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2018 (10) TMI 2011 - ITAT BANGALOREDisallowance u/s 40(a)(ia) - Assessee paid interest on car loan availed - 'assessee in default’ u/s 201(1) - whether filing of Form No.26A namely the certificate of the Chartered Accountant as prescribed u/s 201(1) can be taken as a conclusive proof that the recipients of the payment from the assessee has taken into account the sum received from an assessee on which no tax had been deducted at source for computing his income in such return of income? HELD THAT:- A reading of the proviso to Sec.201(1) of the Act and Rule 31ACB of the Rules shows that once a declaration in Form No.26A by a Chartered Accountant is furnished then the Assessee cannot be treated ‘as an Assessee in default’ and consequently no disallowance u/s.40(a)(ia) can be made. Requirement in Rule 31ACB is purely procedural and noncompliance of furnishing Form No.26A before the Director General of Income Tax (Systems) cannot be the basis to make disallowance u/s.40(a)(ia) - Rule 31ACB cannot override or provide for more conditions than what is contemplated by the provisions of proviso to Sec.201(1). The proviso to Sec.201(1) refers to only prescription of particular form and does not authorise laying down any further condition to be satisfied to escape the rigours of Sec.201(1) of the Act. Its fundamental that Rules cannot override the Act. Disallowance u/s.40(a)(ia) in the present case cannot be sustained and the same is directed to be deleted. Decided in favour of assessee.
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