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Issues involved: Appeal against cancellation of disallowance u/s 40(a)(ia) for non-deduction of TDS on interest payment.
Summary: The appeal was filed by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-IV, Baroda for the assessment year 2005-06, specifically challenging the cancellation of disallowance made u/s 40(a)(ia) amounting to Rs. 5,60,757. The dispute arose from the non-deduction of tax at source from interest paid to Manibhai A. Patel, HUF, based on the submission of Form 15G by the said party. In the assessment order, the Assessing Officer disallowed the amount under section 40(a)(ia) as tax was not deducted at source from the interest paid to Manibhai A. Patel, HUF. The appellant contended that Form 15G was received from the party, and thus, tax deduction was not required. However, the Assessing Officer found the submission insufficient to comply with the relevant sections and invoked the provisions of section 40(a)(ia) for the disallowance. Upon appeal, the Learned Commissioner of Income Tax (Appeals) deleted the addition, emphasizing that due to the submission of Form 15G, tax deduction was not necessary, regardless of whether the form was sent to the CIT. The Revenue challenged this decision, arguing that the acknowledgment of the letter containing Form 15G submission was not provided, and thus, the disallowance should stand. After considering the arguments, the Tribunal upheld the decision of the Learned Commissioner, noting that the non-deduction of tax was justified based on the Form 15G submitted by Manibhai A. Patel, HUF, and the assessed income of the party for the relevant year. Consequently, the appeal filed by the Revenue was dismissed, affirming the cancellation of the disallowance u/s 40(a)(ia).
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