROM WHICH SUB-CLAUSE (IA) OF SEC.40(A) WAS INSERTED BY THE FINANCE (NO. 2) ACT 2004. IT FURTHER HELD THAT AS THE PAYEE HAS FILED THE R ETURN OF INCOME DISCLOSING THE PAYMENT RECEIVED BY AND IN WHICH THE INCOME EARNED BY IT IS EMBEDDED AND HAS ALSO PAID TAX ON SUCH INCOME THE ASSESSEE WOULD NOT BE TREATED AS A PERSON IN DEFAULT. WE FIND THAT THE CO-ORDINATE BENCH OF PUNE TRIBUNAL IN THE CASE OF YAMAZAKI MAZAK (SUPRA) AFTER CONSIDERING THE AFORESAID DECIS ION OF HONBLE KERALA HIGH COURT AND THE DECISION RENDERED BY T HE HONBLE DELHI HIGH COURT IN THE CASE OF ANSAL LAND MARK (SUPRA) HAS HELD THAT THE SECOND PROVISO TO SEC. 40(A)(IA) INSERTED BY THE FINANCE ACT 2012 IS RETROSPECTIVE IN NATURE. 12. WE FURTHER FIND THAT BEFORE US ASSESSEE HAS PLACED RECONCILIATION STATEMENTS SHOWING THE AMOUNT OF INTEREST P AID BY THE ASSESSEE AND THAT ARE OFFERED BY THE RESPECTIVE RE CIPIENTS OF INTEREST IN THEIR INCOME AND THAT THERE ARE CERTAIN DIFFER ENCE WHICH THE ASSESSEE HAS NOT BEEN ABLE TO RECONCILE. WE THERE FORE FIND FORCE IN THE ARGUMENT OF LD.A.R. THAT TO THE EXTENT THE AMOUNT S HAVE BEEN RECONCILED THE ASSESSEE BE ALLOWED THE EXPENDITUR E. WE 12 HOWEVER FIND THAT THERE IS NO FINDING ON THIS ISSUE BY THE LOWER AUTHORITIES. IN SUCH A SITUATION WE ARE OF THE VIEW THAT THE MATTER BE REMANDED BACK TO AO TO VERIFY THE CONTENTION OF THE ASSESSEE AND TO THE EXTENT THE AMOUNTS PAID BY THE ASSESSEE A RE OFFERED AS INCOME BY THE RESPECTIVE RECIPIENTS THE SAME BE ALLOWED A S EXPENDITURE OF ASSESSEE AND TO THAT EXTENT NO DISALLOW ANCE U/S 40(A)(IA) OF THE ACT BE MADE. WE THEREFORE REMIT THE ISSUE BACK TO THE FILE OF AO TO DECIDE THE ISSUE AS PER OUR FOREGOING OB SERVATIONS. NEEDLESS TO STATE THAT AO SHALL GRANT ADEQUATE OPPORTU NITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE BY PROMPTLY FURNISHING ALL THE REQUIRED DETAILS CALLED FOR BY AO. WITH THESE DIRECTIONS WE RESTORE THE ISSUE TO THE FILE OF A O. THUS THE GROUNDS OF THE ASSESSEE FOR A.Y. 2010-11 TO 201 2-13 ARE ALLOWED FOR STATISTICAL PURPOSES. 13. TO SUM UP THE APPEAL OF ASSESSEE FOR A.Y. 2009-10 IS DISMISSED AND THE APPEALS FOR A.YS. 2010-11 TO 2012 -13 ARE PARTLY ALLOWED. ORDER PRONOUNCED ON 30 TH DAY OF NOVEMBER 2017. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ! / JUDICIAL MEMBER '! / ACCOUNTANT MEMBER PUNE; DATED : 30 TH NOVEMBER 2017. YAMINI 13 #$%&'('% / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-12 PUNE. PR.CIT (CENTRAL) NAGPUR. '#$ %%&' ) &' / DR ITAT B PUNE; $+ -/ GUARD FILE. / BY ORDER // TRUE COPY // ./0%1&2 / SR. PRIVATE SECRETARY ) &' / ITAT PUNE.