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2016 (8) TMI 1129 - ITAT JAIPUR

2016 (8) TMI 1129 - ITAT JAIPUR - TMI - TDS u/s 194A - Disallowance on account of interest paid to non-banking Finance (NBFC) company for non deduction of tds - assessee submitted form No. 26A prescribed under rule 31ACB issued by the NBFC companies stating that in respect of income received from assessee the same is included in their taxable income and thereby erred in not following provisions of law (S.201 of I.T. Act., 1961) - Held that:- The Honble Supreme Court in Hindustan Coca Cola Bever .....

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e principle that f two reasonable constructions of a taxing provisions are possible, that construction which favours the assessee must be adopted. In view of the above discussions, we remit the matter to the file of the AO for limited verification of Form No. 26A prescribed under Rule 31ACB on the aspect as to whether recipient of payment has included the same in their computation of business income offered to tax and, if found to be so, delete the disallowance in question. With these directi .....

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nd of appeal: On the facts and in the circumstances of the case, the ld. CIT(A) erred in upholding the disallowance on account of interest paid to non-banking Finance (NBFC) company of ₹ 3,48,284/-inspite of the fact that assessee submitted form No. 26A prescribed under rule 31ACB issued by the NBFC companies stating that in respect of income received from assessee the same is included in their taxable income and thereby erred in not following provisions of law (S.201 of I.T. Act., 1961). .....

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lowed the above amount of ₹ 3,48,284/- and added to the total income of the assessee. 2.1 Being aggrieved, the assessee carried the matter in appeal before the ld CIT(A) and submitted that where it is held that the payment of financial charges is interest, then assessee submits that on such interest/financial charges, income has been displayed and declared by BMW Finance Services and Tata Capital and the provisions of section 40(a)(ia) will not be applicable as the recipient NBFCs have dec .....

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however didn t agree with the contentions of the assessee and has given her findings stating that: In the recent judgement of the Hon ble Kerala High Court in the case of Thomas George Muthoot vs. CIT Kottayam 2015 (63 taxman.com 99) (kerela) it has been clearly held that the second proviso to section 40(a)(ia) introduced w.e.f. 01.04.2013 is only prospective. It has further been held that the fact that the recipient has subsequently paid tax will not absolve payee from consequence of disallowan .....

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he same is interest on vehicle finance of TATA finance and BMW Finance and since TDS was not deducted at source u/s 194A of Income Tax Act, 1961. Section 40(a)(ia) was invoked and entire amount was disallowed. The ld. CIT(A) has confirmed the same holding that the 2nd proviso to S.40(a)(ia) introduced w.e.f. 01.04.2013 is only prospective. Ld. CIT(A) also held that the fact that the recipient have subsequently paid does not absolve payee from consequence of disallowance u/s 40(a)(ia). The Ld. CI .....

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and Sons (1994) 210 ITR 886 (SC), • CIT vs. Rathi Gum Indus tries(1995) 213 ITR 98 (Raj.), and • CIT vs. Ansal Land Township Pvt. Ltd. 234 Taxman 825 (Del.) 2.4 The ld DR is heard who has relied upon the order of lower authorities and the decision of Hon ble Punjab and Haryana High Court in case of PMS Diesel (374 ITR 562) and Hon ble Kerala High Court in the case of Thomas George Muthoot (supra). 2.5 We have heard the rival contentions and perused the material available on record. Th .....

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