9911796707
TMI Blog2022 (5) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... it was observed that the assessee has made payment of interest on loans amounting to Rs. 10,87,826 to L & T Finance Ltd., Citi Corp Finance Ltd., Indiabulls Financial Services Ltd., Sundaram Finance Ltd. and SREI Equipment Private Limited, on which no tax at source was deducted by the assessee. The assessee was asked to show cause as to why interest expenses to NBFCs should not be disallowed under section 40(a)(ia) of the Act as the assessee has failed to deduct TDS on interest paid to such NBFCs during the year. In reply, assessee filed copies of some interest certificates regarding interest paid/payable to the aforesaid NBFCs but no explanation/reason/justification was submitted for non-deduction of TDS from interest payments to NBFCs. The Assessing Officer vide order dated 31 October 2016 passed under section 143(3) of the Act disallowed the interest amounting to Rs. 10,87,826 under section 40(a)(ia) of the Act for non-deduction of TDS on interest paid to NBFCs. 4. In appeal before CIT(A), the assessee placed reliance on second proviso to section 40(a)(ia) and submitted that if NBFCs have paid income tax on the interest received from the assessee, no disallowance could be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of interest to the NBFCs. However, second proviso to section 40(a)(ia) of the Act, inserted by Finance Act, 2012 w.e.f. 01.04.2013, provides that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter-XVII-B on any such sum but is not deemed to be an assessee in default on the first proviso to section 201(1), then, for the purpose of this sub-clause, it shall be deemed that assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee. 8. From the facts available on record, it is evident that the assessee though has taken the plea on the basis of second proviso to section 40(a)(ia) of the Act, however, failed to establish or prove that NBFCs had paid income tax on interest received from the assessee. Accordingly, the CIT(A) upheld the disallowance made by the Assessing Officer. Now, in the present appeal, the assessee by way of additional evidence has produced copies of Form No. 26A in support of its aforesaid plea based on second proviso to section 40(a)(ia) of the Act. In view of the above, we deem it appropriate to admit the additional evidence filed by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 40(a)(ia) of the Act. Being aggrieved, the assessee is in appeal before us. 12. During the course of hearing, learned A.R. referred to Form No. 26A issued by the accountant under the first proviso to sub-section (1) of section 201 of the Act in respect of salary paid to the Directors, filed by way of additional evidence before us. On the other hand, learned D.R. vehemently relied upon the orders passed by the lower authorities. 13. We have considered the rival submissions and perused the material available on record. In the present case, it is an undisputed fact that salary was paid to the Directors of the assessee company and the Directors had offered the same in the return of income filed. The only basis on which CIT(A) dismissed the appeal filed by the assessee on this issue was that the assessee has not furnished the certificate as required under first proviso to section 201(1) of the Act. As the assessee has now furnished the said certificate issued under Form No. 26A, we deem it appropriate to remand this issue to the file of Assessing Officer for necessary verification of the details furnished by way of additional evidence before us and decide the issue de novo as per law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has not furnished any additional evidence to the effect that the payee have offered the rent income in the return of income and paid taxes thereon. Thus, as there is no dispute that as per leave and license agreement, assessee is required to pay Rs. 1,50,000 per annum which is below the threshold required for deducting tax at source on the payment of rent, we direct the Assessing Officer to delete the disallowance under section 40(a)(ia) of the Act to an extent of Rs. 1,50,000 covered by the aforesaid leave and license agreement. As a result, ground No. 3 raised in assessee's appeal is partly allowed. 18. The issue arising in ground No. 4, raised in assessee's appeal, is with regard to ad hoc disallowance of Rs. 6,55,161 out of diesel, petrol and oil expenses and freight expenses. 19. The brief facts of the case pertaining to this issue as emanating from the record are: During the relevant assessment year, the assessee incurred expenditure towards diesel, petrol and oil expenses amounting to Rs. 1,23,53,178 and Freight Expenses of Rs. 5,31,62,956. During the course of assessment proceedings, assessee submitted copy of Ledger account of these expenses. The Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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