Income Tax Appellate Tribunal - Ahmedabad
Kokilaben A Shah,, Anand vs The Joint Cit, Anand Range,, Anand on 1 November, 2018
आयकर अपीलीय अिधकरण,
अिधकरण अहमदाबाद यायपीठ 'lh
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IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH, AHMEDABAD
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER
AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 1514/Ahd/2016
नधा रण वष /Assessment Year : 2011-12
Kokilaben A. Shah, Vs. JCIT,
Shri Ram Pulse Mill Compound Anand Range,
Chikhodra Crossing, Chikhodra, Anand.
Anand.
(PAN No: AHFPS 2946 B)
अपीलाथ / (Appellant) यथ / (Respondent)
Assessee by : Shri Sunil Talati, A.R.
Revenue by : Shri S. K. Dev, Sr. D.R.
सु न वाई क तार ख/ Date of Hearing : 04.09.2018
घोषणा क तार ख / Date of Pronouncement : 01.11.2018
आदे श/O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The captioned appeal has been filed at the instance of the Assessee against the appellate order of the Learned Commissioner of Income-Tax (Appeals)-4, Vadodara ["CIT(A)" in short] relevant to Assessment Year 2011-
12.
2. Assessee has raised the following grounds of appeal:-
"Your appellant being aggrieved by the Order passed by the Ld. Commissioner of Income-tax (Appeals) - 4, VADODARA presents this appeal against the same on the following amongst other grounds.
1. The learned CIT(A) has erred in law and on facts in confirming disallowance of Rs. 16,80,000/- invoking the provisions of Section 40(a)(ia) of the Act. It is submitted before the Ld. A.O. as well as before the Ld. CIT(A) that the interest payments made to the parties having income below taxable as specified under the Act and in this regard , all those parties have furnished in Form 15G/ 15H respectively and thus the 2 ITA No.1514/Ahd/2016 Kolikaben A. Shah vs. JCIT A.Y.. 2011-12 liability of deduction of tax does not arise in case of your appellant. It is submitted that the lower authorities have failed in appreciating and not accepting the complete details filed before them clearly justifying the contention of the Appellant. Thus the disallowance made by A.O. and confirmed by Ld. CIT(A) invoking the provisions of section 40(a)(ia) of the Act in case of your appellant is totally incorrect, illegal and unjustifiable. Therefore impugned disallowance made by Ld. A.O. and confirmed by Ld. CIT(A) of Rs. 16,80,000/- deserves to be deleted.
2. The learned CIT(A) has further erred in law and on facts in giving his own contrary findings and to dealt with on the issue of. as if the recipient of such expenditure paid by the Appellant, have shown such income in their returns of income, then the disallowance u/s 40(a)(ia) does not warranted at all and in subsequent para , he has not appreciated the facts and circumstance of the case and decisions relied upon and given findings by confirming the view of the Ld. A.O. as given in his Remand Report. In view of this also the incorrect disallowance made and confirmed by Lower Authorities of Rs. 16,80,000/-deserves to be deleted.
3. The learned CIT(A) has further erred in not giving any findings/ directions to the Ld. A.O. on issue that the he is apparently incorrect in considering the returned income of the Appellant at Rs. 84,39,810/- ( as per Original Return ) instead at Rs. 83,13,680/- (as per Revised return ) while calculating the assessed income in the order passed u/s 143(3) of the Act. It is submitted that the Appellant has specifically raised this ground as per Ground No. 4 before Ld. CIT(A). However the same has not been dealt with by the Ld. CIT(A). It is submitted that the excessive assessed income as worked out and confirmed by the lower authorities be reduced by Rs.1,26,130/- and that the returned income as declared in Revised return of income be considered as returned income of the appellant. The same be held now.
4. The Order passed by the CIT(A) is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now.
5. The Ld. CIT(A) has erred in law and on facts in charging interest u/s 234B/234D of the Act. The same deserves to be uncalled for.
6. Your appellant craves leave to add, alter and/or to amend all or any of the grounds before the final hearing."
3. The first issue raised by the assessee in ground no.1 & 2 is that ld CIT(A) erred in confirming the order of AO by sustaining the disallowance of Rs.16,80,000/- on account of non deduction of TDS u/s 40(a)(ia).
3 ITA No.1514/Ahd/2016Kolikaben A. Shah vs. JCIT A.Y.. 2011-12
4. Briefly stated facts are that the assessee in the present case is an individual and engaged in the business of money lending and commission agent. The assessee during the year has incurred interest cost amounting to Rs.16,80,000/- without deducting the TDS u/s 194A r.w.s. 40(a)(ia) of the Act. The assessee claimed that she has collected Form No.15G from the parties to whom the interest was paid.
However, the AO during the assessment proceedings observed that the forms were collected by the assessee from the payees on 01.04.2011. Though, the provisions of section requires that the forms should be in her possession on or before 31.03.2011. As per the AO, the assessee has claimed interest expenses as on 31.03.2011 therefore, the form no.15G should have been obtained on or before 31.03.2011. However, in case on hand, the assessee has taken form no.15G subsequently. Therefore, the AO issued a show-cause notice to the assessee for making the disallowance u/s 194A r.w.s. 40(a)(ia) of the Act.
4.1 The assessee in compliance to it submitted as under:
There is no requirement under the provision of Section 194A/197A or Rule 29C or in Form No.15G that the assessee must possessed the form before claiming the expense on account of interest. Therefore, the assessee is eligible for deduction on account of interest expenses as she has received form no 15G which were duly furnished to the concerned CIT within the 7 days from the end of the month in which the declaration was furnished by the payee.
The intention of the statute is to provide the relief to the small tax payers so that they can receive the payment without deducting the TDS therefore the 4 ITA No.1514/Ahd/2016 Kolikaben A. Shah vs. JCIT A.Y.. 2011-12 provision of Section 197A cannot be read as that the assessee is avoiding the deduction of TDS.
The assessee without prejudice to the above further submitted that the clerical staff has wrongly mentioned the date 01.04.2011 in the place of 31.03.2011 due to the fact that he was not conversed with the provision of income tax Act.
However, the AO disregarded the contention of the assessee and held that as per the provision of Section 194A of the Act, the assessee is liable to deduct the TDS on the payment of interest expenses. However, the provision of Section 197A requires the assessee not to deduct the TDS if the payees furnished the form no.15G as prescribed. Thus forms should have been furnished by the payees before the deduction of TDS by the assessee. In the instant case, it is a fact on record that these forms were collected by the assessee from payees as on 01.04.2011 whereas the interest expenses were claimed by her as on 31.03.2011 which clear the picture that the assessee was not in the position of the requisite forms at the time of claiming the expenses. Accordingly, the AO disallowed the sum of Rs 16,80,000/- u/s 194A r.w.s. 40(a)(ia) of the Act and added to the total income of the assessee.
5. Aggrieved, assessee preferred an appeal to ld. CIT(A). The assessee before the ld. CIT(A) submitted that there is no requirement under the provision of Section 194A / 197A of the Act to collect the declaration in form no.15G from the payees before the deduction of TDS. Therefore, there is no question of disallowance of interest expenses as the assessee has collected requisite forms from the payees as on 01.04.2011 pertaining to the A.Y. 2010-11.
5 ITA No.1514/Ahd/2016Kolikaben A. Shah vs. JCIT A.Y.. 2011-12 5.1 The assessee without prejudice to the above also submitted that all the payees have filed their income tax return after including the interest payment received from the assessee in their income tax return. Therefore, there is no need to deduct the TDS u/s 194A of the Act in pursuance to the proviso of Section 40(a)(ia) of the Act.
5.2 The ld CIT(A) called for the remand report from the AO on the details filed by the assessee showing that the payees have paid tax on the interest received from the assessee.
However, the AO did not accept the additional evidence in the remand report.
However, the ld CIT(A) admitted the additional evidences and directed the AO to allow the claim of the assessee if recipient has paid the taxes on the amount of interest received from the assessee. The relevant extract of the order of ld CIT(A) reads as under:
"3.3 I have considered the submissions of the learned Authorized Representative and the order of the Assessing Officer. I am inclined to accept the plea of the Ld. Authorized Representative that where tax has not been deducted by the appellant disallowance u/s 40(a)(ia) cannot be made if the recipient of such amounts paid by the appellant, have shown the impugned amounts in their returns of income. Thus, Assessing Officer is directed to verify the contention of the appellant and allow such interest expense after verification."
However, the ld CIT(A) also confirmed the order of AO by observing that the assessee failed to collect the requisite declaration in form no.15G from the payees. The relevant extract of the ld CIT(A) order reads as under:
"In respect of the amounts where appellant has not deducted tax on the ground that form 15G/15H were filed by the recipients since their income was below taxable limits, I agree with the observation of the Assessing Officer made 6 ITA No.1514/Ahd/2016 Kolikaben A. Shah vs. JCIT A.Y.. 2011-12 in Remand Report that this is mere afterthought because these are filed before appellate authority that means same were not available with the appellant even during assessment proceedings. How appellant is claiming that these Forms were with her as on 01.04.2011 is not understood. Moreover, no reasonable cause as provided u/r 46A, has been furnished by her to accept the Addl. Evidence. Accordingly, I accept the contention of the Assessing Officer that verification of such amounts of interest where Forms 15G/15H were not available before him, was not possible and in view of the same, addition of such sums as mentioned in the Remand Report of the Assessing Officer in respect of 29 parties is upheld. Thus, the ground of appeal is partly allowed."
Being aggrieved by the order of ld CIT(A) assessee is in appeal before us.
6. The ld. AR before us filed a paper book running from pages 1-274 and submitted that the requisite declaration in form 15G were duly collected by the assessee. Therefore, the same cannot be rejected merely on the ground that there was delay of one day in obtaining these forms by her. The ld. AR in support of his claim relied on the judgments reads as under:
i. Kolkata Tribunal in the case of Sanjay Kumar Agarwal vs. ITO reported in 77 taxmann.com 117.
ii. Mumbai Tribunal in the case of Vipin P. Mehta vs. ITO reported in 11 taxmann.com 342.
iii. Bangalore Tribunal in the case of JCIT vs. Karnataka Vikas Grameena Bank reported in 93 taxmann.com 256.
iv. Delhi Tribunal in the case of Vijaya Bank vs. ITO reported in 49 taxmann.com 533.
v. Mumbai Tribunal in the case of Karwat Steel Traders vs. ITO reported in 37 taxmann.com 190.
6.1 Without prejudice to the above, the ld AR also submitted that the payees have shown the receipt of interest of the assessee in their income tax return therefore there is no question of making the disallowance as per the proviso to Section 40(a)(ia) of the Act.7 ITA No.1514/Ahd/2016
Kolikaben A. Shah vs. JCIT A.Y.. 2011-12
7. On the other hand, ld DR vehemently supported the order of authorities below.
8. We have heard the rival contentions and perused the materials available on record. In the instant case, the claim of the assessee on account of interest expenses was denied by the AO on the ground of non-deduction of TDS. However, the assessee claimed to have collected form 15G from the payees but the plea of the assessee was rejected by the AO by observing that these declarations in form 15G were collected after incurring the interest expenses. As per the AO, the assessee ought to have the requisite form in his possession before incurring the interest expenses. Since the forms were not available with the assessee at the time of incurring the interest expenses, the AO made the disallowances.
8.1 Subsequently, the ld CIT(A) disregarded the contention of the assessee by observing that the deduction filed in form 15G were not available during the assessment proceedings accordingly, these declaration are representing the additional documents which were required to be admitted as per the provisions of Rule 46A of the Income Tax rules. However, the AO objected on the admission of these additional evidences in his remand report. Therefore, the ld CIT(A) did not admit additional evidences filed by the assessee and confirmed the order of AO.
8.2 On perusal of the above finding, we note that the ld CIT(A) has misunderstood the facts of the case as the issue of form 15G was very much arising from the order of AO. Thus, there was no question of filing any additional evidences by the assessee in the form of declaration as discussed 8 ITA No.1514/Ahd/2016 Kolikaben A. Shah vs. JCIT A.Y.. 2011-12 above. Thus, the finding of the ld CIT(A) is not correct with regard to the form filed by the assessee in form 15G.
However, the ld CIT(A) has given a direction to the AO to verify the claim of the assessee whether the payees have paid the taxes in their income tax return after including the amount of interest payment received from the assessee and allow the claim of the assessee. Accordingly, in this regard we note that the assessee has filed additional evidences before the ld CIT(A) to justify that the payees have offered the interest income in their respective return. These additional documents are in the following forms:
• "Copies of ITR along with computation and other evidences showing the interest exp. paid has been offered as income in his return by the respective party. (Page No 60 to 159) • Copies of Certificate issued by the Chartered Accountant in prescribed Form No. 26A under Rule 31ACB of I T Rules, justifying the above contention of the Appellant. ( Page No 160 to 217) • Copies of contra confirmations of the parties showing the interest income booked by them in books of accounts for the year under consideration. ( Page No 218 to
248)"
8.3 The above additional documents were duly admitted by the Ld CIT(A) and accordingly direction was provided to allow the claim of the assessee after verification.
8.4 There is no ambiguity that the proviso to Section 40(a)(ia) of the Act brought in the finance Act 2012 which is retrospective in nature. In this regard, we find support and guidance from the order of Rajeev Kumar Agarwal vs. ACIT reported in 45 taxmann.com 555 wherein it was held as under:
"In view of these discussions, as also for the detailed reasons set out earlier, we cannot subscribe to the view that it could have been an "intended consequence"
to punish the assessees for non deduction of tax at source by declining the deduction in respect of related payments, even when the corresponding income is 9 ITA No.1514/Ahd/2016 Kolikaben A. Shah vs. JCIT A.Y.. 2011-12 duly brought to tax. That will be going much beyond the obvious intention of the section. Accordingly, we hold that the insertion of second proviso to Section 40(a)(ia) is declaratory and curative in nature and it has retrospective effect from 1st April, 2005, being the date from which sub clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004."
8.5 In view of above, we find no infirmity in the direction provided by the ld CIT(A). Moreover, we also note that there is no prejudice to the assessee against the direction provided by the ld CIT(A).
8.6 As noted earlier that the issue of form 15G has not been adjudicated by the ld CIT(A) on merit, therefore we are not inclined to adjudicate the same on merit. Moreover, the ld AR also did not advance any argument on the issue of non-deduction of TDS on account of non-furnishing of form 15G within the prescribe time.
In view of above, we do not find any infirmity in the direction provided by the ld CIT(A). Hence, the ground of appeal of the assessee is allowed.
9. The second issue raised by the assessee in ground no.3 is that ld CIT(A) has not given any direction to the AO for taking the amount of income declared by the assessee in the revised income tax return.
10. The grievance of the assessee is that the AO has erroneously taken the income declared in the original return of income for Rs. 84,39,810/- instead of Rs. 83,13,680/- declared in the revised return of income. Therefore, the ld Counsel for the assessee prayed to give the direction to the AO to take the correct amount of income declared in the revised return of income. The ld DR did not raise any objection if such direction is issued by the Bench. After 10 ITA No.1514/Ahd/2016 Kolikaben A. Shah vs. JCIT A.Y.. 2011-12 hearing both the parties and perused the materials available on record we direct the AO to take the correct income as declared by the assessee in her revised return of income in accordance to the provision of law. Thus, the ground of appeal of the assessee is allowed for statistical purposes.
11. In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the Court on 1st November, 2018 at Ahmedabad.
Sd/- Sd/-
(RAJPAL YADAV) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 01/11/2018
Priti Yadav, Sr.PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबं!धत आयकर आयु#त / Concerned CIT
4. आयकर आयु#त(अपील) / The CIT(A) - 4, Vadodara.
5. &वभागीय त न!ध, आयकर अपील य अ!धकरण, अहमदाबाद / DR, ITAT, Ahmedabad.
6. गाड फाईल / Guard file.
ु ार/ BY ORDER, आदे शानस स या&पत त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ&धकरण, अहमदाबाद / ITAT, Ahmedabad