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Income Tax Officer Versus Andhra Pradesh Power Finance Corporation Ltd

2016 (7) TMI 394 - ITAT HYDERABAD

Disallowance u/s 40(a)(ia) - assessee had failed to deduct tax on payment of interest - Held that:- In the present case of the assessee, the amounts of interests had already been paid and the provisions of section 40(a)(ia) are applicable only to the amounts remaining payable. That we also take note of the proviso to section 40(a)(ia) that where the assessee cannot be found in default u/s 201, no disallowance u/s 40(a)(ia) could be made. - The assessee has already submitted before the CIT (A .....

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see - ITA No. 27/Hyd/2016 ,C.O. No.16/Hyd/2016 - Dated:- 1-7-2016 - Shri B. Ramakotaiah, Accountant Member And Shri Partha Sarathi Chaudhuri, Judicial Member For the Revenue: Shri K.E. Sunil Babu, DR For the Assessee : Shri A.V. Raghuram ORDER Per Shri Partha Sarathi Chaudhuri, J. M. The appeal and cross objection are filed by the Revenue and the assessee respectively against the order of the learned CIT (A)-1, dated 08.10.2015 for the relevant A.Y 2012-13. The grounds raised by the Revenue is r .....

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ting to the case are that the assessee is a company incorporated by the State of Andhra Pradesh, engaged in mobilizing funds and funding power projects of the State of A.P. It has filed its return of income for the A.Y 2012-13 on 30.09.2012 admitting Nil income. AO completed the assessment after scrutiny wherein an amount of ₹ 4,93,77,482 was disallowed u/s 40(a)(ia) of the Act and added to the total income of the assessee. This is precisely the issue in Ground No.2 in the ground of appeal .....

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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 under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso. ] In accordance with the proviso where it is not possible to pass an order u/s 201 hold .....

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d the assessee cited the decision of the Special Bench of the ITAT Visakhapatnam in the case of Merlyn Shipping & Transport (136 ITD 23). This decision though stayed by the Hon'ble A.P. High Court, the same High Court in a later case held that the Tribunal is bound to follow this decision as it has not been reversed by the High Court. The Hyderabad ITAT in a recent case followed the decision of the Merlyn Shipping (Supra) and held that no disallowance u/s 40(a)(ia) once the amount is not .....

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t Fund/Superannuation/G.P.F. organization of various entities or other organization whose income are exempt from TDS deduction as per the provisions of section 196. Assessee submitted a statement giving the details of interest paid along with a column giving status of the recipients. It was further submitted by the assessee that wherever the recipient was liable for tax, the assessee has deducted the tax and only where the income was not taxable, deduction of tax was not made. That the assessee .....

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rt has sanctified that the decision of Merlyn Shipping shall have to be followed by the smaller and Coordinate Benches of the Tribunal. The learned CIT (A) in her order observed that the assessee has claimed that the payment has been made to 204 investors mostly which are public trust and welfare fund. All of them are income tax assessees. That therefore, following the direction of the jurisdictional High Court in the case of Janapriya Engineers Syndicate (Supra) and following the Special Bench .....

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