9911796707
TMI Blog2017 (12) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... se ld Commissioner of Income Tax(Appeal) had erred in law in deleting the disallowances of Rs. 11,97,624/- that was made as per provision of section 40(a)(ia) of the I.T. Act on the ground of non-deduction of tax at source by the assessee to the individuals against payment of interest. 3.That on the fact and circumstances of the case ld Commissioner of Income Tax(Appeal) had erred in law in deleting the disallowances of Rs. 1,15,200/- that was made as per provision of section 40(a)(ia) of the IT Act on the ground of non- deduction of tax at source by the assessee to the parties against payment on account of repairs and maintenances. 3.Ground No.1 raised by the revenue relates to addition of Rs. 23,86,002/- u/s36(1)(iii) of the IT Act on account of diversion of interest bearing loan into interest free advances. 3.1The brief facts qua the issue are that assessee filed his return of income on 29.09.2012 disclosing total income at Rs. 2,82,640/-. The assessee's return was processed u/s143(1)on 25.03.2014. Later, the assessee's case was selected for scrutiny u/s 143(2) of the Income Tax Act, 1961 and the AO has completed the assessment by making various additions. During the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borrowed funds of the assessee have been lent to sister concerns in an interest free manner. The amount of such interest worked out by the assessee (equal to the interest rate paid for borrowing monies) works out to Rs. 23,86,002/-. There was also no dispute that the assesseeindividual is a stake holder in both the concerns to which the money has been lent by the assessee at interest free rates, and that he is a Director in the Company M/s Nandlal Kamal Kishore Vyapaar Pvt Ltd, which has been given an amount of Rs. 2,08,15,000/- as also that the assessee-individual is a member of the HUF, M/s Kamal Kishore Rajesh Kumar, to whom an amount of Rs. 9,00,000/- has been lent. The total amount therefore adds up to Rs. 2,17,15,000/-. The ld CIT(A) observed that before looking at the business of the sister concerns/subsidiary company, one has to carefully analyze the business of the assessee itself, and whether any benefits flowed to it, while offering the loan interest-free to a sister concern. The ld CIT(A) noted that the contentions of the assessee that in the F.Y 2011-12, the interest free loan was given to the sister concern in which the assessee was also a director namely M/s Nandla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see that currently, he was generating income against such advances made earlier, and that from the F.Y 2014-15, the assessee was receiving rent-free office accommodation at 1A, Akrur Dutta Lane, 4th Floor, Kolkata - 700012. This address is the same address of the office of the assessee currently. It had also been contended that the assessee had received the maintenance contract of the first floor of the building from SBI from which it was generating income of around Rs. 14 lacs of income per year. Therefore, the ld. DR pointed out that the above mentioned documents, contracts and agreements in respect of receiving rent-free office accommodation had not been examined by the AO because the CIT(A) did not ask the remand report. The assessee was in receipt of maintenance contract of the first floor of the building from SBI Bank. The maintenance contract has neither been examined by CIT(A) nor by AO. The CIT(A) did not ask the remand report from the AO to verify the maintenance contract. The Maintenance contract and 'receiving rent-free office accommodation as per agreement' were additional evidences before the CIT(A) which were not examined by the AO. Therefore, there was no commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ground No.1) is allowed for statistical purposes. 4.Ground No.2 raised by the revenue relates to disallowance of Rs. 11,97,624/- u/s 40(a)(ia) on account of non deduction of tax at source. 4.1 The brief facts qua the issue are that during the course of assessment proceedings, the AO noted that the assessee failed to produce the copies of declaration in Form no.15G/H from the parties. The AO noted that assessee could not furnish the copy of evidence of submission of copies of declaration in Form no.15G/H as claimed to have been collected from the concerned parties, before the jurisdictional Commissioner of Income Tax. Further, the assessee's contention that the interest amount of Rs. 11,97,624/- is a part of proportionate interest amount of Rs. 23,86,002/-(as already disallowed under section 36(1)(iii) of the Act), is of no help to the assessee because during the course of hearing, the assessee failed to bring any material on record in support of his contention. Actually, to avoid disallowance of interest expense of Rs. 11,97,624/- un/s 40(a)(ia), an afterthought story was prepared by the assessee in his submission. Hence, AO held that question of double taxation on this issue doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed with proof that the assessee had submitted the Form 15G/15H to the Office of the Hon'ble CIT, Kolkata dated 11.05.2012. The assessee also stated that the same documents were also submitted before the AO but then he had overlooked the said documents. 4.5. Having heard the rival submissions and perused the materials available on record, we are of the view that assessee submitted Form No.15G/15H before the AO. The assessee also submitted Form 15G/15H before the CIT(A). Therefore, prima facie there would be no disallowance in this case. Apart from this the said issue is covered by the judgment of Coordinate Bench Hyderabad, in the case of Malineni Babulu Vs. ITO, in ITA No.1326/Hyd/2014, A.Y 2009-10, dated 07.08.2015, wherein it has been held that declaration of the payees in the prescribed form with it at the time when the interest was paid to the respective customers, in this position, the assessee cannot be held to be liable to deduct tax therefrom u/s 194A of the Act. We further hold that if the assessee bank was not liable to deduct tax at the time of payment of interest, then section 40(a)(ia) of the Act is not attracted and the assessee cannot be held liable to pay tax. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was disallowed u/s 40(a)(ia) by the AO. 5.2. Aggrieved by the addition made by the AO the assessee filed an appeal before the ld. CIT(A) who has deleted the addition made by AO. The assessee submitted before the CIT(A) that the head of "Repair & Maintenance" includes the component of service provided to the customers post sales under warranty of equipment. It was submitted by the assessee that normally customers get the goods purchased repaired by themselves and the assessee only reimburses the expenses to such customers. Therefore in these cases, there was no requirement for making TDS as the expense is a reimbursement and the assessee was not paying any amount directly to the vendors was merely reimbursing the expense borne by our customer in relation to repairs of defective items. It was further explained that in those cases, where the assessee was responsible for repairs for customer, TDS had been deducted as per the rate applicable. It was pointed out that the total payments made was Rs. 2,05,862/- out of which TDS was not made against payment of Rs. 43,200/- and Rs. 72,000/- to M/s Clear Point Instrumentation Pvt. ltd and M/s TTL Technologies Pvt. Ltd, as the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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