TMI Blog2017 (12) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) on this issue and remand the issue for fresh consideration by the AO on the question as to whether Reliance Capital Ltd can said to be carrying on the business of insurance. Whether the recipients have included the receipts paid by the assessee in their respective returns of income? - Set aside the order of the CIT(A) to the extent to which he had sustained the order of the AO on the disallowance u/s.40(a)(ia) of the Act and remand the issue to the AO to verify whether the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same. To the extent the recipients from the Assessee have so included the sum in their returns of income and filed the same, no disallowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no obligation to deduct tax at source on the interest paid to Reliance Capital Ltd because under section 194A(3) (iii)(e) of the Act the provision mandating of tax at source laid down n section 194(1) shall not apply where the interest income in question is paid to any company or cooperative society carrying on the business of insurance. It is not in dispute that Reliance Capital Ltd is a non banking finance company. It also had one of the line of business of life insurance and general insurance. 4. The AO held that the provision of section 194A of the Act will be clearly attracted and since the assessee failed to deduct tax at source the disallowance u/s 40(a)(ia) of the Act has to be made. 5. On appeal by the assessee the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in appeal before the Tribunal. 7. The submission of the ld. DR was of the clause (e) of section 194A(3)(iii) of the Act covers only cases where the only business of an assessee is business of insurance. It was his submission that the assessee was a non banking finance company and business of financing was its primary business. It was further submitted by him that the purpose of allowing exemption from TDS u/s 194A(3)(iii)(e) of the Act is only to cover cases where there is default in payment of insurance premium and consequently interest is levied by the insurer from the insured on such delayed payment. Only in such case no TDS need to be made on interest paid. It is his further submission that the CIT(A) erred in concluding that Rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgued by the learned counsel for the Assessee that the Assessing Officer and first appellate authorities are vested with statutory powers u/s 133(6) or 131 and or other provisions and they could have made inquires with the parties or their respective Assessing Officer. In this regard it was submitted that all the relevant details of the payees were furnished and are available on record with their PAN and AO details. 10. It was pointed out that ITAT, Kolkata in the case of Ramakrishna Vedanta Math v. Income-tax Officer, Ward 59 (1), Kolkata, [2012] 24 taxmann.com 29 (Kol.) has taken a view that once assessee furnishes lawfully maintained information about recipients, Assessing Officer should first ascertain related facts about payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax deducted at source has not been paid on or before the due date for filing the return of income u/s.139(1) of the Act. 13. We have given a very careful consideration to the rival submissions. As rightly contended on behalf of the assessee a plain reading of the provision of section 194A(3)(iii)(e) of the Act suggests that interest income paid to a company carrying on a business of insurance need not deduct tax at source. There is no other qualification mentioned in the relevant statutory provisions. Nevertheless it is not possible to conclude from a mere look at the profile of the company in a website that it is carrying on business of insurance. Therefore it would be in the interest of justice to set aside the order of CIT(A) on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CIT(A) to the extent to which he had sustained the order of the AO on the disallowance u/s.40(a)(ia) of the Act and remand the issue to the AO to verify whether the recipients have included the receipts paid by the assessee in their respective returns of income and also paid taxes on the same. To the extent the recipients from the Assessee have so included the sum in their returns of income and filed the same, no disallowance u/s.40(a)(ia) of the Act should be made by the AO. In case the recipient parties are not cooperating in providing details, the AO should be directed to call for the information u/s. 133(6) or 131 of the Act, for verification of the same. 15. In the result the appeal by the revenue is treated as allowed for stati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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