Income Tax Appellate Tribunal - Rajkot
M/S. Khedut Feeds And Foods P. Ltd., ... vs The Dcit, Circle-1(2), Rajkot on 9 December, 2022
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
(Conducted through E-Court at Ahmedabad)
BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER &
SHRI T. R. SENTHIL KUMAR, JUDICIAL MEMBER
I.T.A. No.108/Rjt/2020
(Assessment Year: 2014-15)
M/s. Khedut Feeds & Foods Vs. DCIT
Pvt. Ltd., Circle-1(2),
Gundala Road, Gondal, Rajkot
Gujarat-360311
[PAN No.AACCK3894K]
(Appellant) .. (Respondent)
Appellant by : Smt. Ashaben D. Vyas, A.R.
Respondent by : Shri B. D. Gupta, Sr. DR
Date of Hearing 19/09/2022
Date of Pronouncement 09/12/2022
ORDER
PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER:
This appeal is filed by the assessee against the order dated 05.03.2020 passed by the Commissioner of Income Tax (Appeals)-2, Rajkot (in short "CIT(A)") arising out of the assessment order dated 30.11.2017 passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') relating to the A.Y. 2014-15.
2. The brief facts of the case is the assessee is a Private Ltd. Company engaged in the business of trading of agro-based commodities. For the Assessment Year 2014-15 the assessee filed its Return of Income on 12.09.2014 declaring total income of Rs. 24,26,630/-. The return was taken for scrutiny assessment, the Assessing Officer found that during -2- ITA No.108/Rjt/2020 Khedut Feeds & Foods Pvt. Ltd. vs. DCIT Asst.Year - 2014-15 the Financial Year the assessee made payment of interest of loan of Rs. 1,80,778/- to Religare Finvest a Non Banking Financial Institution on which no TDS was made. The assessee was required to deduct tax at source under Section 194A of the Act. The assessee was asked to show- cause as to why interest payment on loan of Rs. 1,80,778/- should not be disallowed under Section 40(a)(ia) of the Act. The Authorized Representative of the assessee had no objection to the said addition and therefore, Rs. 1,80,778/- was disallowed and added to the total income under Section 40(a)(ia) of the Act. On further appeal before the Ld. CIT(A) the assessee contended relying upon the proviso to Section 201(1)(a) wherein it is specifically stated that any person who fails to deduct TDS for the whole or any part of the tax, in accordance with the provisions of the Act, on the sum paid to resident or on the sum credited to the account of the resident, shall not be assessee in default in respect of such tax. If such resident
(i) has furnish return of income under Section 139;
(ii) has taken into account such sum for computing income in such return of income;
(iii) has paid the tax due on the income;
(iv) and the person furnishes certificate of the Auditors in such forms as merit described.
Thus, the assessee produce the Chartered Accountant Certificate in Form No. 26A in support of its claim showing the sum of Rs. 4,030/- being the interest under Section 201(1A) which has been paid by the assessee for non-deduction/short deduction of tax. The Ld. CIT(A) called -3- ITA No.108/Rjt/2020 Khedut Feeds & Foods Pvt. Ltd. vs. DCIT Asst.Year - 2014-15 for a remand report from the Assessing Officer, wherein the AO submitted that the assessee fulfilled the conditions as stipulated in Section 201(1A) for not being an assessee in default. However, the Ld. CIT(A) held that the Form No. 26A which bear the signature of the assessee namely the Director of the Khedut Feeds and Food Pvt. Ltd. but not that of an Accountant signature, therefore, the claim of the assessee is not maintainable and ground of appeal was thereby dismissed.
3. Aggrieved against the same the assessee is in appeal before us raising the following grounds:
"1.0 The learned DCIT has erred by adding payment of Interest of NBFC of Rs.
1,80,778/- without deduction of tax.
2.0 The Learned DCIT has erred by adding income for Arm's Length price adjustment of Rs. 1,68,085/-.
3.0 The Learned ACIT has further erred in initiating the penalty proceedings u/s 271(1)(C).
4.0 The Learned ACIT has further erred in initiating the penalty proceedings u/s 271BA."
4. During the course of the hearing the Ld. A.R. Smt. Ashaben D. Vyas has not pressed Ground No. 2, 3, &4. So the sole ground that is to be adjudicated is disallowance made under Section 40(a)(ia) for non- deduction of tax at source of Rs. 1,80,778/-. The Ld. Counsel submitted though the Ld. Assessing Officer in his remand report proceedings held that the assessee not being in default. However, the Ld. CIT(A) disallowed the claim of the assessee, without considering Section 201(1)(a) of the Act. The Ld. Counsel further relied upon Agra Bench of the ITAT in the case of Rajeev Kumar Agarwal in ITA No. 338/Agra/2013 wherein it is held as follows:
-4- ITA No.108/Rjt/2020Khedut Feeds & Foods Pvt. Ltd. vs. DCIT Asst.Year - 2014-15 "It was, inter alia, contended by the assessee that in view of the insertion of second proviso to Section 40(a)(ia) by the Finance Act 2012, and in view of the fact that the recipients of the interest have already included the income embedded in these payments in their tax returns filed under section 139, disallowance under section 40(a)(ia) could not be invoked in this case where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII -B on any such sum but is not deemed to be an assessee in default under the first proviso to sub - section (1) of section 201, then, for the purpose of this sub -clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso". In other words, as long as the assessee cannot be treated as an assessee in default, the disallowance under section 40(a)(ja) cannot come into play either."
Thus, the Ld. A.R. pleaded that the disallowance made by the Assessing Officer is not justifiable and therefore, pleaded to allow the assessee's appeal.
5. Per contra, the Ld. Sr. D.R. Shri B. D. Gupta appearing for the Revenue supported the order of the lower authorities and requested to upheld the same and dismiss the assessee's appeal.
6. We have given our thoughtful consideration and perused the materials available on record. In Page No. 16 & 17 of the Paper Book filed by the assessee, the assessee enclosed Form No. 26A namely Form for furnishing Accountant certificate under the First Proviso to sub- Section 1 of Section 201 of the Act, wherein it is certified that interest under Section 201(1a) of Rs. 4,030/- was paid by the assessee for non- deduction or short deduction of tax vide Bank Challan No. 83 dated 22.12.2018. Further as held by the Ld. CIT(A) there is no signature by Chartered Accountant, but Director of the assessee company has signed, but in Page No. 17 the assessee produced the Interest Challan payment of Rs. 4,030/- remitted into Central Bank of India more particularly -5- ITA No.108/Rjt/2020 Khedut Feeds & Foods Pvt. Ltd. vs. DCIT Asst.Year - 2014-15 under the caption Minor Head 200 - TDS/TCS payable by taxpayer. Thus, the assessee having paid the interest of Rs. 4,030/- the assessee cannot be construed as an assessee in default. Therefore, the provision of Section 40(a)(ia) cannot be applied in assessee's case. Thus, the Ld. Assessing Officer and the CIT(A) has not considered the provision of Section 201(1) of the Act which is not justifiable in law. Therefore, the addition made under Section 40(a)(ia) by the Assessing Officer is hereby deleted.
7. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the Court on 09.12.2022 at Ahmedabad.
Sd/- Sd/- (WASEEM AHMED) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad, dated 09/12/2022 Tanmay, Sr. PS TRUE COPY आदे श क त ल प अ े षत/Copy of the Order forwarded to : 1.अपीलाथ / The Appellant, 2. यथ / The Respondent, 3. संब ं धत आयकर आयु त / Concerned CIT, 4. आयकर आयु त (अपील)/ The CIT(A)- ,
5. वभागीय तआयकर अपील&य अ धकरण राजोकट/DR,ITAT, Rajkot,
6. गाड, फाईल /Guard file.
आदे शानुसार/ BY ORDER, उप/सहायक पंजीकार Dy./Asstt.Registrar) आयकर अपील य अ धकरण, राजोकट / ITAT, Rajkot