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2016 (10) TMI 693 - ITAT DELHI

2016 (10) TMI 693 - ITAT DELHI - TMI - TDS u/s 194A - disallowance of interest paid u/s. 40(A)(ia) - non deduction of tds - assessee in default - as per assessee the interest on Loans A/c has already been filed with the AO - Held that:- During the year in question the assessee TOP-UP his loan from another banker for which the processing fees was paid. That the loans were taken for his business. That the proportionate interest of housing at the rate of 15% was separately shown against the rental .....

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an 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 the Ld. AO, rightly inclined to agree with the contentio .....

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est paid on loan from banking concern of ₹ 35,06,062/- was rightly deleted by the Ld. CIT(A) - Decided in favour of assessee. - ITA No. 6525/Del/2015 - Dated:- 30-8-2016 - SHRI H.S. SIDHU, JUDICIAL MEMBER For The Department : Sh. FR Meena, Sr. DR For The Assessee : Shri Vinod Kumar Goyal, Adv ORDER PER H.S. SIDHU, J.M. The Department has filed the Appeal against the impugned order dated 10.9.2015 of Ld. CIT(A)-14, New Delhi pertaining to assessment year 2012-13. The grounds raised in the r .....

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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 t .....

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n the order of the AO and reiterated the contentions raised in the grounds of appeal and stated that order of the Ld. CIT(A) may be set aside and Appeal of the Revenue may be allowed. 6. On the contrary, Ld. Counsel of the Assessee has relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part, hence, the same may be upheld and accordingly, the appeal of the Revenue may be dismissed. 7. I have heard the Ld. .....

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of ₹ 35,06,062/- is illegal, unjust and without prejudice. During the course of appellate proceeding the Ld. AR submitted 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 w .....

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r his business. That the proportionate interest of housing at the rate of 15% was separately shown against the rental income. That a demand of ₹ 15,30,000/- has been credited U/s 143(3) of I.T. Act, 1961 for the above said assessment year. That the assessee has filed an appeal before the Higher Authorities 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 2 .....

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Therefore, the assessee is not liable to treat as defaulter as per proviso 40(a) of I.T. Act and A.O. is in error in disallowing the interest payment to the bank without deduction tax." Keeping into consideration the submissions of the appellant as well as the findings of the Ld. AO, I incline to agree with the contention of 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 p .....

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s aforesaid, I find that the AO observed from the perusal of Profit and Loss account 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/- was disallowed and added to the income of the assessee. However, as per assessee the interest on Loans A/c .....

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