9911796707
TMI Blog2014 (1) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... recipients has shown its income in individual returns the receipt of interest and paid taxes thereon. 3. Relevant facts are that the assessee is a proprietor of M/s Karishma Sales Corporation engaged in the business of dealing in coated fabrics. The assessee claimed a sum of Rs.2,48,500/- as interest expenditure. During the course of assessment proceedings initiated u/s 148 of the Act, AO asked the assessee as to why the interest claim of Rs.2,48,500/- should not be disallowed, since assessee did not deduct TDS and therefore as per the provisions of section 40(a)(ia) of the Act are made applicable to it. AO has stated that the assessee submitted that "he has no objection to the same." Since assessee agreed to the said addition, during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tamount to double taxation. In my view, this interpretation of law is not correct and the appellant should have deducted tax at source for the allowance of interest payment as stipulated in section 40(a)(ia) of the IT Act. If the contention of the appellant is accepted then the section 40(a)(ia) will become redundant. Therefore, in my view the addition made by AO of Rs.2,48,500/- is in order and the same is accordingly, confirmed. The ground of appeal is dismissed." Hence, assessee is in further appeal before us. 5. During the course of hearing, ld AR reiterated the same submissions as made before the ld. CIT(A). He further submitted that by Finance Act, 2012 the proviso to section 40(a)(ia) of the Act has been inserted with effect from 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to section 40(a)(ia) of the Act inserted by Finance Act, 2012 with effect from 1.4.2013 is remedial in nature and the same should be considered retrospectively. He submitted that the recipients of the interest had paid taxes on the amount of interest received from the assessee in the return filed, it should be deemed that the assessee was not in default in deducting TDS as per the provisions of Chapter XVII-B of the Act and no disallowance should be made. AR also filed an extract from Taxmann's Masterguide-2012, page 1.216. In this regard, we may state that the said Taxmann's Masterguide-2012 is only in the form of article suggesting that second proviso to section 40(a)(ia) of the Act inserted by Finance Act, 2012 should be read retrospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return filed by him. Since 40(a)(ia) of the Act provides for disallowance interalia for non- deduction of TDS on the interest so paid to a resident, even if in a case when the payee has paid taxes on the sum so received or credited to his account by the payer without deducting TDS, a second proviso has been inserted to section 40(a)(ia) of the Act w.e.f. 1.4.2013 by Finance Act, 2012 to bring the provision of section 40(a)(ia) at par with section 201 (1) of the Act because payer will not be treated an assessee in default but still prior to insertion of second proviso to section 40(a)(ia) of the Act, the disallowance in his hands will be made if TDS is not deducted on the amount paid interalia interest and if deducted but has not paid the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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