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TMI Blog2019 (8) TMI 1051X X X X Extracts X X X X X X X X Extracts X X X X ..... employee has gone on leave suddenly and returned to office on 22.11.2018 and thereafter the appeal papers were handed over to the Counsels, who filed the appeal which resulted in delay. The assessee further submitted that the delay was due to absence of employee and it was not intentional, hence, requested to condone the delay. After hearing both the sides, we condone the delay. This appeal is filed by the assessee against the order of the Commissioner of Income Tax [CIT(A)]-3, Visakhapatnam vide ITA No.71/2017-18/CIT-(A)/VSP/2018-19 dated 03.07.2018 for the Assessment Year (A.Y.)2009-10. 2. In this case, all the grounds of appeal are related to the issue of confirming the addition of Rs. 27,29,767/- pertaining to interest payment u/s 40 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the submissions of the assessee and remitted the matter back to the file of the AO for the limited purpose of verification whether the recipient had accounted interest income and discharged its obligation and filed the returns of income or not and in case it is found that recipient had admitted the income, the ITAT directed the AO to delete the addition made u/s 40(a)(ia) of the Act. For the sake of clarity and convenience, we extract para No.12 to 14 of the order of the Tribunal which reads as under. "12. It is the claim of the assessee that the recipient Sri. Koundinya Education Society has included the interest income in their books of accounts and filed the income tax returns for the relevant years. The assessee has filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so inserted by the Finance Act, 2012, w.e.f. 1-4-2013 is prospective or retrospective in nature. The memorandum explaining the Finance Bill 2012 states that "in order to rationalize the provisions of disallowance on account of non-deduction of tax at source from the payments made to resident payee, it is proposed to amend sec. 40(a)(ia) by inserting the proviso. Thus, as the proviso is inserted to rationalize the existing provisions, it has to be taken to be clarificatory in nature. This view was expressed by the coordinate Bench of ITAT, Agra in the case of Rajeev Kumar Agarwal vs. Addl.CIT in ITA.No. 337/Agra/2013 dated 29-05-2013, wherein the Bench held that second proviso to sec. 40(a)(ia) is declaratory and curative in nature and it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest paid on unsecured loans u/s 40(a)(ia) of the Act." 4.1. The AO has taken up the case for verification of issue and called for the details to give effect to the order of the Tribunal and disallowed the interest paid to Sri Koundinya Educational Society, though the assessee has filed the relevant information before the AO. In the consequential order passed u/s 143(3) r.w.s. 254, the AO held that proviso to section 40(a)(ia) came into force w.e.f. 01.04.2013 and impugned assessment year was 2009-10 and the proviso has no application in case of the assessee. The AO further viewed that though the recipient had admitted the income, the said income was exempt u/s 10(23C)(vi), thus, held that the assessee has not complied with the deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2007-08 with a narration that the interest accrued but not received. As per the ledger copy placed in Page No.2 of the paper book, the total interest received from others was Rs. 17,25,299/- and the same was admitted in Income and Expenditure account for the year ending 31.03.2008 placed in paper book page No.6. Thus, it is established that recipient M/s Koundinya Educational Society had admitted the interest of Rs. 14,66,813/- for the A.Y.2008-09. Similarly, as per page No.1 of the paper book, the recipient had admitted the interest of Rs. 12,62,954/- being the interest from Chaitanya Educational Society and declared in Income & Expenditure account placed in paper book page No.6. Thus, it is established that the recipient had admitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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