TMI Blog2016 (10) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... ies against the said assessment order. However, the assessee directed to pay the above said demand within 30-days. In respect of which the assessee paid ₹ 4,00,000/- (i.e., more than 25% of the total demand) on 30-01-2015 in Corporation Bank Ltd. Challan. As no tax is liable to deduct on account of loan and interest payment to the bank. Therefore, the assessee has not deducted tax. In my view, this is exception as per sub-section III of section 3 of 194A of I.T. Act. Therefore, the assessee is not liable to treat as defaulter as per proviso 40(a) of I.T. Act and A.O. was in error in disallowing the interest payment to the bank without deduction tax CIT(A) after considering the submissions of the assesee as well as the findings of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus holding that no tax is liable to be deducted at source. 2. The appellant craves the right to add, alter or amend any ground of appeal. 2. The brief facts of the case are that the assessee had filed his return of income declaring an income of ₹ 9,80,230/- on 30.9.2012. The assessee is engaged in the business of trading of handloom items under the name and style of M/s Ambica Associates. The case was selected for scrutiny under CASS. During the assessment proceedings the AO has raised various queries and the assessee filed reply before the AO from time to time. After discussion the AO has completed the assessment by making the various additions vide his order dated 31.12.2014 passed u/s. 143(3) of the I.T. Act, 1961. 3. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted as under: - Issue No.1: [Addition of ₹ 35,06,062/- on Alc. of U/s 40(a)(ia)] A.O. Observation: In this regard, Ld. AO observed as under: From the perusal of Profit and Loss account it is found that the assessee has claimed interest on loan at ₹ 35,06,062/- on secured loan where no TDS has been deducted as per the provision of section 194A of I.T. Act which attracts the provisions of disallowance U/s 40(a)(ia) of I.T. Act. Therefore, the interest paid on loan amounting to ₹ 35,06,062/- is disallowed and added to the income of the assessee. Assessee's Submission: That the interest on Loans A/c has already been filed with you however the statement of which are hereby enclosed, that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant that no tax is liable to deduct on account of loan and interest payment to the bank. Therefore, the assessee has not deducted tax. This is exception as per sub-section IIIrd of section 3 of 194A of I.T. Act. Therefore, the assessee is not liable to treat as defaulter as per proviso 40(a) of I.T. Act and A.O. is not justified in disallowing the interest payment to the bank without deduction tax. Accordingly, the addition made on account of non deduction of TDS on account of interest paid on loan from banking concern of ₹ 35,06,062/- is deleted. Hence, this ground of appeal is allowed. 8.1 After going through the findings of the Ld.CIT(A), as aforesaid, I find that the AO observed from the perusal of Profit and Loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n error in disallowing the interest payment to the bank without deduction tax. 8.2 I also find that Ld. CIT(A) after considering the submissions of the assesee as well as the findings of the Ld. AO, rightly inclined to agree with the contention of the assessee that no tax is liable to deduct on account of loan and interest payment to the bank. Therefore, the assessee has not deducted tax. This is exception as per sub-section III of section 3 of 194A of I.T. Act. Therefore, the assessee is not liable to treat as defaulter as per proviso 40(a) of I.T. Act and A.O. was not justified in disallowing the interest payment to the bank without deduction tax. Accordingly, the addition made on account of non deduction of TDS on account of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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