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2015 (9) TMI 270 - ITAT KOLKATA

2015 (9) TMI 270 - ITAT KOLKATA - TMI - Disallowance of interest expense u/s 40(a)(ia) - failure to deduct income tax at source and non procurement of Form 15G from the parties within the stipulated time - Held that:- Assessee has submitted Form 15G well in the stipulated time-limit along with all the relevant details and disallowance u/s 40(a)(ia) of the Act cannot be made only for topographical error in filling the verification date in duplicate Form 15G filled up by payees. All the original F .....

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ocate For The Respondent : Sri Rajendra Prasad, JCIT-DR ORDER This appeal by the assessee is arising out of Commissioner of Income Tax (Appeals)-XX, Kolkata in appeal No. 198.CIT(A)-XX/Ward35(1)/2010-11/Kol dated 12-02-2013. Assessment was framed by ITO Ward-35(1) Kolkata u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act ) vide his order dated 20-12- 2010 for assessment year 2008-09. 2. Only issue involved in this appeal of assessee is against the order or Ld. CIT(A) for .....

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1961 despite receipt of Form no 15G. 3. Briefly stated facts are that during the course of assessment proceedings, AO in order to verify the compliances of TDS provision, asked, the assessee to furnish the requisites details including the Form 15G received by the assessee with reference to Section 197A(IC) of the Act. On going through the copies of Form 15G submitted by assessee. AO noticed that neither Form 15G were properly filled in nor submitted to the deductees within the stipulated time i. .....

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reply to the show cause notice of AO, the AR of the assessee submitted that all the Forms 15G were duly received by the assessee during the first week of March, 2008 but were misplaced for some reasons and could not be found till the end of year i.e. 31-03-2008 and therefore assessee requested all those parties to submit Form 15G afresh. The unsecured loan providers accepted the request of the assessee and resubmitted the Form 15G after 31st March, 2008, however, AO did not accept the plea of th .....

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the appellant. The fact of the case is that the appellant paid interest on loans to various persons but no tax was deducted. The appellant claimed that they had received Form no. 15G from the persons concerned, hence, no tax was required to be deducted. However, the A found that the date on Form No. 15G was 04.04.2008 and signed by the deductees on 04.04.2008 itself. The appellant argued that original form submitted by the deductees were misplaced, therefore, they resubmitted the Form 15G after .....

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the AO to invoke provision of section 40(a)(ia) is correct. Aggrieved, now assessee came in second appeal before the Tribunal. 5. Ld. Counsel for the assessee referred to paper book in regard to the copies of Form 15G received from the parties and submitted to I.T. Authorities on 07- 04-2008 which is well within the statutory time-limit given in the Act for submitting Form 15G before the Tax Authority. He further prayed that all the Form 15G had all the requisites details filled in including th .....

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ts made to the parties from whom assessee had received Form 15G hence, the interest payment should not be disallowed u/s. 40(a)(ia) of the Act. On the contrary, Ld. DR supported the orders of authorities below and did not put any fresh submission before me. 6. I have heard rival contentions and gone through the facts and circumstances of the case. Section 194A provides for deduction of TDS interest paid by the assessee at the appropriate rate and Sec. 197A provides that notwithstanding anything .....

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o the CCIT or CIT one copy of the declaration submitted by the payee of the interest to the assessee on or before the seventh day of the month next following the month in which the declaration was furnished to him. If the person responsible for paying the interest (i.e. the assessee) does not comply with sub-section 2 of Sec. 197A of the Act, he is liable to pay penalty of ₹ 100/- for every day during which the failure continues. Such penalty can be imposed only by the Commissioner or Chie .....

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spect of their total income and therefore tax need not be deducted from interest u/s 194A and in the light of this declaration, he had no option but to make payment for interest without any tax deduction. Further in case before me, the AO has never objected to any details as were provided in the Form 15G and only point on which basis the AO has disallowed the interest paid is the date of signing of the declaration of Form 15G which has been 4th April, 2008 in a few cases. However, the copies of .....

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s on 07-04-2008. Unless it has been proved that Form 15G were not in fact submitted by the loan creditors to the assessee, the assessee cannot be blamed because at the time of paying interest to the loan creditors, he has to perforce rely upon the declarations filed by the loan creditors and he was not expected to embark upon an enquiry as to whether the loan creditors really and in truth had no taxable income on which tax is payable. That would be putting an impossible burden on the assessee. A .....

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s squarely covered in favour of assessee and against the Revenue by the decision of Mumbai Bench F Bench in the case of Vipin P. Mehta v. ITO in ITA No.3317/Mum/2010 dated 20-05-2011 and which has given following finding as under:- … We have already seen that under sub-section (4) of Section 272A no penalty can be imposed unless the assessee is given an opportunity of being heard. All these provisions indicate that the failure on the part of the assessee, who is the payer of the interest, .....

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