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TMI Blog2016 (2) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... Second proviso to section 40(a)(ia) is clarificatory and therefore retrospective in operation and as a consequence, once the payee has discharged in tax obligation in accordance with law, operation of section 40(a)(ia) stands dispensed with. The Assessing Officer is directed to adjudicate the issue in accordance with law after affording reasonable opportunity of hearing to the assessee. Thus, on this Ground assessee succeeds for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rajma), Soyabean etc. locally from farmers and petty traders and selling to various wholesalers. The assessee also often imports pulses like Rajma from China, Pakistan and Burma. The trading activities are mainly carried out from Satara through proprietary concern, 'Radhesham Bherulal Bhandari' and also from Delhi through another proprietary concern, 'Bhandari Agri Sales'. During the assessment proceedings, the Assessing Officer found that the assessee derived major turnover from trading of Ghevada/Rajma. The trading results in respect of two items from centres carried out from Satara and Delhi were found to be as under :- Turnover Gross Profit Gross Profit % Satara Centre 10.63 Crores Rs.38,98,819/- 3.67% Delhi Centre 10.58 Crores Rs.18,51,628/- 1.74% 5. The Assessing Officer observed that there is drastic difference in the gross profit ratio of both the concerns being Satara Centre and Delhi Centre. He also observed that in the immediately preceding year, the G.P. percentage for the Delhi centre was 4.02%. It was next observed by the Assessing Officer that though there is wide variation in the sale prices between different types of Ghevda/Rajma, ranging from ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... culties and business considerations / exigencies while maintaining the books of account. It was stated that maintaining variety/quality-wise stock register was not possible for following reasons :- The suppliers simply mention Ghewda / Rajma in their Bills. Variety of Ghevda is not at all mentioned. Same is the case while selling Ghewda. Sales patti's are prepared by 'Commission Agents' or 'Adatiyas' at Delhi Market. They too do not mention variety of Ghewda traded. Farmers and local petty suppliers also do not mention variety of Ghewda supplied by them when they handover Ghewda to local Adatiyas at local Market yards in respective areas. No trader in India known to appellant maintains separate variety-wise trading account. This is normal trade practice followed over the years by all traders in India. 7. It was pointed out by the assessee before the CIT(A) that during the assessment proceedings that the details of quantitative/month-wise purchases and sales and stock as well as purchases were provided to the Assessing Officer. It was next submitted that the influence of Tejmandi factors prevailing in Delhi and Satara centres is required to be factored. It was further contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the quantitative details is not available to his satisfaction. 11. The Ld. Departmental Representative for the Revenue, on the other hand, relied upon the order of the CIT(A) and submitted that the relief entitled to the assessee has already been granted in this regard. 12. We have carefully considered the rival submissions, orders of the authorities below and material placed on record. The issue agitated before us is to ascertain whether the Revenue was justified in comparing the gross profit margin at Delhi centre vis-à-vis another centre located at Satara (Maharashtra). We find that details of purchase bills, sale bills, quantity-wise stock register and other information having been provided is not disputed. The primary grievance of the Revenue is that quality-wise stock register has not been maintained which may lead to under-valuation of closing stock. The Assessing Officer accordingly rejected the book results of the assessee concerning its Delhi centre and substituted the G.P. by a G.P. rate of 3.67% as found to have been declared for its Satara centre. We notice that no specific defect per se has been pointed out except generic observation of abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties on loan taken from them as under :- S.No. Name of the Institution Amount paid Paying Unit 01. Vyapari Patsanstha 1,92,179 Bhandari Agri Sales 02. Mahesh NSPS Sanstha 4,05,143 Bhandari Agri Sales 03. Mahesh NSPS Sanstha 1,54,690 B.R. Bhandari 04. Parshwanath NSPS 2,76,666 B.R. Bhandari 13.2 The Assessing Officer disallowed the same invoking section 40(a)(ia) of the Act as the assessee has failed to deduct due tax at source from the said payment. While doing so, it was observed by the Assessing Officer that the co-operative credit societies cannot be equated with banks as they are not empowered to carry out banking activities under the Banking Regulations Act and therefore payment of interest made to them is not covered under the exception provided in section 194A of the Act. 13.3 In the first appeal before the CIT(A), the assessee inter-alia submitted that payment of interest were made to Nagri/ Gramin Sahakari Patsansthas whose income are not taxable due to provisions of section 80P of the Act. The assessee bonafidely believed that the income of Nagri/ Gramin Sahakari Patsansthas was not taxable and therefore there is no need to deduct TDS on interest. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e.f. 01.04.2013, whereby it is provided that the disallowance u/s 40(a)(ia) of the Act would not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the Act. The stand of the assessee is that the said proviso should be understood as retrospective in nature as it has been introduced to eliminate unintended consequences which may cause undue hardships to the tax payers. It was pointed out that in similar circumstances, the Pune Bench of the Tribunal in the case of ITO vs. M/s Gaurimal Mahajan & Sons vide ITA No.1852/PN/2012 dated 06.01.2014 following the decision of the Cochin Bench of the Tribunal in the case of Antony D. Mundackal vs. ACIT vide ITA No.38/Coch/2013 dated 29.11 .2013 has restored the matter back to the file of the Assessing Officer. In the precedent dated 06.01.2014 (supra), the Tribunal noted that such a plea was raised for the first time before the Tribunal and the correctness or otherwise of the contentions raised was not examined by the lower authorities. Therefore, the Tribunal restored the matter back to the file of the Assessing Officer for examination afresh, following the decision of the Cochin Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tmental Representative for the Revenue fairly admitted that the appeal of the Revenue in ITA No.194/PN/2014 relating to assessment year 2008-09 is covered by recent CBDT Circular No.21 of 2015 dated 10th December, 2015. Since the 'tax effect' in respect of disputed issues raised by the Revenue in its appeal is less than the revised monetary limit of ₹ 10 lakhs prescribed by the CBDT Circular, the aforesaid appeal of the Revenue in ITA No.194/PN/2014 is not maintainable. 20. In view of expressed Circular of the CBDT (supra), the appeal of the Revenue in ITA No.194/PN/2014 stands dismissed. 21. Now, we shall take-up the appeal of the assessee in ITA No.228/PN/2014 for adjudication. In this appeal, the assessee has raised the following Grounds of Appeal :- "1) On the facts and circumstances of the case and in law the Ld. CIT(A)-III, Pune, was not justified in confirming the disallowance of ₹ 5,37,926/- made by the A. O. invoking the provisions of S. 40(a)(i-a) on account of interest paid to Co. Op. Credit Societies whose income is exempt under S. 80P(2)(a)(i) of the Act. The provisions of S. 40(a)(i-a) are not applicable for such payments of interest to these societies. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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