TMI Blog2018 (10) TMI 1225X X X X Extracts X X X X X X X X Extracts X X X X ..... CA certificate was not verified by any of the authorities below and hence in the interest of justice and in fairness to both the parties, we are restoring the matter back to the file of the AO for necessary verification of the said CA certificate and thereafter if the contents of the CA certificate are proved to be correct , the AO is directed to grant relief to the assessee keeping in view second proviso to Section 40(a)(ia). Disallowance of delayed pay-in-charges to share brokers for making delayed payments against share purchased by the assessee - non deduction of TDS - Held that:- Assessee cannot be accepted and the delayed pay-in-charges payable by the assessee to sharebroker for making delayed payment of purchase consideration for purchase of shares is infact "interest" within meaning of Section 2(28A) of the 1961 Act and the assessee was required to deduct income-tax at source on such interest of ₹ 4,21,773/- within the provisions of Section 194A. Since, the assessee fails to deduct income-tax at source on this payment the assessee will be hit by provisions of Section 40(a)(ia) of the 1961 Act and the disallowance as was done by the AO and as confirmed by learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute the assessed income of the appellant, without considering the facts and circumstances of the case. 5. The Appellant craves leaves to add, amend, alter or delete the said ground of appeal . 3. The Ld. Counsel for the assessee at the outset submitted before the Bench that the assessee does not wish to pursue Grounds of appeal no. 1, 3 and 4 raised by the assessee in memo of appeal filed with the tribunal and it was prayed that these three grounds be dismissed as not been pressed. The Ld. DR did not raised any objection to the dismissal of these three grounds of appeals raised by the assessee in memo of appeal filed with the tribunal as not being pressed . We have also observed that Ground of appeal no. 5 raised by the assesee in memo of appeal is general in nature and does not require separate adjudication by the Bench. Thus, keeping in view the submissions of both the rival parties and also that ground no. 5 being general in nature does not require separate adjudication , we dismiss ground of appeal no. 1, 3 and 4 raised in memo of appeal filed by the assessee as not being pressed while ground no. 5 is dismissed as general in nature. The only effective ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that debt incurred was in respect of purchase of goods and not in the nature of debt created between lender and borrower of the money . It was submitted that thus it will take character of original transaction which is purchase of shares being compensatory in nature and hence Section 40(a)(ia) of the 1961 Act has no applicability . The learned CIT(A) rejected the contentions of the assessee by holding that the said payment of ₹ 4,21,773/- is in the nature of interest on outstanding amount and is based on fixed rate of interest on amount outstanding and the period for which it is outstanding. Thus, it was held by learned CIT(A) to be interest‟ and disallowance as was made by the AO by invoking provisions of Section 40(a)(ia) of the 1961 Act on the grounds that no income-tax was deducted at source by the assessee while making interest payment of ₹ 4,21,773/- was upheld by learned CIT(A) vide appellate order dated 01.02.2017. With respect to interest on loan paid to IIFL NBFC of ₹ 30,60,799/- it was submitted that payments were made without deduction of income-tax at source but the said IIFL NBFC included said interest income of ₹ 30,60,799/- in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng interest income received from the assessee was included in the return of income filed by M/s. India Infoline Finance Ltd. and due taxes were paid by IIFL to Revenue. It was submitted that learned CIT(A) did not admit this additional evidence and the same was rejected on the grounds that the certificate was obtained after filing of return of income as well it was obtained even post assessment. It was submitted that second proviso to Section 40(a)(ia) of the 1961 Act was inserted by Finance Act, 2012 wef 01-04-2013 but the same was held to be retrospective from 01-04-2005 being curative and declaratory in nature by decision of Hon‟ble Delhi High Court in the case of CIT v. Ansal Land Mark Township Private Limited reported in (2015) 377 ITR 635(Del) .The learned counsel for the assessee also relied upon decision of Mumbai-tribunal in the case of Perfect Circle India Private Limited v. DCIT in ITA no. 7241/Mum/2012. With respect to payments of delayed pay-in-charges to the tune of ₹ 4,21,773/- , the learned counsel for the assessee submitted it is not an interest payment but charges paid on delayed payment on purchase of shares to brokers . The learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustice. However , contents of the said CA certificate was not verified by any of the authorities below and hence in the interest of justice and in fairness to both the parties, we are restoring the matter back to the file of the AO for necessary verification of the said CA certificate and thereafter if the contents of the CA certificate are proved to be correct , the AO is directed to grant relief to the assessee keeping in view second proviso to Section 40(a)(ia) in line with judgment of Hon‟ble Delhi High Court in the case of CIT v. Ansal Land Mark Township (P) Ltd., (2015) 61 taxmann.com 45(Del) We order accordingly. There is another disallowance of ₹ 4,21,733/- with respect to the delayed pay-in-charges to share brokers for making delayed payments against share purchased by the assessee . The assessee has submitted that these payments are not interest and is part of the cost of purchase of shares for making delayed payment for share purchased by the assessee from share brokers beyond the agreed stipulated time for making payments to these share brokers. The assessee relied upon following case laws as under:- CIT v. Vidyut Corporation [2010] 324 ITR 221 (Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant case we are seized of the provisions of Section 194A dealing with deduction of income-tax at source on payment of interest and its consequence of non deduction of expenses keeping in view provisions of Section 40(a)(ia) of the 1961 Act. b) Similarly, decision in the case of Central Bank of India(supa) has no application as that case firstly concerned itself with interest tax liability and issue was whether the credit card dues falls within meaning of loan and advances‟ within limited mandate of Section 2(7) of Interest Tax Act, 1974 , while Section 2(28A) defines interest in a widest amplitude. The interest payable in the instant case is on the debt owed by the assessee owing to delayed payment of share purchase consideration and interest/charges paid on delayed payments of purchase consideration will fall within wide meaning of Interest‟ u/s 2(28A) of the 1961 Act. The said debt payable by the assessee owing to purchase of shares is not a loan and advance‟ provided by the sharebroker to the assessee and the said interest may not fall within ambit of Interest Tax Act, 1974, while we are concerned with Section 2(28A) of the 1961 Act read with Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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