Income Tax Appellate Tribunal - Chandigarh
N.L. Engineers Pvt. Ltd., Mohali vs Acit, Mohali on 21 April, 2017
I N T H E I N C O M E T A X AP P EL L AT E T R I BU N A L
D I VI S I O N B EN C H , C H AN D I G A R H
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA,ACCOUNTANT MEMBER
ITA No. 347/CHD/2017
Assessment Year: 2010-11
M/s N.L. Engineers P.Ltd., Vs The ACIT,
C-114, In dustrial Area, Circle 6(1),
Phase-VII, Mohali.
Mohali.
PAN: AAACN5006C
(Appellant) (Respondent)
Appellant by : Shri Parikshit Aggarwal
Respondent by : Shri S.K.Mittal
Date of Hearing : 11.04.2017
Date of Pronouncement : 21.04.2017
O R D E R
Per Sanjay Garg, Judicial Member :
This appeal by the assessee has been directed against order of ld. CIT (Appeals)-2, Gurgaon dated 10.01.2017 relating to assessment year 2010-11.
2. The assessee is aggrieved by the confirmation of the addition made by the Assessing Officer under section 40(a)(ia) of Income Tax Act, 1961 (in short 'the Act') for non deduction of TDS on account of interest paid to various NBFCs ( non banking financial companies ). The Assessing Officer observed that the assessee was liable to deduct tax on interest payments as NBFCs were not covered in the exceptions provided under section 194A of the Act. He, therefore, made a disallowance of Rs. 2 7,79,246/- under section 40(a)(ia) of the Act and added back the same to the income of the assessee.
3. The CIT (Appeals) confirmed the addition so made by the Assessing Officer. The assessee has, thus, come in appeal before us.
4. The assessee, before us, has taken the plea that though the assessee had not deducted the tax at source, however, recipients have offered the income in the computation in their returns of income and, therefore, the disallowance is not attracted in the case of the assessee as per the second proviso to Section 40(a)(ia) of the Act. He, while relying upon the decision of the Hon'ble 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 that the second proviso to section 40(a)(ia) is declaratory and curative and it has a retrospective effect from 01.04.05.
5. We have considered the above submission of the Ld. A.R. and have also gone through the decision of the Hon'ble Delhi High Court in the case of "CIT vs. Ansal Land Mark Township (P) Ltd." (supra). The Hon'ble Delhi High Court, considering the nature and scope of the second proviso to section 40(a)(ia) of the Act, has categorically held that the second proviso is declaratory and curative and has retrospective effect. Under these circumstances, if the payee has taken into consideration the income received from the assessee while filing its 3 return of income, then no disallowance would be attracted in the hands of payer i.e. the assessee before us. However, this fact needs verification at the hands of the AO. The Ld. A.R., at this stage, has stated that the payees NBFCs have issued certificates that they have taken into account the amount of interest while computing their taxable income. He in this has relied upon pages 7 to 11 of the paper book. We, therefore, direct the AO to verify that if the amount received from the assessee has been included by the payee in the receipts and considered and accounted for while computing the income, then to allow the claim of the assessee accordingly. The assessee is also directed to complete the required formalities/ furnish the necessary forms/documents which are required to be submitted in this respect as per the provisions of the Act.
6. With the above observation, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the Open Court.
Sd/- Sd/-
(ANNAPURNA GUPTA) ( SANJAY GARG)
(ACCOUN TAN T MEMBER) JUDICIAL MEMBER
Dated: 21 st April, 2017.
'Poonam'
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A)
4. The CIT,DR
Assistant Registrar,
ITAT/CHD